7274 Federal Register / Vol. 89, No. 23 / Friday, February 2, 2024 / Rules and Regulations 

1 88 FR 12906. 

2See HUD, Mortgagee Letter 95–36: Mortgagee 

Approval—Single Family Loan Production— 

Revised Mortgagee/Program Requirements, Aug. 2, 

1995, https://www.hud.gov/sites/documents/DOC_

20554.TXT. 

3 Id.; See also HUD Handbook 4060.1 REV–1, 

Mortgagee Approval Handbook I (4060.1)—Chapter 

5 Part A. Branch Offices, https://www.hud.gov/ 

sites/documents/40601C5HSGH.PDF. 

Sample Label 16, Horizontal Television 

Labels 

* * * * * 

By direction of the Commission. 

April J. Tabor, 

Secretary. 

[FR Doc. 2024–02036 Filed 2–1–24; 8:45 am] 

BILLING CODE 6750–01–C 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 202 

[Docket No. FR–6321–F–02] 

RIN 2502–AJ63 

Changes in Branch Office Registration 

Requirements 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Final rule. 

SUMMARY: The Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner is issuing final 

regulations to amend the Department of 

Housing and Urban Development’s 

(HUD) requirement for branch office 

registration. The final rule removes the 

requirement that lenders and 

mortgagees register each branch office 

where they conduct FHA business with 

HUD. After considering public 

comments received in response to the 

proposed rule HUD published on March 

1, 2023, this final rule adopts the 

proposed rule without change. 

DATES: Effective March 4, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Timothy Laramie, Mortgagee Approval 

Analyst, U.S. Department of Housing 

and Urban Development, 451 7th Street 

SW, Washington, DC 20410, telephone 

number 202–402–6814 (this is not a tollfree number). HUD welcomes and is 

prepared to receive calls from 

individuals who are deaf or hard of 

hearing, as well as individuals with 

speech or communication disabilities. 

To learn more about how to make an 

accessible telephone call, please visit 

https://www.fcc.gov/consumers/guides/ 

telecommunications-relay-service-trs. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On March 1, 2023, HUD published the 

‘‘Changes in Branch Office Registration 

Requirements’’ proposed rule (‘‘the 

proposed rule’’) in the Federal 

Register. 1 In the proposed rule, HUD 

sought to revise 24 CFR 202.5(k) and (i) 

by eliminating the requirement that a 

lender or mortgagee register all branch 

offices used to conduct FHA business. 

This change would give lenders and 

mortgagees (1) the option to select 

which offices to register and maintain as 

branch offices with HUD, and (2) make 

fees applicable to each branch office 

that a lender or mortgagee registers with 

HUD, rather than applying fees to each 

branch office where they are authorized 

to originate Title I or Title II loans. HUD 

based these changes on the mortgage 

industry’s evolution over time, the 

advancement of technology, and due to 

no longer needing to maintain several 

branch offices to conduct FHA business 

nationwide. 

Prior to 1995, HUD required each 

mortgagee office to get approval from 

the FHA Field Office(s) located where 

the lender or mortgagee intended to 

submit mortgages for insurance 

endorsement.2 After 1995, HUD 

expanded the geographic areas where 

lenders and mortgagees were allowed to 

conduct FHA business. The expansion 

allowed FHA Field Offices to create a 

‘‘lending area’’ and permitted lenders 

and mortgagees to conduct business 

with several FHA Field Offices within 

that area. HUD required that lenders and 

mortgagees ‘‘maintain at least one 

approved branch office within a 

‘lending area from which loans are 

submitted to the FHA Field Offices.’’ 3

Currently, HUD follows its policy from 

HUD Handbook 4000.1 that was 

established in September of 2015. This 

policy calls a geographic area where a 


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Federal Register / Vol. 89, No. 23 / Friday, February 2, 2024 / Rules and Regulations 7275 

4See HUD Handbook 4000.1 I.A.4b, Single 

Family Lending Area (4000.1), https://

www.hud.gov/sites/dfiles/OCHCO/documents/ 

4000.1hsgh-080923.pdf. 

branch office is permitted to conduct 

FHA business an ‘‘Area Approved for 

Business’’ (AAFB).4 HUD Handbook 

4000.1 states that all branch offices that 

are registered with HUD are granted a 

nationwide AAFB to conduct FHA 

business; however, the registered branch 

‘‘may only exercise its authority to 

originate or underwrite FHA mortgages 

in those states where the lender or 

mortgagee fully complies with state 

origination and/or underwriting 

licensing and approval requirements.’’ 

As the mortgage industry has evolved, 

HUD has found it necessary to update 

its regulations. In response to this 

change, HUD published a proposed rule 

on March 1, 2023, that would give 

lenders and mortgagees the option to 

register and maintain branch offices 

with HUD, which would allow them to 

be placed on HUD’s Lender List Search 

page. In addition, the proposed rule 

would revise 24 CFR 202.5(i) to make 

fees applicable to each branch office 

that a lender or mortgagee registers with 

HUD, rather than applying fees to each 

branch office where they are authorized 

to conduct FHA business. These 

revisions were intended to reduce the 

administrative burden for existing 

lenders and mortgagees and eliminate 

barriers for entities interested in FHA 

programs. In addition to providing relief 

for the mortgage industry, HUD’s 

proposed rule would provide the 

flexibility to encourage more lenders 

and mortgagees to originate FHAinsured mortgages. Removing the 

requirement to register branch offices 

will not affect HUD’s monitoring of 

lenders and mortgagees. HUD will 

continue to maintain oversight and risk 

management of lenders and mortgagees 

who will remain responsible to FHA for 

the actions of its branch offices and 

employees. 

In response to public comments as 

discussed further below, HUD is 

publishing this final rule without 

change from the proposed rule. 

II. The Public Comments 

HUD received 11 public comments on 

the proposed rule from various 

interested parties, including 

individuals, lenders and mortgagees, 

and business associations. 

Support for the Rule 

Numerous commenters supported 

finalizing the proposed rule. 

Removing the branch office 

registration requirement is a needed 

update in response to industry 

developments resulting from 

technological changes and the COVID– 

19 Pandemic. 

Commenters in support of the rule 

discussed the industry trend towards 

remote work. These commenters 

described a shift away from conducting 

FHA business in centralized workplaces 

to remote homes or smaller, lesscentralized offices as a result of prepandemic technological developments 

and the COVID–19 pandemic shift to 

work from home. One commenter stated 

that remote work was likely to remain 

a part of the industry moving forward. 

Another comment stated that, due to 

remote work, their business had more 

locations that could possibly be 

considered branch offices based on the 

current rule. 

HUD Response: HUD agrees with 

industry feedback that the requirement 

to register branch offices has become 

cumbersome and no longer aligns with 

the virtual environment in which the 

industry operates. Additionally, the 

requirement is somewhat redundant as 

branch offices will still need to be 

licensed by the state according to the 

Secure and Fair Enforcement for 

Mortgage Licensing Act of 2008 (12 

U.S.C. 5101, et seq.) (SAFE Act). The 

rule may reduce administrative burden 

for existing lenders and mortgagees and 

eliminate barriers for entities interested 

in FHA programs. 

Revising fee applicability to only 

branch offices registered with HUD will 

decrease costs. 

One commenter stated that altering 

fee applicability to apply to only branch 

offices registered with HUD will lower 

lenders’ overhead costs and maintain 

low FHA origination costs. 

HUD Response: HUD agrees that the 

rule should reduce overhead costs of 

participating in FHA programs. The rule 

may also incentivize small size lenders, 

mortgagees, banks, and credit unions to 

offer FHA programs in branch offices in 

which they did not previously register 

with HUD. Expanding the availability of 

FHA programs to underserved urban 

and rural communities may provide 

homeowners with better access to FHAinsured mortgages and loans. 

Eliminating this requirement will 

benefit homeowners by increasing 

access to FHA-insured products. 

A commenter noted that the rule will 

likely increase the number of banks and 

credit unions participating in FHA 

programs and improve access for 

homeowners to FHA-insured mortgage 

products. 

HUD Response: HUD agrees that 

removing the requirement to register 

branch offices with HUD will provide 

lenders and mortgagees greater 

flexibility and removes a burdensome 

administrative and financial burden 

when participating in FHA programs. 

As branch offices are subject to state 

licensing, HUD’s current requirement 

for branch office registration is 

unnecessary. 

One commenter said that under the 

Secure and Fair Enforcement of 

Mortgage Licensing Act of 2008 (SAFE 

Act), branch offices are still subject to 

state licensing, so HUD’s branch office 

registration requirement is unnecessary 

and removing the requirement will not 

affect HUD’s monitoring of mortgagees. 

HUD Response: HUD agrees and is 

revising its branch registration 

requirements because all lenders and 

mortgagees must comply with state 

licensing and approval requirements. 

Further, lenders and mortgagees can 

only exercise the authority to conduct 

FHA business from those branch office 

locations in which they fully comply 

with state licensing and approval 

requirements for origination, 

underwriting and/or servicing. 

Therefore, the current requirement to 

also register branch offices with HUD 

has become redundant. Removing the 

branch office registration requirement 

will not affect HUD’s monitoring. HUD 

can monitor lenders and mortgagees 

even without the specific branch office 

identification, and lenders and 

mortgagees will still remain responsible 

to FHA for the actions of its branch 

offices and employees. 

Self-regulation by lenders will prevent 

unregistered branch offices from 

becoming non-compliant with 

applicable laws. 

A commenter stated that branch 

offices will still be overseen by ‘‘home’’ 

offices motivated by licensing 

requirements and business reputation to 

ensure branch offices remain compliant. 

The commenter also stated that a 

lender’s compliance could still be 

enforced through the audit process and, 

as lenders regularly submit loan files to 

FHA, any later attempts by these lenders 

to alter records will alert regulators of 

non-compliance. 

HUD Response: HUD agrees and notes 

that while it will continue to maintain 

oversight and risk management of 

lenders and mortgagees, it is the 

responsibility of each lender and 

mortgagee to ensure compliance with all 

FHA program requirements. Each lender 

and mortgagee is responsible for the 

actions of its staff that participate in 

FHA transactions. Each lender and 

mortgagee must continue to maintain 

effective internal controls and execute 

risk and control procedures on a day-today basis. Further, HUD has existing 

processes and procedures for 


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7276 Federal Register / Vol. 89, No. 23 / Friday, February 2, 2024 / Rules and Regulations 

enforcement activities to address 

noncompliance. 

FHA lenders will continue to be 

monitored by HUD’s Office of Lender 

Activities and Program Compliance— 

Quality Assurance Division. 

One commenter stated that the rule 

states that FHA lenders will continue to 

be monitored by HUD’s Office of Lender 

Activities and Program Compliance— 

Quality Assurance Division. The 

commenter stated that, as a result, HUD 

will still review the level of early 

defaults and claims on mortgages 

originated from each lender or 

mortgagee in a HUD field office’s 

geographic area. The commenter stated 

lenders and mortgagees with excessive 

rates of early default and claims could 

then have their authority terminated by 

FHA. 

HUD Response: The rule does not 

affect HUD’s monitoring of lenders and 

mortgagees. Further HUD’s Office of 

Lender Activities and Program 

Compliance—Quality Assurance 

Division will continue to monitor FHA 

mortgagees quarterly to determine 

whether Credit Watch Termination is 

warranted. 

Opposition to the Rule 

Some commenters opposed this rule 

without providing a basis for their 

opposition. 

HUD Response: HUD is unable to 

address commenters’ opposition to the 

rule, as they did not provide specific 

reasons for their opposition. 

Concerns With the Rule 

There is a potential for lenders to 

become lax in complying with 

applicable regulations if branch offices 

are not registered. 

One commenter said that while they 

welcome the rule, it could result in 

lenders becoming less compliant if 

branch offices are not registered with 

HUD. The commenter stated that if 

offices were no longer subject to branch 

inspections, lenders will be less likely 

to hold branch office employees 

accountable. 

HUD Response: HUD appreciates this 

comment and the concern raised. 

However, as stated previously in this 

preamble, each lender and mortgagee 

has, and will continue to have, the 

responsibility to manage its risk, to 

comply with regulations and standards, 

and to carry out its defined risk 

management processes. HUD will 

continue its proactive monitoring of the 

performance for lenders and mortgagees. 

Further, HUD has existing processes and 

procedures for enforcement activities to 

address noncompliance. 

There should be limitations on what 

an unregistered branch office can and 

cannot do. 

One commenter expressed concern 

with reduced compliance by 

unregistered branch offices and 

suggested imposing limitations on what 

an unregistered branch office can and 

cannot do. 

HUD Response: HUD does not agree 

that a bifurcation between the permitted 

activities for registered and unregistered 

branch offices is necessary. Each lender 

and mortgagee has been, and will 

continue to be, responsible for the 

actions of its staff that participate in 

FHA transactions. Further lenders and 

mortgagees must continue to exercise 

control over the management and 

supervision of such staff, which must 

include regular and ongoing reviews of 

staff performance and of the work 

performed. Performance monitoring will 

include FHA activity from both 

registered and unregistered branch 

offices. Further, HUD currently has 

existing processes and procedures for 

enforcement activities to address 

noncompliance. 

Questions about HUD’s current 

practices and implementation of the 

rule. 

One commenter questioned ‘‘if 

eliminating the requirement that lenders 

register all branch offices conducting 

FHA business will affect reporting 

Neighborhood Watch/Compare Ratio 

Data by branch office and, if so, if it will 

skew the data by excessively expanding 

the dataset to larger geographic 

parameters results?’’ The commenter 

stated concerns about how FHA will 

record branch level data without 

individual branch office registration. 

Another commenter had various 

questions regarding HUD’s current 

practices and implementation of the 

proposed rule including: ‘‘1. [d]oes HUD 

currently monitor excessive rates of 

early defaults and claims based on the 

branch ID or mortgages originated 

within the geographic area served by a 

HUD field office?’’ ‘‘2. If HUD monitors 

based on the geographic area served by 

a HUD field office, and FHA terminates 

the lender’s authority, does that 

termination apply to the entire 

geographic area served by a HUD field 

office, regardless of how many branches 

serve that area, or just the branch with 

the excessive rate of early defaults and 

claims in that geographic area?’’ ‘‘3. If 

HUD monitors based on excessive rate 

of early defaults and claims by branch 

ID, what would happen if an institution 

only had one branch registered under 

the proposed rule?’’ ‘‘Would the entire 

institution be terminated, or would the 

institution be terminated in that specific 

geographic area where an excessive rate 

of early defaults and claims occurred?’’ 

‘‘4. If a lender chooses to have multiple 

branch IDs, would HUD require the 

registered branch manager to be 

physically located somewhere within 

the geographic area served by a HUD 

field office based on the branch’s 

physical address?’’ ‘‘5. If so, what would 

HUD’s expectation be for those call 

center branches where the employees 

work remotely?’’ ‘‘In that instance, 

would the required office address be the 

home office?’’ ‘‘Would HUD permit a 

branch manager to be listed under 

multiple lender branch IDs (for the same 

lender) or would the need for a branch 

manager be removed altogether, 

permitting a lender ‘‘manager’’ assigned 

by lender ID?’’ 

HUD Response: Once the rule 

becomes effective, FHA branch 

registration will become optional. 

Mortgagees that elect to register branch 

offices will still be able to access 

branch-level data in Neighborhood 

Watch, including Compare Ratios for 

registered branches. For mortgagees that 

discontinue branch office registration or 

that never had a business model that 

included local or regional branch 

offices, Neighborhood Watch provides a 

variety of geographic parameters 

independent of branch IDs. Most FHA 

monitoring processes already focus on 

mortgagee-level data based on a variety 

of geographic areas. For example, FHA’s 

current Credit Watch Termination 

process focuses on properties 

underwritten by each Direct 

Endorsement Mortgagee in a particular 

HUD field office jurisdiction, regardless 

of the originating branch. FHA expects 

mortgagees to conduct similar analysis, 

and to continue tracking the 

performance of specific branches using 

their own data if necessary. 

HUD currently monitors excessive 

rates of early defaults and claims based 

on mortgages originated/underwritten 

within the geographic area served by a 

HUD field office. When FHA terminates 

a mortgagee’s authority through the 

Credit Watch Termination process, that 

termination applies to the entire 

geographic area served by the HUD field 

office, regardless of how many branches 

serve that area. 

Currently, HUD defines a branch 

manager as an onsite manager for a 

branch office who manages one branch 

office. HUD defines a regional manager 

as a manager who oversees the 

operation of multiple branch offices. 

Each lender and mortgagee must have a 

branch and/or regional manager to 

oversee each of its branch offices. 

Furthermore, each lender and mortgagee 

must ensure that it and its employees 


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Federal Register / Vol. 89, No. 23 / Friday, February 2, 2024 / Rules and Regulations 7277 

comply with the requirements of the 

SAFE Act, including the licensing and 

registration of its employees in the 

Nationwide Mortgage Licensing System 

(NMLS). 

III. Findings and Certifications 

Regulatory Review—Executive Orders 

12866, 13563, and 14094 

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. Executive Order 

14094 entitled ‘‘Modernizing Regulatory 

Review’’ (hereinafter referred to as the 

‘‘Modernizing E.O.’’) amends section 

3(f) of Executive Order 12866 

(Regulatory Planning and Review), 

among other things. 

The final rule will revise 24 CFR 

202.5 (i) and (k) to update HUD’s 

regulation to conform with the mortgage 

industry’s evolving business practices. 

Additionally, the rule will lessen the 

administrative burden on lenders and 

mortgagees. This rule was determined 

not to be a ‘‘significant regulatory 

action’’ as defined in section 3(f) of 

Executive Order 12866 as amended by 

Executive Order 14094 and is not an 

economically significant regulatory 

action and therefore was not subject to 

OMB review. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4; 

approved March 22, 1995) (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 final rule does not impose 

any Federal mandates on any state, 

local, or tribal government, or on the 

private sector, within the meaning of the 

UMRA. 

Environmental Review 

This final rule does not direct, 

provide for assistance or loan and 

mortgage insurance for, or otherwise 

govern or regulate real property 

acquisition, disposition, leasing, 

rehabilitation, alteration, demolition, or 

new construction, or establish, revise, or 

provide for standards for construction or 

construction materials, manufactured 

housing, or occupancy. Accordingly, 

under 24 CFR 50.19(c)(1), this rule is 

categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321). 

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. The rule will 

remove the requirement that lenders 

and mortgagees register with HUD each 

branch office where they conduct FHA 

business. This will not create an undue 

burden on small entities, instead it will 

eliminate the burden for all lenders and 

mortgagees of having to register branch 

offices with HUD and pay the associated 

fees. HUD has determined that this rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

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 will not impose 

substantial direct compliance costs on 

state and local governments or preempt 

state law within the meaning of the 

Executive Order. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520), 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 Office of Management 

and Budget (OMB) control number. The 

information collection requirements 

contained in this final rule have been 

approved by OMB under the Paperwork 

Reduction Act and assigned OMB 

control number 2502–0059. 

List of Subjects in 24 CFR Part 202 

Administrative practice and 

procedure, Home improvement, 

Manufactured homes, Mortgage 

insurance, Reporting, and recordkeeping 

requirements. 

Accordingly, for the reasons stated in 

the preamble above, HUD amends 24 

CFR part 202 as follows: 

PART 202—APPROVAL OF LENDING 

INSTITUTIONS AND MORTGAGEES 

■ 1. The authority citation for part 202 

continues to read as follows: 

Authority: 12 U.S.C. 1703, 1709 and 

1715b; 42 U.S.C. 3535(d). 

§ 202.5 [Amended] 

■ 2. Amend § 202.5 by: 

■ a. In paragraph (i) removing 

‘‘authorized to originate Title I loans or 

submit applications for mortgage 

insurance’’ and adding in its place ‘‘that 

the lender or mortgagee registers with 

the Department’’; 

■ b. In paragraph (k), adding ‘‘or 

mortgagee’’ after ‘‘A lender’’ in the first 

sentence of paragraph (k), and removing 

the second sentence. 

Julia R. Gordon, 

Assistant Secretary of Office of Housing— 

Federal Housing Administration. 

[FR Doc. 2024–02023 Filed 2–1–24; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF JUSTICE 

28 CFR Parts 0 and 27 

[Docket No. JMD 154; AG Order No. 5872– 

2024] 

RIN 1105–AB47 

Whistleblower Protection for Federal 

Bureau of Investigation Employees 

AGENCY: Department of Justice. 

ACTION: Final rule. 

SUMMARY: This rule updates the 

Department of Justice (‘‘Department’’) 

regulations on the protection of 

whistleblowers in the Federal Bureau of 

Investigation (‘‘FBI’’). This update 

reflects changes resulting from an 

assessment conducted by the 

Department in response to Presidential 

Policy Directive–19 of October 10, 2012, 

‘‘Protecting Whistleblowers with Access 

to Classified Information’’ (‘‘PPD–19’’), 

and the Federal Bureau of Investigation 

Whistleblower Protection Enhancement 

Act of 2016 (‘‘FBI WPEA of 2016’’). This 


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