[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Proposed Rules]
[Pages 26702-26704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12615]



[[Page 26701]]

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Part IV





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Parts 200 and 207



Electronic Submission of Required Data by Multifamily Mortgagees to 
Report Mortgage Delinquencies, Defaults, Reinstatements, Assignment 
Elections, and Withdrawals of Assignment Elections; Proposed Rule

Federal Register / Vol. 63, No. 92 / Wednesday, May 13, 1998 / 
Proposed Rules

[[Page 26702]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 200 and 207

[Docket No. FR-4303-P-01]
RIN 2502-AH11


Electronic Submission of Required Data by Multifamily Mortgagees 
to Report Mortgage Delinquencies, Defaults, Reinstatements, Assignment 
Elections, and Withdrawals of Assignment Elections

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Proposed rule; Notice of proposed information collection 
requirements.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would require mortgagees that hold or 
service multifamily mortgages insured by HUD to submit certain data 
electronically to HUD in a HUD prescribed format. Electronic submission 
is necessary because the manual submission of HUD forms has become a 
burden to servicing mortgagees, as well as to HUD. This proposed rule 
would apply to all multifamily mortgagees in their responsibility to 
report mortgage delinquencies, mortgage defaults, mortgage 
reinstatements, elections to assign mortgages to HUD, and withdrawal of 
assignment elections.

DATES: Comment due date: July 13, 1998.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of the General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410. Communications should refer 
to the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each comment submitted will be available for 
public inspection and copying during regular business hours (7:30 a.m. 
to 5:30 p.m.) eastern time at the above address.

FOR FURTHER INFORMATION CONTACT: Willie Spearmon, Director, Office of 
Business Products, Room 6134, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410, telephone 
(202) 708-3000 (this is not a toll-free number). Individuals with 
hearing or speech impairments may access this number via TTY by calling 
the Federal Information Relay Service at (800) 877-8339 (this is a 
toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background

    HUD obtains data regarding the status of delinquent insured 
mortgage loans on multifamily projects by using Form HUD-92426, 
Multifamily Default Status Report. HUD needs the information submitted 
on the form in order to monitor mortgage loans for which the mortgagees 
are experiencing payment or other difficulties. In accordance with the 
requirements of 24 CFR part 207, the mortgagee must prepare and sign 
this form under the specified circumstances and mail it to HUD. When 
HUD receives the form, it must sign it and return it to the mortgagee 
to acknowledge receipt of the form.
    To replace this burdensome paperwork process, HUD has developed a 
method for mortgagees to submit the data currently collected on Form 
HUD-92426, as well as to report the date of the mortgagees' last 
physical inspection of the project, using the Internet. According to 
this new method, the mortgagee will electronically submit the required 
data to HUD, after which an electronic receipt will automatically be 
returned. HUD will provide, at no cost to mortgagees, ``stand alone'' 
software and technical support for that software, which is designed to 
run on IBM-compatible personal computers (PCs). Mortgagees will, 
however, need to provide their own PCs and Internet connections. 
Mortgagees that do not choose to initiate Internet access for 
themselves may contract with another entity or individual to act on 
their behalf to report the data electronically; HUD believes that this 
is not likely to be necessary in most cases.
    One of HUD's primary concerns is the costs mortgagees may incur in 
establishing Internet access if they have not already done so. For this 
reason, HUD has decided to allow for a staggered implementation of this 
rulemaking, under which smaller mortgagees would be given more time to 
comply with the new electronic reporting requirements. HUD believes, 
however, that electronic tracking of the default and reinstatement data 
generally will reduce costs for mortgagees. HUD has field-tested 
electronic submission of this data on a voluntary pilot basis with a 
number of mortgagees, and has received generally favorable responses.
    While HUD hopes to begin implementing the electronic reporting 
requirements in this rule in July 1998, HUD encourages mortgagees to 
comply with these requirements voluntarily to the extent possible, in 
order for the mortgagees and HUD to realize an early advantage of cost 
savings.

II. This Proposed Rule

    This document proposes to amend the regulations in 24 CFR parts 200 
and 207 related to multifamily housing mortgage insurance, in order to 
require mortgagees with insured multifamily mortgage loans to submit 
information reporting mortgage delinquencies, defaults, reinstatements, 
assignment elections, and withdrawals of assignment elections 
electronically, rather than in writing on Form HUD-92426. Specifically, 
this document proposes to amend the regulations as follows:
    (1) This proposed rule would add a new subpart B to part 200, 
entitled ``Electronic Submission of Required Data for Mortgage Defaults 
and Mortgage Insurance Claims for Insured Multifamily Mortgages.'' This 
new subpart B would require multifamily mortgagees to submit the data 
electronically, and it would provide the staggered schedule of 
effectiveness. As mentioned above, HUD would allow smaller mortgagees 
(i.e., those with fewer insured mortgage loans) more time to comply 
with the electronic submission requirements. This new subpart would 
also provide for an exception to the electronic submission 
requirements, subject to HUD approval, for very small mortgagees for 
which compliance would represent a financial hardship.
    (2) This document also proposes several conforming changes to the 
current requirements in part 207. In Sec. 207.256, which requires 
mortgagees to notify HUD of defaults, this document proposes to require 
mortgagees to notify HUD in the manner prescribed in the new subpart B 
of part 200, rather than in writing. This document would similarly 
amend Sec. 207.256a, which requires mortgagees to notify HUD if a 
mortgage loan is reinstated, and Sec. 207.258, which requires 
mortgagees to notify HUD if they elect to assign a mortgage to HUD or 
to acquire a property and convey title to HUD.

III. Other Matters

A. Paperwork Burden

    The information collection requirements contained in this proposed 
rule have been submitted to the Office of Management and Budget (OMB) 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520).
    In accordance with 5 CFR 1320.5(a)(1)(iv), HUD is setting forth the 
following concerning the proposed collection of information:

[[Page 26703]]



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                                                 Number of       Total annual     Minutes per                   
                 Description                    respondents        response         response       Total  hours 
----------------------------------------------------------------------------------------------------------------
Electronic transfer of information..........             420             2000               10              333 
----------------------------------------------------------------------------------------------------------------

    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposed rule. Comments 
must be received within 60 days of the date of this proposal. Comments 
must refer to the proposed rule by name and docket number (FR 4303), 
and must be sent to Joseph F. Lackey, Jr., HUD Desk Officer, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503.

B. Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this proposed rule before publication and 
by approving it certifies that this proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
The electronic submission requirements in this proposed rule should 
reduce burden and costs for all mortgagees. As stated above, HUD will 
also reduce the burden on mortgagees by providing the software and 
technical support necessary to facilitate the electronic submission 
requirements. Therefore, HUD has determined that this proposed rule 
would not have a significant economic impact on a substantial number of 
small entities. Notwithstanding this determination, HUD specifically 
invites comments regarding alternatives to this proposed rule that will 
meet HUD's objectives as described in this preamble.

C. Environmental Impact

    This proposed rule is categorically excluded from environmental 
review under the National Environmental Policy Act (42 U.S.C. 4321). 
The proposed addition to part 200 of a new subpart B falls within the 
exclusion provided by 24 CFR 50.19(c)(1), in that it 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. The 
proposed amendments to part 207 are categorically excluded under 24 CFR 
50.19(c)(2), because they amend an existing document, and the existing 
document as a whole would not fall within the exclusion in 24 CFR 
50.19(c)(1), but the amendments by themselves would.

D. Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this proposed rule would not have substantial direct 
effects on States or their political subdivisions, on the relationship 
between the Federal Government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
This proposed rule relates only to the manner in which mortgagees 
submit required information to HUD, and it would not affect the 
federalism concerns addressed in the Order. As a result, this proposed 
rule is not subject to review under the Order.

E. 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 rule 
would not impose any Federal mandates on any State, local, or tribal 
government, or on the private sector, within the meaning of the UMRA.

F. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number is 14.155.

List of Subjects

24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Home improvement, Housing standards, Lead 
poisoning, Loan programs--housing and community development, Minimum 
property standards, Mortgage insurance, Organization and functions 
(Government agencies), Penalties, Reporting and recordkeeping 
requirements, Social security, Unemployment compensation, Wages.

24 CFR Part 207

    Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements, Solar energy.

    Accordingly, 24 CFR Chapter II is proposed to be amended as 
follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

    1. The authority citation for 24 CFR part 200 continues to read as 
follows:

    Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).

    2. In part 200, a new subpart B, consisting of Secs. 200.120 
through 200.121, is added to read as follows:

Subpart B--Electronic Submission of Required Data for Mortgage 
Defaults and Mortgage Insurance Claims for Insured Multifamily 
Mortgages

Sec.
200.120  Purpose and applicability.
200.121  Requirements and effectiveness.


Sec. 200.120  Purpose and applicability.

    (a) Purpose. The purpose of this subpart B is to require mortgagees 
of all multifamily projects whose mortgages are insured or coinsured by 
HUD to submit electronically information regarding mortgage 
delinquencies, defaults, reinstatements, elections to assign, and 
withdrawals of assignment elections, and related information, as that 
information is required by 24 CFR part 207 and Form HUD-92426 (which is 
available at the Department of Housing and Urban Development, HUD 
Custom Service Center, 451 7th Street, SW, Room B-100, Washington, DC 
20410; telephone (800) 767-7465).
    (b) Applicability. This subpart applies to all HUD multifamily 
mortgage insurance and coinsurance programs.


Sec. 200.121  Requirements and effectiveness.

    (a) Multifamily mortgagees, which are required by 24 CFR part 207 
to report mortgage delinquencies, defaults, reinstatements, assignment 
elections, withdrawals of assignment elections, and related 
information, must submit this information electronically, over the 
Internet, in accordance with the following schedule of effectiveness:
    (1) Mortgagees having 70 or more insured mortgage loans must comply 
with this section by no later than January 1, 1999;
    (2) Mortgagees having from 26 to 69 insured mortgage loans must 
comply with this section by no later than January 1, 2000;
    (3) Mortgagees having from 11 to 25 insured mortgage loans must 
comply with this section by no later than January 1, 2001;

[[Page 26704]]

    (4) Mortgagees having 10 or fewer insured mortgage loans must 
comply with this section by no later than January 1, 2002.
    (b) Exception. On or after January 1, 2002, mortgagees that hold or 
service fewer than 10 multifamily mortgages may continue to report 
mortgage delinquencies, defaults, reinstatements, assignment elections, 
withdrawals of assignment elections, and related information in writing 
on Form HUD-92426 only with specific HUD approval. HUD will grant such 
approval, upon application by the mortgagee, for reasons of hardship 
due to insufficient financial resources to purchase the required 
hardware and Internet access.
    (c) HUD will not accept reports of information regarding defaults, 
reinstatements, assignment elections, and related information in a 
manner that is not in accordance with this section. Failure on the part 
of mortgagees to report this information as required by 24 CFR part 207 
and this section may result in HUD's application of the sanctions and 
surcharges specified in 24 CFR part 207.

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

    3. The authority citation for 24 CFR part 207 continues to read as 
follows:

    Authority: 12 U.S.C. 1701z-11(e), 1713, and 1715b; 42 U.S.C. 
3535(d).

    4. Section 207.256 is revised to read as follows:


Sec. 207.256  Notice.

    (a) If the default as defined in Sec. 207.255 is not cured within 
the 30 days grace period, the mortgagee must, within 30 days 
thereafter, notify the Commissioner of such default, in the manner 
prescribed in 24 CFR part 200, subpart B.
    (b) Notwithstanding Sec. 207.255(a)(2), the mortgagee must give 
notice to the Commissioner, in the manner prescribed in 24 CFR part 
200, subpart B, of the failure of the mortgagor to comply with such 
covenant, regardless of the fact the mortgagee may not have elected to 
accelerate the debt.
    5. Section 207.256a is revised to read as follows:


Sec. 207.256a  Reinstatement of defaulted mortgage.

    If, after default and prior to the completion of foreclosure 
proceedings, the mortgagor cures the default, the insurance shall 
continue as if a default had not occurred, provided the mortgagee gives 
notice of reinstatement to the Commissioner, in the manner prescribed 
in 24 CFR part 200, subpart B.
    6. Section 207.258 is amended by revising paragraphs (a) and 
(b)(1), to read as follows:


Sec. 207.258  Insurance claim requirements.

    (a) Alternative election by mortgagee. When the mortgagee becomes 
eligible to receive mortgage insurance benefits pursuant to 
Sec. 207.255(c), it must, within 45 days thereafter, give the 
Commissioner notice, in the manner prescribed in 24 CFR part 200, 
subpart B, of its intention to file an insurance claim and of its 
election either to assign the mortgage to the Commissioner, as provided 
in paragraph (b) of this section, or to acquire and convey title to the 
Commissioner, as provided in paragraph (c) of this section.
    (b) * * *
    (1) Notice of assignment. On the date the assignment of the 
mortgage is filed for record, the mortgagee must notify the 
Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, 
of such assignment, and must also notify the FHA Comptroller by 
telegram of such recordation.
* * * * *
April 8, 1998.

    Dated: May 6, 1998.
Art Agnos,
Acting General Deputy, Assistant Secretary for Housing, Deputy Federal 
Housing Commissioner.
[FR Doc. 98-12615 Filed 5-12-98; 8:45 am]
BILLING CODE 4210-27-P