31038 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules and Regulations 

restricts Federal awards that are 

considered covered transactions to 

persons or entities that are listed in 

SAM Exclusions and these requirements 

flow down to all covered transactions, 

including: (1) All nonprocurement 

subawards; and (2) contracts that equal 

or exceed $25,000. However, 2 CFR 

180.215 provides specific exceptions 

from what are considered covered 

transactions, including awards to 

certain types of foreign entities. This 

action revises 2 CFR 180.215 to define 

‘‘covered transactions’’ to include direct 

awards, regardless of tier or amount for 

non-procurement and procurement 

transaction, to exempt foreign persons, 

entities and organizations if such 

persons, entities, or organizations have 

engaged in any activity that contributed 

to or is a significant factor in a country’s 

non-compliance with its obligations 

under arms control, nonproliferation or 

disarmament agreements or 

commitments with the United States. 

Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is not a significant 

regulatory action and, therefore, was not 

subject to review under Section 6(b) of 

E.O. 12866. In addition, this action is 

not a major rule under 5 U.S.C. 804. 

Executive Order 13771 

This action is not an E.O. 13771 

regulatory action because it is not 

significant under E.O. 12866. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act, 5 

U.S.C. 601, et seq., requires that an 

agency provide a final regulatory 

flexibility analysis or certify that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. OMB does not 

expect this interim action to have a 

significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act. 

This interim action implements the 

provisions of section 1290 of the NDAA 

and will not have a significant economic 

impact on a substantial number of small 

entities because it will affect only a 

small number of Federal awards that are 

currently excluded from the definition 

of covered transactions. Currently, the 

vast majority of Federal awards are 

subject to the 2 CFR part 180 provisions 

that apply to covered transactions. 

Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the changes to 2 CFR 

part 180 do not impose incremental 

recordkeeping or information collection 

requirements, or the collection of 

information that require the approval of 

the Office of Management and Budget 

under 44 U.S.C. 3501, et seq. 

Determination To Issue Interim Action 

As this regulatory action involves a 

matter relating to Federal awards, it is 

not subject to the public procedure 

requirements of the informal rulemaking 

provisions of the Administrative 

Procedure Act. See 5 U.S.C. 553(a)(2). 

Nevertheless, OMB is voluntarily 

seeking comment to be considered in 

the formation of the final action. 

List of Subjects in 2 CFR Part 180 

Administrative practice and 

procedure, Debarment and suspension, 

Grant programs, Reporting and 

recordkeeping requirements. 

Timothy F. Soltis, 

Deputy Controller. 

For the reasons stated in the 

preamble, the Office of Management and 

Budget amends 2 CFR part 180, as set 

forth below: 

PART 180—OMB GUIDELINES TO 

AGENCIES ON GOVERNMENTWIDE 

DEBARMENT AND SUSPENSION 

(NONPROCUREMENT) 

■ 1. The authority citation for part 180 

is revised to read as follows: 

Authority: Pub. L. 109–282; 31 U.S.C. 

6102, Sec. 2455, Pub. L. 103–355, 108 Stat. 

3327; E.O. 12549, 3 CFR, 1986 Comp., p. 189; 

E.O. 12689, 3 CFR, 1989 Comp., p. 235. 

■ 2. In § 180. 215, add paragraph (h) to 

read as follows: 

§ 180. 215 Which nonprocurement 

transactions are not covered transactions? 

* * * * * 

(h) Notwithstanding paragraph (a) of 

this section, covered transactions must 

include non-procurement and 

procurement transactions involving 

entities engaged in activity that 

contributed to or is a significant factor 

in a country’s non-compliance with its 

obligations under arms control, 

nonproliferation or disarmament 

agreements or commitments with the 

United States. Federal awarding 

agencies and primary tier nonprocurement recipients must not award, 

renew, or extend a non-procurement 

transaction or procurement transaction, 

regardless of amount or tier, with any 

entity listed in the System for Award 

Management Exclusions List on the 

basis of involvement in activities that 

violate arms control, nonproliferation or 

disarmament agreements or 

commitments with the United States, 

pursuant to section 1290 of the National 

Defense Authorization Act for Fiscal 

Year 2017, unless the head of a Federal 

agency grants an exception pursuant to 

2 CFR 180.135 with the concurrence of 

the OMB Director. 

[FR Doc. 2018–14279 Filed 6–29–18; 8:45 am] 

BILLING CODE 3110–01–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 200 

[Docket No. FR–5457–F–02] 

RIN 2502–AJ03 

Streamlining Inspection Requirements 

for Federal Housing Administration 

(FHA) Single-Family Mortgage 

Insurance: Removal of the FHA 

Inspector Roster 

AGENCY: Office of the Assistant 

Secretary of Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Final rule. 

SUMMARY: This final rule streamlines the 

inspection requirements for FHA singlefamily mortgage insurance by removing 

the regulations for the FHA Inspector 

Roster (Roster). The Roster is a list of 

inspectors approved by FHA as eligible 

to determine if the construction quality 

of a one- to four-unit property is 

acceptable as security for an FHAinsured loan. The removal of the Roster 

regulations is based on the recognition 

of the sufficiency and quality of 

inspections carried out by certified 

inspectors and other qualified 

individuals. This final rule follows 

publication of a February 6, 2013, 

proposed rule, and takes into 

consideration the public comments 

received on the proposed rule. 

DATES: Effective date: August 2, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Elissa Saunders, Director, Office of 

Single Family Program Development, 

Office of Housing, Department of 

Housing and Urban Development, 451 

7th Street SW, Room 9184, Washington, 

DC 20410–8000; telephone number 202– 

708–2121 (this is not a toll-free 


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Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules and Regulations 31039 

1Codified at 24 CFR 200.170–200.172. 

2http://www.iccsafe.org/wp-content/uploads/ 

stateadoptions.pdf. 

3The public comments on the proposed rule are 

available for download from the Regulations.gov 

website at the following link: http://

www.regulations.gov/#!docketBrowser;rpp=25;po=

0;dct=PS;D=HUD-2013-0011. 

number). Persons with hearing or 

speech impairments may access this 

number via TTY by calling the Federal 

Relay Service at 1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background—HUD’s February 6, 

2013, Proposed Rule 

On February 6, 2013, at 78 FR 8448, 

HUD published a proposed rule to 

streamline the inspection and home 

warranty requirements for FHA singlefamily home insurance. As part of this 

rule, HUD proposed to eliminate the 

Roster,1 which lists inspectors, 

approved by HUD, to perform 

inspections in the limited circumstances 

when either: (1) A local jurisdiction did 

not already perform its own inspections 

for new construction, and issue building 

permits and certificates of occupancy; or 

(2) when the inspection of a structural 

repair or renovation was not performed 

by a licensed professional as specified 

by regulation. (See 24 CFR 200.170(b)). 

HUD originally established the Roster to 

standardize the inspection process for 

properties with FHA-insured mortgages. 

Before the Roster, cities and states 

developed their own building codes, 

which had little uniformity or 

consistency with each other. Now, 

however, the International Residential 

Code (IRC) is in use or adopted in 49 

states, the District of Columbia, Puerto 

Rico, Guam, and the U.S. Virgin 

Islands.2 The International Code 

Council (ICC), which developed the IRC, 

also certifies Combination Inspectors 

(CIs) and Residential Combination 

Inspectors (RCIs). To be certified by the 

ICC, CIs and RCIs must pass a rigorous 

set of examinations, which includes 

testing their knowledge of the IRC. As 

a result, there is no longer a need for 

HUD to maintain and administer its 

own standardization process for 

inspectors. 

For local jurisdictions that do not 

provide building code enforcement and 

requisite documentation, the rule 

proposed to accept inspections by an 

RCI, who is also licensed or certified as 

a home inspector in accordance with the 

applicable state and local requirements 

governing the licensing or certification 

of such inspectors in the respective 

jurisdiction. For jurisdictions who have 

an absence of RCIs, the rule proposed to 

require lenders to obtain an inspection 

performed by a third party who is a 

registered architect, a professional 

engineer, or a trades person or 

contractor and has met the licensing and 

bonding requirements of the state in 

which the property is located. 

As part of the same publication, HUD 

also proposed to eliminate its 

requirement that borrowers purchase a 

10-year protection plan for all high loanto-value mortgages in order to qualify 

for FHA mortgage insurance. HUD had 

combined the two proposals as they 

both involved streamlining 

requirements for FHA single-family 

mortgage insurance. However, the two 

proposals are distinct and the 

regulations unrelated. In addition to 

covering separate subjects, the 

regulations applied to different parties. 

The procedures and requirements 

related to the Roster applied to 

inspectors and lenders, while the 

regulations regarding 10-year protection 

plans applied to homebuilders, lenders, 

and borrowers. The public comments 

reflect this distinction, in that they 

treated these proposals separately, with 

the exception of expressions of general 

support for both proposals. In order to 

properly address the separate comments 

received on each proposal and to be 

more transparent about the how the 

regulatory changes will affect different 

parties, this final rule only deals with 

elimination of the Roster. HUD is 

addressing elimination of the 10-year 

protection plan requirement in a 

separate rule. 

Interested readers are referred to the 

preamble of the February 6, 2013, 

proposed rule for additional historical 

background and explanation of the 

proposed regulatory changes. 

II. This Final Rule; Change to February 

6, 2013, Proposed Rule 

After considering public comment, 

HUD is making one change to the 

February 6, 2013, proposed rule. As 

discussed above, HUD proposed to 

accept inspections from RCIs for local 

jurisdictions that do not provide 

building code enforcement and requisite 

documentation. This final rule provides 

that HUD will also accept inspections 

performed by CIs, who are subject to the 

same rigorous ICC requirements 

required for RCI certification, and have 

also passed tests in the same disciplines 

for commercial buildings. HUD 

determined that the change is warranted 

due to similarity in the certification 

requirements between RCIs and CIs. 

Moreover, as more fully discussed in the 

following section of this preamble, 

expanding the number of inspectors 

certified by the ICC that are eligible to 

perform inspections will help to address 

the concern expressed by a commenter 

that some jurisdictions lack a sufficient 

number of RCIs. 

III. Discussion of the Public Comments 

Related to the Elimination of HUD’s 

Inspector Roster 

The public comment period for the 

February 6, 2013, proposed rule closed 

on April 8, 2013. HUD received 7 public 

comments, 5 of which provided 

comments on the elimination of the 

Roster requirement. These comments 

were submitted by the ICC, a housing 

trade association, a mortgage company, 

a homebuilder, and an individual.3

Below is a summary of the significant 

issues pertaining to the Roster raised by 

these comments, and HUD’s responses 

to these comments. 

In response to the general solicitation 

of public comments, HUD received the 

following comments and provides the 

following responses: 

Comment: Include CIs as allowed 

inspectors. One commenter suggested 

that HUD accept inspections from ICCcertified CIs who have passed the 

required tests for RCI certification, as 

well as passed tests in the same 

disciplines for commercial buildings. 

The commenter wrote that this change 

would increase the pool of inspectors 

from 3,666 (RCIs) to 5,892 (RCIs and 

CIs), and help avoid confusion as to 

whether only RCIs meet the 

requirements of the rule, or whether 

those certified for both Residential and 

Commercial Inspection who are 

certified as Combination Inspectors also 

meet the requirements of the rule. 

HUD Response. HUD has adopted the 

change suggested by the commenter. 

The final rule provides that in 

jurisdictions that do not provide 

building code enforcement and requisite 

documentation, the lender must, in 

order to ensure compliance with FHA 

requirements, select an RCI or CI 

certified by the ICC who is licensed or 

certified as a home inspector in 

accordance with the applicable state 

and local requirements. CIs are subject 

to the same rigorous ICC certification 

requirements as RCIs and, therefore, 

their inclusion is consistent with HUD’s 

stated policy goals in accepting 

inspection performed by RCIs. Further, 

HUD agrees with the commenter that 

the change will expand the pool of 

qualified inspectors and avoid 

confusion. 

Comment: With Limited Number of 

RCIs, Allow Original Loan Appraiser to 

Complete Final Inspection. One 

commenter wrote that due to the limited 

number of current RCI inspectors, the 


sradovich on DSK3GMQ082PROD with RULES
31040 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules and Regulations 

4Please refer to the end of this section of the 

preamble for the information on the number of ICCcertified inspectors. 

proposed process will be less efficient 

and more subjective than HUD 

anticipated. The commenter wrote that 

while the use of a building permit/ 

certificate of occupancy may be feasible 

with existing residences, the timing of 

these related to new home construction 

would be problematic. The commenter 

wrote that with reduced options and 

precarious timelines, the opportunity 

for additional costs and closing delays 

will increase for homeowners. The 

commenter suggested that HUD allow 

the original appraiser to complete the 

final inspection. According to the 

commenter this is acceptable under 

Federal National Mortgage Association 

(Fannie Mae), United States Department 

of Agriculture, and United States 

Department of Veterans Affairs 

guidelines. The commenter wrote that 

because mortgage lenders maintain an 

FHA approved appraiser list, or work 

with an appraisal management company 

which does so, the process would be an 

extension of an efficient and accepted 

process, which would continue to 

provide protections for both 

homebuyers and HUD. 

HUD Response. HUD has not revised 

the rule in response to this comment. As 

an initial matter, HUD notes that 

inspections are only required where the 

local jurisdiction does not provide 

building code enforcement and 

documentation. HUD specifically 

solicited comment on the number of 

qualified RCIs. Based on the data 

provided by the ICC, HUD continues to 

believe there are sufficient number of 

ICC-certified inspectors to allow for 

inspections in the limited circumstances 

contemplated by the rule.4 As discussed 

in the preamble to the February 6, 2013, 

proposed rule, HUD believes that the 

overall effect of removing the Roster 

will be to increase the number of 

competent inspectors, since inspectors 

currently on the Roster will no longer 

have an advantage of the exclusive 

market power of inspecting FHAinsured homes. Moreover, HUD is 

amending the proposed rule to further 

expand the pool of eligible inspectors to 

include CIs. In the absence of such ICCcertified inspectors, the lender may 

obtain an inspection performed by a 

third party, who is a registered architect, 

a professional engineer, or a trades 

person or contractor, and who has met 

the licensing and bonding requirements 

of the State in which the property is 

located. 

With respect to the suggestion that 

HUD allow appraisers to conduct the 

required inspections, HUD agrees that 

appraisers have always played a vital 

role in FHA’s mission to provide 

affordable homeownership by 

accurately assessing the value of a 

home. While other Federal agencies may 

allow appraisers to conduct inspections 

to determine construction quality, HUD 

continues to believe that limiting the 

conduct of required inspections to ICCcertified inspectors and other qualified, 

licensed and bonded professionals is the 

best means to safeguard FHA and the 

Federal taxpayer. 

In addition to the general solicitation 

of public comments on the February 6, 

2013, proposed rule, HUD specifically 

requested comments on two issues. 

First, HUD advised that it had been 

unable to determine the number of 

jurisdictions for which there may be an 

absence of RCIs and specifically 

requested information on this issue. In 

response, the ICC advised that there are 

3,666 RCIs and 2,226 CIs around the 

country, with nearly every state having 

at least 4 inspectors certified as RCIs or 

CIs. Massachusetts, Maine, North 

Dakota, South Dakota, Rhode Island, 

and Vermont each have only one 

certified inspector. However, the ICC 

said that in each of these states, there 

are additional individuals possessing 

three, and sometime four, of the 

required four underlying certifications 

to achieve the RCI, or seven or eight of 

the underlying certifications for the CI. 

The ICC said it believes that if this 

proposed requirement is implemented, 

many eligible inspectors will apply for 

appropriate certification. The ICC said it 

believes that there are sufficient 

numbers in every state to allow for 

inspectors in all of the 50 states, but that 

in some cases, nearby out of state travel 

may be required by the inspector. 

In addition to the foregoing issue, 

HUD specifically sought comment on 

whether, for jurisdictions for which 

RCIs are not available, HUD should 

require the lender, in selecting a nonRCI, albeit an individual licensed and 

bonded under State law, to select a 

registered architect, engineer, trades 

person, or contractor with a minimum 

of 5 years’ experience. HUD did not 

receive any comments in response to 

this issue. 

IV. Findings and Certifications 

Regulatory Review—Executive Orders 

12866 and 13563 

Under Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made whether a 

regulatory action is significant and, 

therefore, subject to review by the Office 

of Management and Budget (OMB) in 

accordance with the requirements of the 

order. Executive Order 13563 

(Improving Regulation and Regulatory 

Review) directs executive agencies to 

analyze regulations that are ‘‘outmoded, 

ineffective, insufficient, or excessively 

burdensome, and to modify, streamline, 

expand, or repeal them in accordance 

with what has been learned.’’ Executive 

Order 13563 also directs that where 

relevant, feasible, and consistent with 

regulatory objectives, and to the extent 

permitted by law, agencies are to 

identify and consider regulatory 

approaches that reduce burdens and 

maintain flexibility and freedom of 

choice for the public. 

This rule was determined to be a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of Executive 

Order 12866 (although not an 

economically significant regulatory 

action, as provided under section 3(f)(1) 

of the Executive Order). The removal of 

these regulations is consistent with 

goals of Executive Order 13563. 

The rule does not rise to the level of 

an economically ‘‘significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. HUD expects 

the elimination of the national Inspector 

Roster to have economic benefits and 

costs. However, neither the economic 

costs nor the benefits of the elimination 

are greater than the $100 million 

threshold that determines economic 

significance under Executive Orders 

12866 and 13563. The preamble to the 

February 6, 2013, proposed rule at 78 

FR 8453–8454, provided a discussion of 

the anticipated costs and benefits of the 

regulatory amendments. Please see the 

below section on the summary of 

benefits and costs, which summarizes 

and updates the costs and benefits of the 

regulatory changes. 

Executive Order 13771 

Executive Order 13771, entitled 

‘‘Reducing Regulation and Controlling 

Regulatory Costs,’’ was issued on 

January 30, 2017. This final rule is 

considered an E.O. 13771 deregulatory 

action. Details on the estimated cost 

savings of this final rule can be found 

in the rule’s economic analysis. 

Summary of Benefits and Costs of Final 

Rule 

There are two effects of eliminating 

the FHA Inspector Roster requirement: 

A reduction in paperwork burden to the 

Federal Government and potential, but 

not probable, gains in consumer surplus 

from enhanced competition. 

First, no longer requiring that an 

inspector be on the Roster creates 

savings by reducing the administrative 

costs necessary to maintain the Roster. 


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Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules and Regulations 31041 

HUD anticipates cost savings of 

approximately $62,870. This estimate is 

based on the following: Savings of 

$46,350 for elimination of Applications 

for Fee or Roster Inspector designation 

forms and copy of state certification 

(based on 3,090 inspector applications 

or respondents times a response per 

respondent times 0.5 burden hours per 

response times at cost of $30 per hour); 

savings of $11,520 for elimination of the 

fielding with inspectors and data input 

into FHA Connection; and savings of 

$5,000 for the elimination of 

maintenance of the Roster database. 

Second, relaxing restrictions to entry 

of inspectors would expand the set of 

inspectors from which lenders may 

choose for the inspection of a home 

where the mortgage is to be insured by 

FHA. Inspectors currently on the Roster 

would lose the ability to exploit any 

market power conveyed by the current 

Roster requirements. 

The market outcome (effect on price, 

quantity, and quality of service) of 

eliminating supply restrictions depends 

upon whether there is excess demand 

for inspector services. It appears that the 

Inspector Roster is not a binding 

restriction. Only a very limited number 

of FHA loans would be affected by 

eliminating the Roster. FHA data reveals 

that the number of FHA-insured 

properties requiring an inspection by an 

RCI or other qualified individual where 

an RCI is unavailable represents a small 

percentage of total loans. During 2017, 

only 877 (0.07 percent) out of the 

1,233,428 endorsed loans required the 

use of a Roster inspector. The average 

cost for Roster inspector services was 

estimated at $200 in 2016. This fee is 

not significantly different (and not 

greater than) the average fee charged by 

inspectors. Given the small number of 

loans initially reserved to inspectors 

from the Roster and the lack of 

divergence in cost, the cost for inspector 

service would not be affected. However, 

an elimination of the Roster could result 

in a small transfer of business activity 

away from inspectors on the Roster. 

The quality of inspection is not likely 

to suffer because of the elimination of 

the Roster. Current industry standards 

and local regulations are sufficiently 

rigorous to render HUD’s standards 

redundant. To become an RCI, 

applicants must undergo a rigorous 

examination and certification process 

that is even more robust than the 

Inspector Roster qualification process. 

On the rare occasion that an RCI is 

unavailable in a particular jurisdiction, 

the professional qualifications and 

length of experience for other qualified 

individuals are sufficiently high 

thresholds to mitigate the concern of 

inadequate inspections. 

The docket file is available for public 

inspection in the Regulations Division, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 7th Street SW, Room 10276, 

Washington, DC 20410–0500. Due to 

security measures at the HUD 

Headquarters building, please schedule 

an appointment to review the docket file 

by calling the Regulation Division at 

202–402–3055 (this is not a toll-free 

number). Individuals with speech or 

hearing impairments may access this 

number via TTY by calling the toll-free 

Federal Relay Service at 800–877–8339. 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule have 

been approved by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520) and assigned 

OMB Control Numbers 2502–0538 

(Application for Fee or Roster Personnel 

Designation (form HUD–92563)), and 

2502–0189 (pertaining to the 

Compliance Inspection Report (form 

HUD–92051) and the Mortgagee’s 

Assurance of Completion (form HUD– 

92300)). In accordance with the 

Paperwork Reduction Act, an agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information, unless the 

collection displays a currently valid 

OMB control number. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This rule is a 

deregulatory action taken by HUD that 

will lower barriers to entry to FHA 

business by removing redundant 

professional certifications. As 

previously noted, an elimination of the 

Roster could result in a small transfer of 

business activity away from inspectors 

on the Roster, but there is no reason to 

believe this transfer will be significant. 

There is no detectable wage premium 

for inspectors on the FHA Roster, and 

the Roster has been used for less than 

0.1 percent of FHA’s loans in recent 

years. Therefore, the undersigned 

certifies that this rule will not have a 

significant impact on a substantial 

number of small entities. 

Environmental Impact 

A Finding of No Significant Impact 

with respect to the environment has 

been made in accordance with HUD 

regulations at 24 CFR part 50, which 

implement section 102(2)(C) of the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4332(2)(C)). The 

Finding of No Significant Impact is 

available for public inspection between 

the hours of 8 a.m. and 5 p.m. weekdays 

in the Regulations Division, Office of 

General Counsel, Room 10276, 

Department of Housing and Urban 

Development, 451 Seventh Street SW, 

Washington, DC 20410–0500. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial direct compliance costs on 

State and local governments or is not 

required by statute, or the rule preempts 

State law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive Order. This 

rule will not have federalism 

implications and would not impose 

substantial direct compliance costs on 

State and local governments or preempt 

State law within the meaning of the 

Executive Order. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on State, 

local, and tribal governments, and on 

the private sector. This rule does not 

impose any federal mandates on any 

State, local, or tribal governments, or on 

the private sector, within the meaning of 

UMRA. 

Catalogue of Federal Domestic 

Assistance 

The Catalogue of Federal Domestic 

Assistance Number for the principal 

FHA single-family mortgage insurance 

program is 14.117. 

List of Subjects in 24 CFR Part 200 

Administrative practice and 

procedure, Claims, Equal employment 

opportunity, Fair housing, Housing 

standards, Lead poisoning, Loan 

programs—housing and community 

development, Mortgage insurance, 

Organization and functions 

(Government agencies), Penalties, 

Reporting and recordkeeping 

requirements, Social security, 

Unemployment compensation, Wages. 


sradovich on DSK3GMQ082PROD with RULES
31042 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Rules and Regulations 

Accordingly, for the reasons 

discussed in the preamble, HUD amends 

24 CFR part 200 as follows: 

PART 200—INTRODUCTION TO FHA 

PROGRAMS 

■ 1. The authority citation for part 200 

continues to read as follows: 

Authority: 12 U.S.C. 1702–1715z–21; 42 

U.S.C. 3535(d). 

■ 2. In § 200.145, add paragraph (c) to 

read as follows: 

§ 200.145 Property and mortgage 

assessment. 

* * * * * 

(c) For all new construction as well as 

structural repairs and/or renovations of 

existing properties, to the extent that an 

inspection is required to determine if 

construction quality of a one- to fourunit property is acceptable as security 

for an FHA-insured loan, the following 

requirements apply: 

(1)(i) In areas where local 

jurisdictions provide building code 

enforcement and the requisite 

documentation, the lender shall provide 

a copy of: 

(A) The building permit, or its 

equivalent, and a copy of the certificate 

of occupancy, or its equivalent; or 

(B) A satisfactory inspection notice for 

work completed, or its equivalent. 

(ii) The documentation provided 

under paragraph (c)(1)(i) of this section 

shall be considered satisfactory 

evidence of completion of the work. 

(2) In jurisdictions that do not provide 

building code enforcement and requisite 

documentation, three inspections are 

required for new construction. For 

existing construction, only one 

inspection and certification of work 

completed for structural repairs and 

renovations is required. For both new 

and existing construction, the lender 

shall, in order to ensure compliance 

with FHA requirements: 

(i) Select a Residential Combination 

Inspector (or its successor designation) 

or a Combination Inspector (or its 

successor designation) certified by the 

International Code Council (or its 

successor organization) who is licensed 

or certified as a home inspector in 

accordance with the applicable State 

and local requirements governing the 

licensing or certification of those 

jurisdictions that license or certify such 

inspectors in the respective jurisdiction. 

The lender shall provide a certification 

from such inspector that the new 

construction and/or structural repair or 

renovation work is completed 

satisfactorily and in compliance with 

any applicable building code. 

(ii) In the absence of such Residential 

Combination Inspector and 

Combination Inspector, the lender shall 

obtain an inspection performed by a 

third party, who is a registered architect, 

a professional engineer, or a trades 

person or contractor, and who has met 

the licensing and bonding requirements 

of the State in which the property is 

located. The lender shall provide a 

certification from such inspector that 

the inspector is licensed and bonded 

under applicable State law, and that the 

new construction and/or structural 

repair or renovation work is completed 

satisfactorily and in compliance with 

any applicable building code. 

§§ 200.170 through 200.172 [Removed] 

■ 3. Remove the undesignated center 

heading ‘‘FHA Inspector Roster’’ and 

§§ 200.170 through 200.172. 

Dated: June 26, 2018. 

Brian D. Montgomery, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2018–14212 Filed 7–2–18; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 330 

[Docket No. FR–6112–IA–01] 

Government National Mortgage 

Association: Loan Seasoning for 

Ginnie Mae Mortgage-Backed 

Securities—Interpretive Rule 

AGENCY: Office of General Counsel, 

HUD. 

ACTION: Interpretive rule. 

SUMMARY: HUD is issuing this 

interpretive rule to clarify the scope of 

the provision of the recently enacted 

Economic Growth, Regulatory Relief, 

and Consumer Protection Act (Act) that 

prohibits the Government National 

Mortgage Association (Ginnie Mae) from 

guaranteeing the timely payment of 

principal and interest on a security that 

is ‘‘backed by a mortgage’’ that fails to 

meet certain ‘‘seasoning’’ requirements. 

With this new amendment, questions 

have arisen as to the effect of this 

provision on Ginnie Mae’s ability to 

guarantee Multiclass Securities where 

the trust assets consist of direct or 

indirect interests in certificates, 

previously lawfully guaranteed by 

Ginnie Mae, but with underlying 

mortgage loans that may not be in 

compliance with the seasoning 

requirements. This rule provides HUD’s 

interpretation that the statutory 

provision does not prohibit Ginnie Mae 

from making guarantees in this context. 

Although interpretive rules are exempt 

from public comment under the 

Administrative Procedure Act, HUD 

nevertheless invites public comment on 

the interpretation provided in this rule. 

DATES: 

Effective date: This interpretive rule is 

effective June 29, 2018, and is 

applicable beginning June 25, 2018. 

Comment due date: August 2, 2018. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this interpretive rule to the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 7th Street SW, Room 

10276, Washington, DC 20410–0500. 

Communications must refer to the above 

docket number and title. There are two 

methods for submitting public 

comments. All submissions must refer 

to the above docket number and title. 

1. Submission of Comments by Mail. 

Comments may be submitted by mail to 

the Regulations Division, Office of 

General Counsel, Department of 

Housing and Urban Development, 451 

7th Street SW, Room 10276, 

Washington, DC 20410–0500. Due to 

security measures at all Federal 

agencies, however, submission of 

comments by mail often results in 

delayed delivery. To ensure timely 

receipt of comments, HUD recommends 

that comments submitted by mail be 

submitted at least two weeks in advance 

of the public comment deadline. 

2. Electronic Submission of 

Comments. Interested persons may 

submit comments electronically through 

the Federal eRulemaking Portal at 

www.regulations.gov. HUD strongly 

encourages commenters to submit 

comments electronically. Electronic 

submission of comments allows the 

commenter maximum time to prepare 

and submit a comment, ensures timely 

receipt by HUD, and enables HUD to 

make them immediately available to the 

public. Comments submitted 

electronically through the 

www.regulations.gov website can be 

viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

Note: To receive consideration as 

public comments, comments must be 

submitted through one of the two 

methods specified above. Again, all 

submissions must refer to the docket 

number and title of the rule. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. 

Public Inspection of Public 

Comments. All properly submitted 


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