5912 Federal Register / Vol. 66, No. 13 / Friday, January 19, 2001 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 221

[Docket No. FR–4588–F–02]

RIN 2502–AH50

Discontinuation of the Section

221(d)(2) Mortgage Insurance Program

AGENCY: Office of the Assistant

Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Final rule.

SUMMARY: This final rule discontinues

HUD’s section 221(d)(2) mortgage

insurance program. The section

221(d)(2) program is rarely used by

homebuyers, primarily due to its low

mortgage limits. Accordingly, HUD will

no longer enter into new contracts for

mortgage insurance under the program.

The final rule removes those provisions

of the section 221(d)(2) regulations

concerning eligibility for participation

in the program, and replaces them with

a savings clause. The rule, however,

retains those regulatory provisions

regarding the contract rights and

servicing responsibilities for existing

program participants. This final rule

follows publication of a September 28,

2000 proposed rule. There were no

public comments on the proposed rule,

and HUD is adopting the proposed

regulatory amendments without change.

DATES: Effective Date: February 20,

2001.

FOR FURTHER INFORMATION CONTACT:

Vance T. Morris, Director, Office of

Single Family Program Development,

Office of Insured Single Family

Housing, Room 9266, U.S. Department

of Housing and Urban Development,

451 Seventh Street, SW., Washington,

DC 20410–8000; telephone (202) 708–

2121 (this is not a toll-free number).

Hearing- or speech-impaired individuals

may access this number via TTY by

calling the toll-free Federal Information

Relay Service at (800) 877–8339.

SUPPLEMENTARY INFORMATION:

I. Background

Section 221(d)(2) of the National

Housing Act (12 U.S.C. 1715l(d)(2)),

authorizes HUD to insure private

lenders against loss from default on

mortgage loans made to finance the

purchase, construction, or rehabilitation

of low-cost, one- to four-family homes.

HUD’s regulations implementing the

section 221(d)(2) program are located in

24 CFR part 221.

On September 28, 2000 (65 FR 58338),

HUD published a proposed rule to

discontinue the section 221(d)(2)

mortgage insurance program. The

program is rarely used by homebuyers,

primarily due to its low mortgage limits.

Moreover, the section 221(d)(2) program

provides few homeownership

opportunities not already made

available by other HUD mortgage

insurance programs, primarily the single

family home mortgage insurance

programs authorized by section 203 of

the National Housing Act (12 U.S.C.

1709) (implemented by HUD in 24 CFR

part 203), and the condominium

mortgage insurance program authorized

by section 234 of the National Housing

Act (12 U.S.C. 1715y) (implemented by

HUD in 24 CFR part 234). For these

reasons, HUD has decided to

discontinue the section 221(d)(2)

program.

II. This Final Rule

This final rule adopts the policies and

procedures of the September 28, 2000

proposed rule. The public comment

period for the proposed rule closed on

November 27, 2000. By close of business

on that date, HUD had not received any

public comments on the proposed rule.

Accordingly, this final rule adopts the

proposed regulatory amendments

without change.

The final rule removes HUD’s

regulations establishing the eligibility

requirements for section 221(d)(2)

mortgage insurance in subpart A of 24

CFR part 221. A savings clause is

retained in subpart A of the part 221

regulations, which provides that the

authority to insure section 221(d)(2)

mortgages is terminated, except that

HUD will endorse for insurance validly

processed mortgages under direct

endorsement where the credit

worksheet was signed by the

mortgagee’s underwriter before the

effective date of the final rule. The

savings clause also provides that

subpart A, as it existed immediately

before the termination date, will

continue to govern the rights and

obligations of insured mortgage lenders,

mortgagors, and HUD with respect to

section 221(d)(2) single family loans

insured before the effective date of the

final rule, and to the aforementioned

direct endorsement loans.

III. Findings and Certifications

Environmental Impact

A Finding of No Significant Impact

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. 4223).

That finding remains applicable to this

final rule and is available for public

inspection between the hours of 7:30

a.m. and 5:30 p.m. weekdays in the

Office of the Rules Docket Clerk, Office

of General Counsel, Room 10276,

Department of Housing and Urban

Development, 451 Seventh Street, SW.,

Washington, DC.

Regulatory Flexibility Act

The Secretary has reviewed this final

rule before publication, and by

approving it certifies, in accordance

with the Regulatory Flexibility Act (5

U.S.C. 605(b)), that this final rule will

not have a significant economic impact

on a substantial number of small

entities. As noted above, the section

221(d)(2) program is rarely used by

homebuyers. Mortgage lenders eligible

to participate in the section 221(d)(2)

program are also generally eligible to

participate in other, alternative, FHA

single family mortgage insurance

programs that are preferred by

homebuyers (such as the section 203

and section 234(c) programs).

Accordingly, HUD’s decision to

discontinue the section 221(d)(2)

program is not anticipated to have a

significant economic impact on a

substantial number of mortgage lenders

participating in these FHA programs.

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 and 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

final rule would 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) 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 would not

impose any Federal mandates on any

State, local, or tribal governments, or on

the private sector, within the meaning of

the Unfunded Mandates Reform Act of

1995.

Federal Register / Vol. 66, No. 13 / Friday, January 19, 2001 / Rules and Regulations 5913

Catalog of Federal Domestic Assistance

Number

The Catalog of Federal Domestic

Assistance program number applicable

to 24 CFR part 221 is 14.120: Mortgage

Insurance—Homes for Low/Moderate

Income Families.

List of Subjects in 24 CFR Part 221

Low and moderate income housing,

Mortgage insurance, Reporting and

recordkeeping requirements.

Accordingly, for the reasons described

in the preamble, HUD amends 24 CFR

part 221 to read as follows:

PART 221—LOW COST AND

MODERATE INCOME MORTGAGE

INSURANCE

1. The authority citation for part 221

is revised to read as follows:

Authority: 12 U.S.C. 1715b, 1715l; 42

U.S.C. 3535(d).

2. Subpart A is revised to read as

follows:

Subpart A—Eligibility Requirements—

Low Cost Homes—Savings Clause

§ 221.1 Savings clause.

(a) Effective February 20, 2001, the

authority to insure mortgages under

section 221(d)(2) of the National

Housing Act (12 U.S.C. 1715l(d)(2)) for

low cost and moderate income mortgage

insurance is terminated, except that

HUD will endorse for insurance validly

processed mortgages under direct

endorsement where the credit

worksheet was signed by the

mortgagee’s underwriter before February

20, 2001.

(b) Subpart A of this part, as it existed

immediately before February 20, 2001,

will continue to govern the rights and

obligations of insured mortgage lenders,

mortgagors, and HUD with respect to

section 221(d)(2) single family loans

insured before February 20, 2001, or in

accordance with paragraph (a) of this

section, pursuant to the applicable

provisions of this subpart.

Dated: January 9, 2001.

William C. Apgar,

Assistant Secretary for Housing-Federal

Housing Commissioner.

[FR Doc. 01–1534 Filed 1–18–01; 8:45 am]

BILLING CODE 4210–27–P