Federal Register / Vol. 87, No. 63 / Friday, April 1, 2022 / Proposed Rules 19037 

Transportation (DOT) Regulatory 

Policies and Procedures (44 FR 11034; 

February 26, 1979); and (3) does not 

warrant preparation of a regulatory 

evaluation as the anticipated impact is 

so minimal. Since this is a routine 

matter that will only affect air traffic 

procedures and air navigation, it is 

certified that this proposed rule, when 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities under the 

criteria of the Regulatory Flexibility Act. 

Environmental Review 

This proposal will be subject to an 

environmental analysis in accordance 

with FAA Order 1050.1F, 

‘‘Environmental Impacts: Policies and 

Procedures’’ prior to any FAA final 

regulatory action. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Proposed Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

proposes to amend 14 CFR part 71 as 

follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for 14 CFR 

part 71 continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order JO 7400.11F, 

Airspace Designations and Reporting 

Points, dated August 10, 2021, and 

effective September 15, 2021, is 

amended as follows: 

Paragraph 6009(d) Colored Federal Airways 

* * * * * 

B–8 [Remove] 

* * * * * 

Issued in Washington, DC, on March 28, 

2022. 

Scott M. Rosenbloom, 

Manager, Airspace Rules and Regulations. 

[FR Doc. 2022–06816 Filed 3–31–22; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 203 

[Docket No. FR–6263–P–01] 

RIN 2502–AJ59 

Increased Forty-Year Term for Loan 

Modifications 

AGENCY: Office of Housing, HUD. 

ACTION: Proposed rule. 

SUMMARY: HUD’s current regulations 

allow mortgagees to modify a Federal 

Housing Administration (FHA) insured 

mortgage by recasting the total unpaid 

loan for a term limited to 360 months 

to cure a borrower’s default. This 

proposed rule would amend HUD’s 

current regulation to allow for 

mortgagees to recast the total unpaid 

loan for a new term limit of 480 months. 

Increasing the maximum term limit to 

480 months would allow mortgagees to 

further reduce the borrower’s monthly 

payment as the outstanding balance 

would be spread over a longer time 

frame, providing more borrowers with 

FHA-insured mortgages the ability to 

retain their homes after default. This 

change would also align FHA with 

modifications available to borrowers 

with mortgages backed by the Federal 

National Mortgage Association (Fannie 

Mae) and the Federal Home Loan 

Mortgage Corporation (Freddie Mac), 

which both currently provide a 40-year 

loan modification option. 

DATES: Comment Due Date: May 31, 

2022. 

ADDRESSES: HUD invites interested 

persons to submit comments to the 

Office of the General Counsel, 

Regulations Division, Department of 

Housing and Urban Development, 451 

7th Street SW, Room 10276, 

Washington, DC 20410–0500. 

Communications should refer to the 

above docket number and title and 

should contain the information 

specified in the ‘‘Request for 

Comments’’ section. There are two 

methods for submitting public 

comments. 

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, HUD 

recommends that comments be mailed 

at least two weeks in advance of the 

public comment deadline. 

2. Electronic Submission of 

Comments. Comments may also be 

submitted electronically through the 

Federal eRulemaking Portal at http://

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 comments immediately available 

to the public. Comments submitted 

electronically through the website can 

be viewed by other commenters and 

interested members of the public. 

Commenters should follow instructions 

provided on that site to submit 

comments electronically. 

Note: To receive consideration as public 

comments, comments must be submitted 

using one of the two methods specified 

above. Again, all submissions must refer to 

the docket number and title of the notice. 

No Facsimile Comments. Facsimile 

(fax) comments are not acceptable. 

Public Inspection of Comments. All 

comments and communications 

submitted to HUD will be available for 

public inspection and copying between 

8 a.m. and 5 p.m. weekdays at the above 

address. Due to security measures at 

HUD Headquarters, an advance 

appointment to review the public 

comments must be scheduled by calling 

the Regulations Division at 202–708– 

3055. This is not a toll-free number. 

Copies of all comments submitted are 

available for inspection and 

downloading at http://

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Elissa Saunders, Department of Housing 

and Urban Development, 451 7th Street 

SW, Suite 9278, Washington, DC 20410– 

4000; telephone number 202–708–2121 

(this is not a toll-free number). Persons 

with hearing or speech impairments 

may contact the numbers above via TTY 

by calling the Relay Service at 800–877– 

8339 (this is a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Federal Housing Administration 

(FHA) was established by Congress in 

1934 to improve nationwide housing 

standards, to provide employment and 

stimulate industry, to improve 

conditions with respect to home 

mortgage financing, to prevent 

speculative excesses in new mortgage 

investment, and to eliminate the 

necessity for costly second mortgage 


lotter on DSK11XQN23PROD with PROPOSALS1
19038 Federal Register / Vol. 87, No. 63 / Friday, April 1, 2022 / Proposed Rules 

1 12 U.S.C. 1701 et seq. 

2 24 CFR 203.501. 

3 12 U.S.C. 1715u. 

4 24 CFR 203.616. 

5 It is also worth noting that, per its recent press 

release, Ginnie Mae is now permitting the pooling 

of 40-year mortgages for the purposes of providing 

FHA loan modifications with lower payments to 

help keep borrowers in their homes. Ginnie Mae’s 

mortgage-backed securities include the requirement 

that loans must be 90 or more days delinquent or 

have successfully completed a trial payment plan 

before they can be bought out of a Ginnie Mae pool. 

6See D2–3.2–07: Fannie Mae Flex Modification 

(09/09/2020), available at: https://servicingguide.fanniemae.com/THE-SERVICING-GUIDE/ 

Part-D-Providing-Solutions-to-a-Borrower/SubpartD2-Assisting-a-Borrower-Who-is-Facing-Default-or/ 

Chapter-D2-3-Fannie-Mae-s-Home-Retention-andLiquidation/Section-D2-3-2-Home-RetentionWorkout-Options/D2-3-2-07-Fannie-Mae-FlexModification/1042575201/D2-3-2-07-Fannie-MaeFlex-Modification-09-09-2020.htm; Freddie Mac 

Flex Modification Reference Guide, March 2021, 

available at: https://sf.freddiemac.com/content/_

assets/resources/pdf/other/flex_mod_ref_guide.pdf. 

7For more information, see 7 CFR 3555.304. 

financing.1 HUD’s regulations for Title II 

FHA single family forward mortgage 

insurance are codified in 24 CFR part 

203. These regulations address 

mortgagee eligibility requirements and 

underwriting procedures, contract rights 

and obligations, and the mortgagee’s 

servicing obligations. These regulations 

also address a mortgagee’s obligations to 

offer loss mitigation options when a 

mortgagor defaults on a loan, as 

provided in 24 CFR 203.501. 

Mortgagees are required to consider 

utilizing deeds in lieu of foreclosure, 

pre-foreclosure sales, partial claims, 

assumptions, special forbearance, and 

recasting of mortgages.2 In 1996, the 

Balanced Budget Downpayment Act, I 

(Pub. L. 104–99, approved January 26, 

1996) amended sections 204 and 230 of 

the National Housing Act to provide 

that HUD may pay insurance benefits to 

a mortgagee to recompense the 

mortgagee for its actions to provide an 

alternative to the foreclosure of a 

mortgage that is in default. These 

actions may include special forbearance, 

loan modification, and/or deeds in lieu 

of foreclosure, all upon terms and 

conditions as the mortgagee shall 

determine in the mortgagee’s sole 

discretion, within guidelines provided 

by HUD.3 In response, HUD 

promulgated an interim final rule (61 FR 

35014, July 3, 1996), followed by a final 

rule (62 FR 60124, November 6, 1997) 

adding loss mitigation options to 24 

CFR part 203. One of these options 

allows mortgagees to modify a mortgage 

for the purpose of changing the 

amortization provisions and recasting 

the total unpaid amount due for a term 

not exceeding 360 months from the date 

of the modification.4

II. This Proposed Rule 

HUD proposes to amend 24 CFR 

203.616, which allows a mortgagee to 

modify a mortgage for the purpose of 

changing the amortization provisions by 

recasting the total unpaid amount due 

for a new term, by replacing the current 

maximum of 360 months with a new 

maximum of 480 months. 

Allowing mortgagees to provide a 40- 

year loan modification would support 

HUD’s mission of fostering 

homeownership by assisting more 

borrowers with retaining their homes 

after a default episode while mitigating 

losses to FHA’s Mutual Mortgage 

Insurance (MMI) Fund. HUD believes 

there are situations in which a 

mortgagee seeks to engage in loss 

mitigation but is unable to provide loss 

mitigation to a degree sufficient to 

prevent default. In such cases, an 

additional 120 months on the length of 

the recast mortgage would allow for a 

lower, more sustainable monthly 

payment. 

Many borrowers who have become 

delinquent would have difficulty 

making payments at the monthly rate of 

their mortgage before default. Therefore, 

a lower monthly payment is a key 

element to bring the mortgage current, 

prevent imminent re-default, and 

ultimately retain their home and 

continue to build wealth through 

homeownership. HUD anticipates that a 

40-year loan modification as part of loss 

mitigation could decrease a borrower’s 

monthly principal and interest payment 

by a meaningful amount sufficient to 

prevent several thousand borrowers a 

year from foreclosure by increasing a 

borrower’s ability to afford the modified 

payment. Given the large number of 

FHA-insured mortgages that have been 

originated or refinanced in the past few 

years in a historically low interest rate 

environment, simply extending out the 

term of a mortgage in default for another 

30 years at a similar interest rate would 

not provide a substantial reduction to a 

borrower’s monthly mortgage payment. 

Additionally, borrowers impacted by 

the COVID–19 pandemic, including 

those who may re-default in the future 

after having received a loss mitigation 

option under COVID–19 policies, may 

need a 40-year loan modification to 

obtain affordable monthly payments 

that would allow them to stay in their 

homes. This would also reduce losses to 

the MMI Fund as fewer properties 

would be sold at a loss in foreclosure or 

out of FHA’s real estate-owned (REO) 

inventory.5

All else held equal, borrowers who 

choose a 40-year loan modification 

would be subject to slower equity 

accumulation and additional interest 

payments over the course of the 

modified mortgage relative to a 30-year 

loan modification. However, to the 

extent a 40-year modification helps 

borrowers avoid foreclosure, the slower 

equity accumulation and additional 

interest would be greatly outweighed by 

the benefits of being able to retain their 

homes. Moreover, a borrower is not 

obligated to carry the loan for 40 years. 

FHA data indicates that the average life 

of a 30-year FHA-insured mortgage is 

approximately seven years, although it 

is possible that prepayment behavior 

could be different with a longer-term 

loan. 

The 40-year mortgage remains rare but 

has become more commonly recognized 

in the mortgage industry. The 

Government Sponsored Enterprises 

(GSEs), Fannie Mae and Freddie Mac, 

both allow for 40-year mortgage loan 

modifications.6 The National Credit 

Union Association also allows for 40- 

year mortgages and a federal credit 

union may set the maturity date for 

modified or refinanced mortgages 

beyond the regulatory 40-year maturity 

limit as long as the terms of the original 

loan were no more than 40 years. The 

U.S. Department of Agriculture allows 

for loan modification up to 40 years 

where certain conditions are met above 

the requirements for a 30-year loan 

modification.7 By allowing 40-year loan 

modifications, HUD would align with 

the GSEs, NCUA, and USDA and ensure 

that FHA borrowers receive comparable 

opportunities for home retention. 

III. Findings and Certifications 

Regulatory Review—Executive Orders 

12866 and 13563 

Pursuant to 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 Regulations 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. 


lotter on DSK11XQN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 63 / Friday, April 1, 2022 / Proposed Rules 19039 

This proposed rule was determined to 

be a ‘‘significant regulatory action’’ 

because it is likely to have an annual 

effect on the economy of $100 million 

or more. This proposed rule would 

increase available loss mitigation 

options for borrowers and enable more 

borrowers to avoid foreclosure and 

remain in their homes. HUD also 

anticipates that this would have a 

positive effect on the FHA MMI Fund by 

lowering defaults. The docket file is 

available for public inspection on http:// 

www.regulations.gov and 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 Regulations 

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 Relay Service at 800–877–8339 (this 

is a toll-free 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. The change of 

this proposed rule would be limited to 

requiring mortgagees to consider and, 

where appropriate, utilize an extended 

term limit. Mortgagees are already 

required to consider mortgage 

modification so this change should not 

have an economic impact on 

mortgagees. If there is an economic 

effect on mortgagees, it would fall 

equally on all mortgagees. Further, HUD 

anticipates that allowing an additional 

loss mitigation tool would have a net 

positive economic impact on mortgagees 

by decreasing the number of defaults 

and therefore the costs associated with 

those defaults. 

Accordingly, the undersigned certifies 

that the proposed rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Notwithstanding HUD’s determination 

that this rule will not have a significant 

effect on a substantial number of small 

entities, HUD specifically invites 

comments regarding any less 

burdensome alternatives to this rule that 

will meet HUD’s objectives as described 

in the preamble to this rule. 

Environmental Impact 

A Finding of No Significant Impact 

(FONSI) with respect to the 

environment was made at the proposed 

rule stage, 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 

remains applicable to this final rule and 

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, Department 

of Housing and Urban Development, 

451 Seventh Street SW, Room 10276, 

Washington, DC 20410. Due to security 

measures at the HUD Headquarters 

building, please schedule an 

appointment to review the FONSI by 

calling the Regulations Division at (202) 

708–3055 (this is not a toll-free 

number). Individuals with speech or 

hearing impairments may access this 

number via TTY by calling the Federal 

Relay Service at (800) 877–8339. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either: (i) 

Imposes substantial direct compliance 

costs on state and local governments 

and is not required by statute, or (ii) 

preempts state law, unless the agency 

meets the consultation and funding 

requirements of section 6 of the 

Executive Order. This proposed rule 

does not have federalism implications 

and does 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 proposed rule 

would not impose any federal mandates 

on any state, local, or tribal 

governments, or on the private sector, 

within the meaning of the UMRA. 

List of Subjects in 24 CFR Part 203 

Hawaiian Natives, Home 

improvement, Indians-lands, Loan 

programs-housing and community 

development, Mortgage insurance, 

Reporting and recordkeeping 

requirements, and Solar energy. 

For the reasons discussed in the 

preamble, HUD proposes to amend 24 

CFR part 203 as follows: 

PART 203—SINGLE FAMILY 

MORTGAGE INSURANCE 

■ 1. The authority for 24 CFR part 203 

continues to read as follows: 

Authority: 12 U.S.C. 1707, 1709, 1710, 

1715b, 1715z–16, 1715u, and 1715z–21; 15 

U.S.C. 1639c; 42 U.S.C. 3535(d). 

§ 203.616 [Amended] 

■ 2. Amend § 203.616 by removing the 

number ‘‘360’’ and adding in its place, 

the number ‘‘480’’. 

Lopa P. Kolluri, 

Principal Deputy Assistant Secretary, Office 

of Housing-Federal Housing Administration. 

[FR Doc. 2022–06875 Filed 3–31–22; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2022–0163] 

RIN 1625–AA00 

Safety Zone; Tall Ships Challenge 

Great Lakes 2022; Erie, PA, Cleveland, 

OH, and Two Harbors, MN 

AGENCY: Coast Guard, Homeland 

Security (DHS). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

create safety zones around each tall ship 

visiting the Great Lakes during the Tall 

Ships Challenge 2022 race series. These 

safety zones will provide for the 

regulation of vessel traffic in the vicinity 

of each tall ship in the navigable waters 

of the United States. The Coast Guard is 

taking this action to safeguard 

participants and spectators from the 

hazards associated with the limited 

maneuverability of these tall ships and 

to ensure public safety during tall ships 

events. We invite your comments on 

this proposed rulemaking. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or May 2, 2022. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2022–0163 using the Federal 

eRulemaking Portal at https://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 


lotter on DSK11XQN23PROD with PROPOSALS1