[Federal Register Volume 74, Number 45 (Tuesday, March 10, 2009)]
[Rules and Regulations]
[Pages 10172-10174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5221]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3500

[Docket No. FR-5180-F-05]
RIN 2502-AI61


Real Estate Settlement Procedures Act (RESPA): Rule To Simplify 
and Improve the Process of Obtaining Mortgages and Reduce Consumer 
Settlement Costs; Further Deferred Applicability Date for the Revised 
Definition of ``Required Use'' and Solicitation of Public Comment on 
Withdrawal of Required Use Provision

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

ACTION: Final rule; request for comments.

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SUMMARY: This final rule delays the effective date of the definition of 
``required use'' as revised by HUD's November 17, 2008, final rule 
amending its RESPA regulations, until July 16, 2009. The November 17, 
2008, final rule revised HUD's RESPA regulations to further the 
purposes of RESPA by requiring more timely and effective disclosures 
related to mortgage settlement costs for federally related mortgage 
loans to consumers. The final rule revised the existing definition of 
``required use,'' which revision was directed to enhancing protections 
for consumers from certain practices conducted by affiliated business 
arrangements. The revised definition of ``required use'' would have 
become effective on January 16, 2009. However, on January 15, 2009, HUD 
published a final rule that delayed the effective date of the 
definition of ``required use'' from January 16, 2009, to April 16, 
2009, due to litigation by the National Association of Home Builders, 
et al., around the time of issuance of the final rule. For this same 
reason, HUD is further delaying the effective date of required use 
until July 16, 2009.
    In this rule, HUD also solicits comment on withdrawing the revised 
definition of ``required use'' from the November 17, 2008, final rule. 
HUD will consider these comments before pursuing new rulemaking process 
on this definition. Since promulgating the rule on November 17, 2008, 
HUD has determined to reevaluate the scope and operation of the 
required use provision. New rulemaking would give HUD the opportunity 
to present for public consideration a new proposal based upon HUD's 
reevaluation of the required use provision to help ensure better 
consumer protections.

[[Page 10173]]


DATES: The amendment to Sec.  3500.1 is effective March 10, 2009. The 
effective date of the definition of ``required use'' in Sec.  3500.2, 
as revised by HUD's final rule published on November 17, 2008, at 73 FR 
68204, and further delayed by final rule published on January 15, 2009, 
at 74 FR 2369, is further delayed to July 16, 2009.
    Comment Due Date: April 9, 2009.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, 451 
7th Street, SW., Room 10276, Department of Housing and Urban 
Development, 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.
    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 http://www.regulations.gov Web site 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 
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 the HUD Headquarters 
building, 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). Individuals with speech or hearing impairments 
may access this number through TTY by calling the Federal Information 
Relay Service at 800-877-8339. Copies of all comments submitted are 
available for inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Ivy Jackson, Director, or Barton 
Shapiro, Deputy Director, Office of RESPA and Interstate Land Sales, 
Office of Housing, Department of Housing and Urban Development, 451 7th 
Street, SW., Room 9158, Washington, DC 20410-8000; telephone 202-708-
0502 (this is not a toll-free telephone number). Persons with hearing 
or speech impairments may access this number through TTY by calling the 
toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION: On November 17, 2008 (73 FR 68204), HUD 
published a final rule amending its regulations to further the purposes 
of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601-
2617) by requiring more timely and effective disclosures related to 
mortgage settlement costs for federally related mortgage loans to 
consumers. The final rule followed publication of a March 14, 2008, 
proposed rule (73 FR 14030) and made changes in response to public 
comment and in further consideration of certain issues by HUD. 
Additional information regarding the regulatory amendments, and the 
changes made by HUD at the final rule stage, is provided in the 
preamble to the November 17, 2008, final rule.
    The November 17, 2008, final rule became effective on January 16, 
2009, but provided a longer transition period for the majority of the 
new requirements. Other provisions, however, were scheduled to take 
effect on January 16, 2009. Among regulatory changes identified as 
being applicable upon the effective date of January 16, 2009, is the 
revised definition of the term ``required use.'' The revision of that 
definition became the subject of litigation, following issuance of the 
final rule. (National Association of Home Builders, et al. v. Steve 
Preston, et al., Civ. Action No. 08-CV-1324, United States District 
Court for the Eastern District of Virginia, Alexandria Division.)
    For reasons related to the proper litigation of this case, HUD 
issued a final rule on January 15, 2009 (74 FR 2369) that deferred the 
effective date of the revised definition of ``required use'' for an 
additional 90 days until April 16, 2009. The litigation continues and 
HUD finds again that for reasons including the pending litigation, the 
applicability date of the definition of ``required use'' should be 
further delayed until July 16, 2009. The effective and implementation 
dates of the remaining provisions of the November 17, 2008, final rule 
are not affected by the action taken in this rule.
    The further delay is consistent with the direction to federal 
agencies, provided in a January 21, 2009, memorandum from the Director 
of the Office of Management and Budget to consider extending the 
effective date for rules published under the prior Administration, 
which have not yet taken effect. Additionally, the memorandum notes 
that the Administrative Procedure Act provides for agencies to postpone 
the effective date of an agency action pending judicial review (see 5 
U.S.C. 705). Accordingly, this further extension is consistent with law 
and the new Administration's procedural directions.
    With the further delay of the effective date, HUD seeks to use this 
time to solicit public comment on withdrawing the ``required use'' 
definition, as promulgated in the November 17, 2008, final rule and 
commencing new rulemaking on this definition, which would similarly 
strive to ensure consumers are protected from certain practices 
conducted by affiliated business arrangements. Since issuance of the 
final rule, HUD has determined to reevaluate the scope and operation of 
the required use provision. This issue is one of importance in the 
RESPA context, and HUD, regulated industries, consumers and the public 
generally would be better served by new rulemaking. New rulemaking 
would offer HUD with the opportunity to present a new proposal based 
upon HUD's reevaluation of the required use provision. New rulemaking 
would provide consumers, industry, and other interested members of the 
public with the opportunity to comment on a definition of ``required 
use,'' developed as part of HUD's evaluation process, and for HUD to 
make informed decisions based on this new commentary. HUD therefore 
specifically seeks public comment on withdrawing the required use 
provision from the November 17, 2008, final rule and commencing new 
rulemaking on this subject.
    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with its own regulations on rulemaking 
at 24 CFR part 10. Part 10, however, does provide in Sec.  10.1 for 
exceptions from that general rule where HUD finds good cause to omit 
advance notice and public participation. The Department finds that good 
cause exists to publish this final

[[Page 10174]]

rule for effect without first soliciting public comment as requiring 
public comment before extending the effective date would be contrary to 
the interest of justice and the public interest.

List of Subjects in 24 CFR Part 3500

    Consumer protection, Condominiums, Housing, Mortgagees, Mortgage 
servicing, Reporting and recordkeeping requirements.


0
Accordingly, 24 CFR part 3500 is corrected by making the following 
amendments:

PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT

0
1. The authority citation for part 3500 continues to read as follows:

    Authority: 12 U.S.C. 2601 et seq: 42 U.S.C. 3535(d).


0
2. Section 3500.1(b)(1) is revised to read as follows:


Sec.  3500.1  Designation and applicability.

* * * * *
    (b) * * *
    (1) The definition of Required use in Sec.  3500.2 is applicable 
commencing on July 16, 2009; Sec. Sec.  3500.8(b), 3500.17, 3500.21, 
3500.22 and 3500.23, and Appendices E and MS-1 are applicable 
commencing January 16, 2009.
* * * * *

    Dated: March 6, 2009.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
 [FR Doc. E9-5221 Filed 3-9-09; 8:45 am]
BILLING CODE 4210-67-P