31334 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Proposed Rules 

Empresa Brasileira de Aeronautica S.A. 

(EMBRAER): Docket No. FAA–2010– 

0546; Directorate Identifier 2009–NM– 

215–AD. 

Comments Due Date 

(a) We must receive comments by July 19, 

2010. 

Affected ADs 

(b) None. 

Applicability 

(c) This AD applies to all Empresa 

Brasileira de Aeronautica S.A. (EMBRAER) 

Model EMB–120, –120ER, –120FC, –120QC, 

and –120RT airplanes, certificated in any 

category. 

Subject 

(d) Air Transport Association (ATA) of 

America Code 28: Fuel. 

Reason 

(e) The mandatory continuing 

airworthiness information (MCAI) states: 

It has been found that some fuel quantity 

probes may fail during the airplane life 

leading to an erroneous fuel quantity 

indication to the crew. This erroneous 

indication may lead to the airplane being 

operated with less fuel than indicated which 

may lead to an uncommanded in-flight 

shutdown of one or both engines due to fuel 

starvation. 

Required actions include determining the 

real fuel quantity on each tank using the 

dripless measuring sticks, comparing the 

results of the fuel quantity measurement with 

the fuel master indicator and repeater 

indicator readings for each tank, and 

corrective actions as applicable. Corrective 

actions include replacing the measuring stick 

and its relevant magnetic float, replacing the 

master fuel quantity indicator, and replacing 

the repeater indicator, as applicable; 

inspecting defective tank units for 

contamination, corrosion and integrity of 

components, and repairing or replacing as 

necessary; inspecting system wiring from the 

connector at the wing root to the master 

indicator for condition and continuity; and 

correcting the fuel quantity indication 

system; as applicable. 

Compliance 

(f) You are responsible for having the 

actions required by this AD performed within 

the compliance times specified, unless the 

actions have already been done. 

Actions 

(g) Within 600 flight hours or 180 days 

after the effective date of this AD, whichever 

occurs first, with at least 400 kg (882 lb) of 

fuel on each tank, determine the real fuel 

quantity on each tank using the dripless 

measuring sticks, in accordance with 

Sections 28–41–00 and 28–42–00 of Chapter 

28 of the EMBRAER EMB120 Aircraft 

Maintenance Manual, Revision 24, dated 

March 30, 2009. Before further flight, 

compare the results of the fuel quantity 

measurement with the fuel master indicator 

and repeater indicator readings for each tank 

and do the applicable action in paragraph 

(g)(1), (g)(2), or (g)(3) of this AD. 

(1) If the difference of the two 

measurements is greater than 60 kg (132 lb) 

on both tanks, before further flight do all 

applicable corrective actions including 

correcting the FQIS, in accordance with 

Sections 28–41–00 and 28–42–00 of Chapter 

28 of the EMBRAER EMB120 Aircraft 

Maintenance Manual, Revision 24, dated 

March 30, 2009. 

(2) If the difference of the two 

measurements is greater than 60 kg (132 lb) 

on only one tank, and the conditions in 

paragraphs (g)(2)(i), (g)(2)(ii), and (g)(2)(iii) of 

this AD are met, do all applicable corrective 

actions including correcting the FQIS, in 

accordance with Sections 28–41–00 and 28– 

42–00 of Chapter 28 of the EMBRAER 

EMB120 Aircraft Maintenance Manual, 

Revision 24, dated March 30, 2009, within 10 

days after determining the real fuel quantity 

as specified in paragraph (g) of this AD. 

(i) Before further flight after each refueling, 

the actions required in paragraph (g) of this 

AD are done; 

(ii) Both fuel flow indicators are operating 

properly; and 

(iii) The fuel used or fuel remaining 

function of the totalizer is operating properly. 

(3) If the difference of the two 

measurements is greater than 60 kg (132 lb) 

on only one tank, and any condition in 

paragraph (g)(2)(i), (g)(2)(ii), or (g)(2)(iii) of 

this AD is not met, before further flight do 

all applicable corrective actions including 

correcting the FQIS, in accordance with 

Sections 28–41–00 and 28–42–00 of Chapter 

28 of the EMBRAER EMB120 Aircraft 

Maintenance Manual, Revision 24, dated 

March 30, 2009. 

(h) Repeat the actions required in 

paragraph (g) of this AD thereafter at 

intervals not to exceed 600 flight hours or 

180 days, whichever occurs first. 

FAA AD Differences 

Note 1: This AD differs from the MCAI 

and/or service information as follows: This 

AD requires doing all applicable corrective 

actions in accordance with Sections 28–41– 

00 and 28–42–00 of Chapter 28 of the 

EMBRAER EMB120 Aircraft Maintenance 

Manual, Revision 24, dated March 30, 2009. 

Corrective actions include replacing the 

measuring stick and its relevant magnetic 

float, replacing the master fuel quantity 

indicator, and replacing the repeater 

indicator, as applicable; inspecting defective 

tank units for contamination, corrosion and 

integrity of components, and repairing or 

replacing as necessary; inspecting system 

wiring from the connector at the wing root 

to the master indicator for condition and 

continuity; and correcting the fuel quantity 

indication system; as applicable. The MCAI 

does not provide a corrective action and only 

requires a repetitive functional check of the 

FQIS in accordance with Section 28–42–00 of 

Chapter 28 of the EMBRAER EMB120 

Aircraft Maintenance Manual, Revision 24, 

dated March 30, 2009. This difference has 

been coordinated with Ageˆncia Nacional de 

Aviac ̧a ̃o Civil (ANAC). 

Other FAA AD Provisions 

(i) The following provisions also apply to 

this AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, International 

Branch, ANM–116, FAA, has the authority to 

approve AMOCs for this AD, if requested 

using the procedures found in 14 CFR 39.19. 

Send information to ATTN: Todd Thompson, 

Aerospace Engineer, International Branch, 

ANM–116, Transport Airplane Directorate, 

FAA, 1601 Lind Avenue, SW., Renton, 

Washington 98057–3356; telephone (425) 

227–1175; fax (425) 227–1149. Before using 

any approved AMOC on any airplane to 

which the AMOC applies, notify your 

principal maintenance inspector (PMI) or 

principal avionics inspector (PAI), as 

appropriate, or lacking a principal inspector, 

your local Flight Standards District Office. 

The AMOC approval letter must specifically 

reference this AD. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

Related Information 

(j) Refer to MCAI Brazilian Airworthiness 

Directive 2009–07–04, effective July 13, 2009; 

and Sections 28–41–00 and 28–42–00 of 

Chapter 28 of the EMBRAER EMB120 

Aircraft Maintenance Manual, Revision 24, 

dated March 30, 2009; for related 

information. 

Issued in Renton, Washington, on May 25, 

2010. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 2010–13304 Filed 6–2–10; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 3500 

[Docket No. FR–5352–A–01] 

RIN 2502–A178 

Real Estate Settlement Procedures Act 

(RESPA): Strengthening and Clarifying 

RESPA’s ‘‘Required Use’’ Prohibition 

Advance Notice of Proposed 

Rulemaking 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: Through this Advance Notice 

of Proposed Rulemaking (ANPR), HUD 

commences the process of initiating 

rulemaking directed to strengthening 

and clarifying the prohibition against 

the ‘‘required use’’ of affiliated 


srobinson on DSKHWCL6B1PROD with PROPOSALS
Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Proposed Rules 31335 

1 In July 2008, Congress reaffirmed its interest in 

protecting consumers by directing HUD to 

recommend legislative reforms to RESPA that 

would ‘‘promote more transparent disclosures, 

allowing consumers to better shop and compare 

mortgage loan terms and settlement costs.’’ See 12 

U.S.C. 1515(b). 

settlement service providers in 

residential mortgage transactions under 

section 8 of RESPA. HUD has received 

complaints that some homebuyers are 

committing to use a builder’s affiliated 

mortgage lender in exchange for 

construction discounts or discounted 

upgrades, without sufficient time to 

research their contracts or to 

comparison shop. The purpose of this 

ANPR is to solicit information that can 

be used to inform any future revision or 

clarification of the regulatory definition 

of the ‘‘required use’’ of affiliated 

settlement service providers in 

residential mortgage transactions. 

With this ANPR, HUD seeks comment 

from an array of sources with 

experience or knowledge of affiliated 

business arrangements in residential 

mortgage transactions. HUD also 

welcomes comment on actions in 

addition or as an alternative to 

rulemaking that would better address 

concerns with affiliated business 

arrangements in residential mortgage 

transactions. 

DATES: Comment Due Date: September 

1, 2010. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this ANPR to the Regulations Division, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 7th Street, SW., Room 10276, 

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 

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 (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: 

Teresa Payne, Deputy Assistant 

Secretary for Regulatory Affairs and 

Manufactured Housing, Office of 

Housing, Department of Housing and 

Urban Development, 451 7th Street, 

SW., Room 9162, Washington, DC 

20410–8000; telephone number 202– 

708–6401 (this is not a toll-free 

number). Persons with hearing or 

speech impairments may access this 

number through TTY by calling the 

Federal Information Relay Service at 

800–877–8339 (this is a toll-free 

number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

In the late 1960s, Congress became 

concerned about the excessive cost of 

settlement services for residential 

mortgage loans. Congress found that 

many homebuyers had very little 

knowledge about the settlement process 

and that homebuyers often did not shop 

for, and were not involved in, choosing 

the settlement service providers that 

they would be required to pay at 

settlement. Instead, in many areas of the 

country, the delivery of settlement 

services was controlled by a system of 

referrals by those in a position to refer 

settlement business (such as builders, 

real estate agents, and lawyers), 

resulting in ‘‘kickbacks’’ by settlement 

service providers to those who referred 

business to them. In this system, 

settlement service providers did not 

compete for business by providing a 

quality service at a reasonable cost to 

homebuyers. Rather, settlement service 

providers generated business by 

providing the most lucrative kickbacks 

to those in a position to refer business 

to them. 

Through the adoption of RESPA and 

subsequent amendments, Congress 

sought to change the way in which 

homebuyers retained settlement service 

providers for federally related mortgage 

loans. The term ‘‘federally related 

mortgage loan,’’ as defined in section 3 

of RESPA, includes nearly all 

residential mortgage loans for one- to 

four-family homes. In order to 

encourage consumers to shop for 

settlement services, and cause 

settlement service providers to compete 

for homebuyers’ business, RESPA 

requires that the nature and costs of real 

estate settlement services be disclosed 

in advance to the consumer, and it 

forbids the payment of referral fees, 

kickbacks, and unearned fees for real 

estate settlement services.1

RESPA defines an ‘‘affiliated business 

arrangement’’ as ‘‘an arrangement in 

which (A) a person who is in a position 

to refer business incident to or a part of 

a real estate settlement service involving 

a federally related mortgage loan, or an 

associate of such person, has either an 

affiliate relationship with or a direct or 

beneficial ownership interest of more 

than 1 percent in a provider of 

settlement services; and (B) either of 

such persons directly or indirectly refers 

such business to that provider or 

affirmatively influences the selection of 

that provider.’’ (12 U.S.C. 2602(7).) In 

RESPA-covered transactions, referrals to 

affiliated settlement service providers 

are subject to civil and criminal liability 

under section 8 of RESPA (Section 8), 

because the referrer’s return on 

investment in the affiliate can be 

considered a prohibited kickback or 

thing of value for the referral. (See 12 

U.S.C. 2607(a).) However, Section 

8(c)(4) provides an exemption for 

affiliate referrals that allows for returns 

on ownership interest if the referrals 

involve an affiliated business 

arrangement and three other conditions 

are met. The three other conditions are: 

(1) The referral is accompanied by a 

disclosure of affiliation and estimated 

charges by the provider to which the 

consumer is referred, (2) the consumer 

is not ‘‘required to use’’ a particular 

settlement service provider; and (3) the 

arrangement does not involve otherwise 


srobinson on DSKHWCL6B1PROD with PROPOSALS
31336 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Proposed Rules 

2Additional information regarding the RESPA 

regulatory amendments, and specifically changes 

made by HUD subsequent to its RESPA proposed 

rule of March 14, 2008, published at 73 FR 14030, 

is provided in the preamble to the November 17, 

2008, final rule. 

3See National Association of Home Builders, et 

al. v. Shaun Donovan, et al., Civ. Action No. 08– 

CV–1324, United States District Court for the 

Eastern District of Virginia, Alexandria Division. 

prohibited compensation. (See 12 U.S.C. 

2607(c)(4).) Requiring the use of an 

affiliate is thus presumed to involve a 

violation of Section 8, insofar as it 

violates a condition for exemption from 

liability under Section 8. 

The definition of ‘‘required use’’ in 

HUD’s existing RESPA regulations reads 

as follows: 

Required use means a situation in which 

a person must use a particular provider of a 

settlement service in order to have access to 

some distinct service or property, and the 

person will pay for the settlement service of 

the particular provider or will pay a charge 

attributable, in whole or in part, to the 

settlement service. However, the offering of 

a package or (combination of settlement 

services) or the offering of discounts or 

rebates to consumers for the purchase of 

multiple settlement services does not 

constitute a required use. Any package or 

discount must be optional to the purchaser. 

The discount must be a true discount below 

the prices that are otherwise generally 

available, and must not be made up by higher 

costs elsewhere in the settlement process. (24 

CFR 3500.2) 

On November 17, 2008 at 73 FR 

68204, HUD published a final rule 

amending its RESPA regulations at 24 

CFR part 3500 to further the purposes of 

RESPA, including protecting consumers 

from kickbacks and referral fees that 

tend to unnecessarily increase 

settlement costs.2 In support of that 

rulemaking, HUD had received 

consumer complaints and comments 

about certain affiliated business 

practices. These complaints and 

comments included concerns that 

residential developers and 

homebuilders would offer to reduce the 

cost of a home (for example, by adding 

free construction upgrades, or 

discounting the home price) if the 

homebuyer used the developer’s 

affiliated mortgage lender. Buyers also 

complained that, in some instances, 

because the timing of the contract with 

the builder precluded the buyer from 

shopping, the affiliated lender used by 

the homebuyer was able to charge 

settlement costs or interest rates that 

were not competitive with those of 

nonaffiliated lenders. The complaints 

indicated that these incentivized 

referrals to affiliate lenders may be 

steering techniques that effectively 

‘‘require the use’’ of the affiliate. 

In order to address concerns about the 

operation and effect of these 

incentivized affiliate referrals, the 

November 17, 2008, RESPA final rule 

included a revised definition of 

‘‘required use’’ that was to take effect on 

January 16, 2009. The revised definition 

of ‘‘required use’’ in the November 17, 

2008, final rule would have provided as 

follows: 

Required use means a situation in which 

a person’s access to some distinct service, 

property, discount, rebate, or other economic 

incentive, or the person’s ability to avoid an 

economic disincentive or penalty, is 

contingent upon the person using or failing 

to use a referred provider of settlement 

services. In order to qualify for the affiliated 

business exemption under § 3500.15, a 

settlement service provider may offer a 

combination of bona fide settlement services 

at a total price (net of the value of the 

associated discount, rebate, or other 

economic incentive) lower than the sum of 

the market prices of the individual settlement 

services and will not be found to have 

required the use of the settlement service 

providers as long as: (1) The use of any such 

combination is optional to the purchaser; and 

(2) the lower price for the combination is not 

made up by higher costs elsewhere in the 

settlement process. (See 73 FR 68239–68240) 

As a result of litigation challenging 

the revised definition,3 HUD deferred 

the effective date for the revised 

definition, and subsequently withdrew 

the revision by final rule published on 

May 15, 2009 (74 FR 22822). When HUD 

withdrew the revised definition, it left 

in place the existing definition of 

‘‘required use’’ pending new rulemaking 

on the subject. HUD’s final rule 

withdrawing the revised definition of 

‘‘required use’’ noted that public 

comments received in response to the 

proposed withdrawal had highlighted 

the potential complexity of existing 

affiliated business arrangement 

practices and the need for further clarity 

on the application of ‘‘required use’’ to 

such practices. The comments also 

underscored the need for HUD to 

continue to pursue reform in this area 

in order to protect consumers from 

harmful steering and referral practices. 

In withdrawing the definition, HUD 

stated its intention to pursue new 

rulemaking on the subject of ‘‘required 

use.’’ In the May 15, 2009, final rule, 

HUD also reiterated its commitment to 

the goals of RESPA reform and to 

addressing referral practices that result 

in required use. 

II. This ANPR 

HUD remains committed to furthering 

RESPA’s goal of protecting homebuyers 

against unnecessarily high settlement 

costs by addressing both incentivized 

affiliate referrals and penalties that 

could adversely affect not only 

individual borrowers, but also 

competition in the provision of 

settlement services. HUD also remains 

committed to preserving the benefits of 

voluntary contracts that involve true 

discounts. In advance of proposing a 

new rule on this subject, HUD is 

publishing this ANPR to request 

information on the practices to be 

addressed by this rulemaking. 

HUD requests information from all 

interested members of the public, 

including individual consumers, 

consumer advocacy organizations, 

housing counseling agencies, the real 

estate and mortgage industry, and 

federal, state, and local consumer 

protection and enforcement agencies. In 

addition to information about 

individual consumers’ experiences, 

HUD requests information that includes 

empirical data, studies, and analyses 

regarding affiliated business 

arrangement practices, and that 

responds to the specific questions 

presented in this ANPR. In particular, 

HUD seeks information that would 

enable an assessment of the benefits and 

costs of possible regulatory alternatives. 

For instance, have economic incentives 

to use affiliated lenders facilitated 

inflated appraisals or lowered 

underwriting standards in the lending 

market? Has required use played any 

role in creating recent situations where 

borrowers are more likely to be 

‘‘underwater?’’ Commenters are 

encouraged to provide data that would 

inform analysis of both the magnitude of 

the required use problem and the 

potential regulatory options to address 

the problem. 

From individual consumers who have 

purchased new homes and from 

consumer advocates, HUD seeks 

information about consumers’ 

experiences with lenders referred by 

builders. 

From state and local consumer 

protection agencies and state attorneys 

general, HUD seeks comment and 

information regarding complaints 

received and/or investigations 

undertaken with respect to business 

arrangements that steer consumers to 

use affiliated settlement businesses. 

To develop the necessary and 

appropriate protections for consumers 

from detrimental practices that may 

result from affiliated business 

arrangements, HUD requests further 

information about the structure, scope, 

frequency, timing, and effects of 

affiliated practices that impair 

consumers’ ability to evaluate the true 

costs of a mortgage transaction, thereby 

limiting consumer choice and steering 


srobinson on DSKHWCL6B1PROD with PROPOSALS
Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Proposed Rules 31337 

consumers into unnecessarily high 

settlement costs. 

HUD invites comment on any aspect 

of referral arrangements in residential 

mortgage transactions that may assist 

HUD in developing any new or revised 

protections, but HUD specifically 

requests information on the following 

questions, and requests that commenters 

provide as detailed and factual 

information or evidence as possible in 

responding to these questions. 

1. Tailoring ‘‘required use’’ to reach 

abusive incentive schemes, but not 

beneficial discounts or packages. The 

definition of ‘‘required use’’ in the 

November 17, 2008, RESPA final rule, 

sought to prevent detrimental referral 

practices among affiliates, while 

preserving discounts offered by 

settlement service providers for 

packaged settlement services. 

Some commenters have suggested that 

builders’ incentive programs discourage 

homebuyers from comparison shopping 

for the best loan, because: (1) The value 

of some of the incentives offered by 

builders for the use of their affiliated 

lender (e.g., kitchen upgrades) are 

difficult for consumers to quantify when 

comparing the loan terms and 

settlement costs of the affiliated lender 

with those of nonaffiliated lenders; and 

(2) often, in order to get the incentive a 

builder is offering, a new homebuyer 

must commit to the use of the builder’s 

affiliated lender at the time that the 

contract for the construction of the 

home is executed, which may be many 

months before settlement will occur and 

long before the typical consumer would 

begin shopping for a lender; and (3) that 

the builder encourages the buyer to 

commit to the contract before the buyer 

has time to fully consider alternatives 

and comparison shop. 

To assist in determining whether 

these claims are correct, HUD asks: 

(a) What types of discounts and 

incentives are tied to the use of an 

affiliated settlement service provider 

such as a mortgage lender? For example, 

are construction upgrades, and 

discounts, such as free or reduced costs 

for options such as fireplaces, flooring 

upgrades, kitchen upgrades (such as 

granite countertops, stainless steel 

appliances), or decks and finished 

basements frequently offered? Is closing 

cost assistance or interest rate 

guarantees usually part of the incentive 

package? Are these incentives delivered 

as coupons for services, merchandise, 

discount deposit bank accounts, etc.? 

(b) In a new home purchase 

transaction, at what points in time are 

incentives for the use of a builderaffiliated lender discussed with a 

potential homebuyer? Do such 

discussions occur with sales 

representatives at the initial time 

consumers inspect homes, and are they 

presented by the sales representative or 

are they presented only in response to 

a consumer request? Does the issue of 

incentives also arise when the contract 

for the purchase of the home is signed 

or does it arise at some point later in the 

process? At what point are affiliatedbusiness arrangement disclosures 

provided to consumers? 

(c) At what point, generally, in a new 

home purchase transaction, are the 

homebuyers expected to determine 

whether or not they will use a builderaffiliated lender? Is a decision expected 

of the homebuyer at the time that the 

contract for the purchase of the house is 

signed or at some point later in the 

process? Are there standard contract 

provisions specifying the package or 

combination of settlement services that 

are provided? Are homebuyers expected 

to contact the affiliated lender within a 

certain period of time before or after the 

contract has been signed? 

(d) Is there evidence demonstrating 

that homebuyers who are offered 

incentives by builders to use builderaffiliated lenders are as likely or less 

likely to engage in comparison shopping 

for a lender as are those homebuyers 

who are not offered an incentive to use 

a builder-affiliated lender? Is there 

empirical data demonstrating a 

difference in the use of affiliated lenders 

between first-time homebuyers and 

other homebuyers? 

(e) Is there evidence that buyers using 

affiliated lenders pay higher rates of 

interest or higher closing costs than 

those that use unaffiliated lenders? 

(f) Is there evidence demonstrating 

that homebuyers benefit from some 

types of incentives and not from others 

or by incentives offered by some types 

of business but not others? Incentives 

could include benefits such as discounts 

on the costs of settlement, payment of 

settlement services, and discounts on 

upgrades to the house. 

2. Forward Loan Commitments. A 

forward loan commitment (forward 

commitment), in its simplest definition, 

is a pledge to provide a loan at a future 

date. It is HUD’s understanding that in 

the homebuilding industry, some largescale homebuilders purchase forward 

commitments from lenders pursuant to 

which the lenders make an aggregate 

amount of mortgage financing available 

to the homebuilder’s customers under 

the terms of the commitment. Some 

commenters on the March 14, 2008, 

RESPA proposed rule expressed 

concern about the effect of a revised 

definition of ‘‘required use’’ on the 

ability of homebuilders to purchase 

forward commitments. 

To better understand forward 

commitments and their use in mortgage 

loan transactions, HUD seeks comment 

on the following: 

(a) How are forward commitments 

purchased and used as described above, 

and are there alternative types, terms, or 

uses for builder-purchased forward 

commitments? 

(b) Is there evidence as to the 

prevalence of builder-purchased 

forward commitments? 

(c) What is the benefit to homebuyers 

of forward commitments in mortgage 

loan transactions from affiliated as well 

as nonaffiliated lenders? 

3. Other Issues. A concern raised 

through comments submitted on the 

March 14, 2008, RESPA proposed rule 

is that certain incentives are built into 

the cost of the home and are therefore 

not true discounts. Commenters also 

stated a belief that an affiliated lender 

has a special, potentially improper, 

interest in financing a house at any 

price set by a seller. In this regard, HUD 

asks: 

(a) Is there any data that home sellers 

are providing discounts or upgrades to 

buyers who agree to use affiliated 

businesses based on prices that are 

different from those offered to buyers 

who decline such offers? 

(b) Is there any evidence that home 

sellers either include or do not include 

in the listed price of the house the cost 

of the incentives that they offer for the 

use of an affiliated lender? 

(c) Do homes sold with incentives to 

the homebuyer appraise at the pre- or 

post-incentive price? Is it possible to 

isolate the effects of standard builder 

construction upgrades and custom 

upgrades requested by the consumer on 

the appraised value? 

(d) How do affiliate-originated 

mortgages perform compared to the 

local average (e.g., in the case of default 

or the homeowner being ‘‘under water’’ 

statistics)? 

(e) How do prices of new construction 

homes financed by affiliated lenders 

compare with prices of new 

construction homes financed by 

nonaffiliates? That is, is there evidence 

that builders do not negotiate down to 

or near to incentivized prices in the 

absence of an incentive to use an 

affiliate? 

(f) Is there data on the extent to which 

the current affiliated business disclosure 

encourages consumers to comparison 

shop with nonaffiliated service 

providers before signing contracts? Can 

the affiliated business disclosure be 

improved to inform consumers of the 


srobinson on DSKHWCL6B1PROD with PROPOSALS
31338 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Proposed Rules 

advantages and disadvantages of 

affiliated lending practices? 

4. State and Local Experience. State 

and local consumer and enforcement 

agencies, through their investigatory 

and prosecutorial experiences, may be 

able to contribute valuable information 

regarding practices that steer consumers 

to overpriced settlement service 

providers, as well as provide 

information about successful and 

unsuccessful means of preventing such 

abuse. To these agencies especially, 

HUD asks: 

(a) What has been and continues to be 

the impact of state and local regulatory 

enforcement in this area? 

(b) What rules and forms of 

enforcement have proven most 

effective? 

(c) Is there evidence available 

regarding specific anticompetitive or 

anticonsumer practices that can be 

provided by state law enforcement? 

(d) Can state laws regulating builderaffiliated business arrangements provide 

an approach for evaluating options? 

5. One-Stop Shopping. In the process 

of withdrawing the revised definition of 

‘‘required use’’ in the November 17, 

2008, RESPA final rule, HUD received 

comments indicating that limiting 

referrals to affiliates adversely affects 

one-stop shopping options that could 

benefit consumers. Accordingly, HUD 

asks whether there is any way to 

quantify the benefit to homebuyers of 

one-stop shopping. Additionally, is 

there any evidence that homebuyers 

derive greater benefit from one-stop 

shopping than from comparison 

shopping for the best loan terms and 

settlement costs? 

6. Incentives vs. Disincentives or 

Penalties. HUD requests comments on 

the relationship between incentives to 

use an affiliated settlement service 

provider and disincentives or penalties 

for using a nonaffiliated settlement 

service provider, and how incentives 

and disincentives might be treated in 

the new regulation. To assist in the 

development of distinctions or 

equivalencies between incentives and 

disincentives, HUD asks for information 

concerning cases where an incentive to 

use a certain provider would not have 

the same effect as a disincentive for 

failure to use another provider. 

While HUD specifically seeks 

comments on the foregoing questions, 

HUD welcomes additional information 

that will help inform HUD’s views on 

this issue. 

Dated: May 27, 2010. 

David H. Stevens, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2010–13350 Filed 6–2–10; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF EDUCATION 

34 CFR Chapter VI 

Promoting Postbaccalaureate 

Opportunities for Hispanic Americans 

(PPOHA) Program 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Proposed requirements. 

SUMMARY: The Assistant Secretary for 

Postsecondary Education proposes 

requirements under the PPOHA 

Program. The Assistant Secretary may 

use one or more of these requirements 

for competitions in fiscal year (FY) 2010 

and later years. We take this action to 

establish appropriate requirements for 

the PPOHA Program. We have based 

these requirements on existing rules for 

the Hispanic-Serving Institutions (HSI) 

Program, authorized by Title V of the 

Higher Education Act of 1965, as 

amended (HEA), because the PPOHA 

Program and the HSI Program are 

governed by some common provisions 

and support similar institutions. We are 

proposing to limit the number of 

applications an eligible institution can 

submit under the PPOHA to ensure that 

more HSIs have an opportunity for 

assistance under the PPOHA Program. 

We are also proposing a limitation on 

the use of PPOHA Program funds for 

direct student assistance to ensure that 

institutions use the grant funds to best 

meet the broad purposes of the statute. 

DATES: We must receive your comments 

on or before July 6, 2010. 

ADDRESSES: Address all comments about 

this notice to Dr. Maria E. Carrington, 

U.S. Department of Education, 1990 K 

Street, NW., Room 6036, Washington, 

DC 20006–8513. 

If you prefer to send your comments 

by e-mail, use the following address: 

maria.carrington@ed.gov. You must 

include the term ‘‘PPOHA Program 

Notice of Proposed Requirements’’ in the 

subject line of your electronic message. 

FOR FURTHER INFORMATION CONTACT: Dr. 

Maria E. Carrington: (202) 502–7548, or 

by e-mail: maria.carrington@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD), call the 

Federal Relay Service (FRS), toll free, at 

1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

Invitation to Comment: We invite you 

to submit comments regarding this 

notice. To ensure that your comments 

have maximum effect in developing the 

notice of final requirements, we urge 

you to identify clearly the specific 

proposed requirement that each 

comment addresses. 

We invite you to assist us in 

complying with the specific 

requirements of Executive Order 12866 

and its overall requirement of reducing 

regulatory burden that might result from 

these proposed requirements. Please let 

us know of any further ways we could 

reduce potential costs or increase 

potential benefits while preserving the 

effective and efficient administration of 

the program. 

During and after the comment period, 

you may inspect all public comments 

about this notice in Room 6036, 1990 K 

Street, NW., Washington, DC, between 

the hours of 8:30 a.m. and 4:00 p.m., 

Washington, DC time, Monday through 

Friday of each week except Federal 

holidays. 

Assistance to Individuals with 

Disabilities in Reviewing the 

Rulemaking Record: On request, we will 

provide an appropriate accommodation 

or auxiliary aid to an individual with a 

disability who needs assistance to 

review the comments or other 

documents in the public rulemaking 

record for this notice. If you want to 

schedule an appointment for this type of 

accommodation or auxiliary aid, please 

contact the person listed under FOR

FURTHER INFORMATION CONTACT. 

Purpose of Program: The purposes of 

the PPOHA Program are to: (1) Expand 

postbaccalaureate educational 

opportunities for, and improve the 

academic attainment of, Hispanic 

students; and (2) expand the 

postbaccalaureate academic offerings as 

well as enhance the program quality in 

the institutions of higher education that 

are educating the majority of Hispanic 

college students and helping large 

numbers of Hispanic and low-income 

students complete postsecondary 

degrees. 

Program Authority: 20 U.S.C.1102–1102c, 

20 U.S.C.1161aa–1. 

Proposed Requirements 

Background 

The PPOHA Program is authorized by 

Title V, part B, sections 511 through 514 

of the HEA. It was added to the HEA by 

the Higher Education Opportunity Act 

of 2008, Public Law 110–315. The 

PPOHA Program supports HSIs that 

offer a postbaccalaureate certificate or 

degree granting program. 


srobinson on DSKHWCL6B1PROD with PROPOSALS