684 Federal Register / Vol. 61, No. 6 / Tuesday, January 9, 1996 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 25

[Docket No. FR–3979–F–01]

RIN 2501–AC09

Mortgagee Review Board; Streamlined

Final Rule

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

SUMMARY: This rule further streamlines

HUD’s regulations on the Mortgagee

Review Board (MRB). This rule is part

of HUD’s efforts to comply with the

President’s regulatory reform initiatives

by producing concise regulations that

are easy to use and understand. This

rule will not change the substantive

requirements of the MRB regulations,

but it will eliminate provisions that are

redundant of the MRB statute.

EFFECTIVE DATE: February 8, 1996.

FOR FURTHER INFORMATION CONTACT:

Emmett N. Roden, Assistant General

Counsel for Administrative Proceedings,

Office of General Counsel, Department

of Housing and Urban Development,

451 7th Street, S.W., Room 10251,

Washington, D.C. 20410, telephone

(202) 708–2350. The telephone number

for the hearing impaired (TDD) is (202)

708–9300. These are not toll-free

numbers.

SUPPLEMENTARY INFORMATION: The

Mortgagee Review Board (MRB or the

Board) final rule was published in the

Federal Register on August 1, 1995 (60

FR 39236). The August 1, 1995 final rule

streamlined the hearing procedures to

allow the Board to delegate its hearing

authority to a hearing official. This new

process is much less time-consuming

and expensive, and it is consistent with

the President’s regulatory reform

initiatives expressed in Executive Order

12866 and the President’s memorandum

of March 4, 1995 to all Federal

departments and agencies.

However, HUD has determined that it

can further streamline the regulations by

removing language that is redundant of

the MRB statute (12 U.S.C. 1708(c)–(d)).

For example, the statute fully describes

the types of administrative actions that

the Board may take against mortgagees,

the Board’s authority to request the

Secretary to issue cease and desist

orders to mortgagees, and the

requirement to notify GNMA of

withdrawal actions. Since these

statutory provisions are nearly selfexplanatory and widely accessible, it is

unnecessary to repeat them in the Code

of Federal Regulations.

Therefore, this rule removes several

redundant provisions from the MRB

regulations. This rule revises § 25.3 to

remove the following definitions:

administrative action, cease and desist

order, letter of reprimand, notice of

charges, party, probation, reasonable

cause, suspension, and withdrawal. The

rule revises § 25.5 (Administrative

actions) and removes § 25.12 (Cease and

desist orders). The rule also revises

§ 25.14 concerning the requirement to

notify GNMA of withdrawal actions,

and removes § 25.15 concerning annual

reports to the Secretary. In place of the

redundant statutory language, this rule

includes the references to the

appropriate statutory provisions.

Although the statutory provisions are

accessible and are referenced in the new

rule text, HUD seeks to ensure that this

rule is easy to use. Therefore, HUD

intends to provide mortgagees with a

copy of the MRB statute along with the

copies of the updated regulatory text

that HUD routinely provides.

This rule also amends the regulations

to correct three minor errors. First, this

rule corrects a typographical error in

§ 25.9(l); the word ‘‘inquiries’’ should

appear instead of ‘‘inquires.’’ Second,

this rule corrects § 25.9(p) to refer to

prudent ‘‘mortgagees’’ rather than

‘‘lenders.’’ HUD had intended to use the

term ‘‘mortgagees’’ in this paragraph, in

conformance with the definition of that

term in § 25.3. Third, this rule restores

language in § 25.5(d) regarding the effect

of a suspension upon Title I lenders that

was inadvertently deleted from

§ 202.9(a)(3) in the August 1, 1995 final

rule.

Justification for Final Rulemaking

HUD generally publishes a rule for

public comment before issuing a final

rule for effect, in accordance with its

regulations on rulemaking (24 CFR part

10). However, part 10 provides

exceptions from the general rule if HUD

finds good cause to omit advance notice

and public participation. The good

cause requirement is satisfied when

prior public procedure is

‘‘impracticable, unnecessary, or contrary

to the public interest’’ (24 CFR 10.1).

HUD finds that good cause exists to

publish this rule for effect without first

soliciting public comment. Since this

rule does not alter any rights or

responsibilities of parties affected by the

rule nor any substantive requirements of

the rule, such prior public procedure is

unnecessary.

Findings and Other Matters

National Environmental Policy Act

In accordance with 40 CFR 1508.4 of

the regulations of the Council on

Environmental Quality and 24 CFR

50.20(k) of HUD regulations, the

policies and procedures contained in

this rule relate only to administrative

decisions, which do not constitute

development decisions and do not affect

the physical condition of a project area

or building. Therefore, this rule is

categorically excluded from the

requirements of the National

Environmental Policy Act.

Regulatory Flexibility Act

In accordance with the Regulatory

Flexibility Act (5 U.S.C. 605(b)), the

Secretary hereby certifies that this rule

would not have a significant economic

impact on a substantial number of small

entities. The rule streamlines the

Mortgagee Review Board regulations by

removing language from the Code of

Federal Regulations that is redundant of

language that appears in the United

States Code. It will have no adverse or

disproportionate economic impact on

small businesses.

Executive Order 12606, The Family

The General Counsel, as the

Designated Official under Executive

Order 12606, The Family, has

determined that this final rule does not

have potential for significant impact on

family formation, maintenance, and

general well-being. No significant

change in existing HUD policies or

programs will result from promulgation

of this rule, as those policies and

programs relate to family concerns.

Therefore, the rule is not subject to

review under the Order.

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 rule will not have substantial

direct effects on States or their political

subdivisions, or the relationship

between the Federal Government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. As a

result, the final rule is not subject to

review under the Order.

List of Subjects in 24 CFR Part 25

Administrative practice and

procedure, Loan programs—housing

and community development,

Organization and functions

(Government agencies).
Federal Register / Vol. 61, No. 6 / Tuesday, January 9, 1996 / Rules and Regulations 685

Accordingly, 24 CFR part 25 is

amended as follows:

PART 25—MORTGAGEE REVIEW

BOARD

1. The authority citation for part 25

continues to read as follows:

Authority: 12 U.S.C. 1708 (c)–(d)), 1709(s),

1715b, and 1735 (f)–14; 42 U.S.C. 3535(d).

2. Section 25.3 is amended by

removing the definitions for the

following terms: ‘‘administrative

action’’, ‘‘cease and desist order’’,

‘‘letter of reprimand’’, ‘‘notice of

charges’’, ‘‘party’’, ‘‘probation’’,

‘‘reasonable cause’’, ‘‘suspension’’, and

‘‘withdrawal’’; and by revising the

definitions for the terms ‘‘lender’’, ‘‘loan

correspondent’’, and ‘‘mortgagee’’, to

read as follows:

§ 25.3 Definitions.

* * * * *

Lender. A financial institution as

defined in § 202.2(a) of this title.

Loan correspondent. A financial

institution as defined in § 202.2(b) of

this title.

Mortgagee. For purposes of the

regulations in this part, the term

‘‘mortgagee’’ includes:

(1) The original lender

under the mortgage, as that term is

defined at sections 201(a) and 207(a)(1)

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

1707(a), 1713(a)(1));

(2) A lender or loan correspondent as

defined in this section;

(3) A branch office or subsidiary of

the mortgagee, lender, or loan

correspondent; or

(4) Successors and assigns of the

mortgagee, lender, or loan

correspondent, as are approved by the

Commissioner.

* * * * *

3. Section 25.5 is revised to read as

follows:

§ 25.5 Administrative actions.

(a) General. The Board is authorized

to take the following administrative

actions: letter of reprimand, probation,

suspension, withdrawal, or settlement

agreement. These actions are described

at 12 U.S.C. 1708(c)(3), and as further

set out in this section.

(b) Letter of reprimand. A letter of

reprimand shall be effective upon

receipt of the letter by the mortgagee.

Failure to comply with a directive in the

letter of reprimand may result in any

other administrative action under this

part that the Board finds appropriate.

(c) Probation. Probation shall be

effective upon receipt of the notice of

probation by the mortgagee. Failure to

comply with the terms of probation may

result in any other administrative action

under this part that the Board finds

appropriate.

(d) Suspension. A suspension shall be

based upon adequate evidence and shall

be effective upon receipt of the notice of

suspension by the mortgagee. During the

period of suspension, HUD will not

endorse any mortgage originated by the

suspended mortgagee unless prior to the

date of suspension a firm commitment

has been issued relating to any such

mortgage, or a Direct Endorsement

underwriter has approved the mortgagor

for any such mortgage. During the

period of suspension, a lender or loan

correspondent may not originate new

title I loans under their Title I Contracts

of Insurance or apply for a new Contract

of Insurance.

(e)(1) Withdrawal. During the period

of withdrawal, HUD will not endorse

any mortgage originated by the

withdrawn mortgagee unless prior to the

date of withdrawal a firm commitment

has been issued relating to any such

mortgage, or a Direct Endorsement

underwriter has approved the mortgagor

for any such mortgage. During the

period of withdrawal, a lender or loan

correspondent may not originate new

title I loans under their Title I Contracts

of Insurance or apply for a new Contract

of Insurance. The Board may limit the

geographical extent of the withdrawal,

or limit its scope (e.g., to either the

single family or multifamily activities of

a withdrawn mortgagee). Upon the

expiration of the period of withdrawal,

the mortgagee may file a new

application for approval under 24 CFR

part 202.

(2) Effective date of withdrawal. (i) If

the Board determines that immediate

action is in the public interest or in the

best interests of the Department, then

withdrawal shall be effective upon

receipt of the Board’s notice of

withdrawal.

(ii) If the Board does not determine

that immediate action is necessary

according to paragraph (e)(2)(i) of this

section, then withdrawal shall be

effective either:

(A) Upon the expiration of the 30-day

period specified in § 25.8, if the

mortgagee has not requested a hearing;

or

(B) Upon receipt of the Board’s

decision under § 25.8, if the mortgagee

requests a hearing.

4. Section 25.9 is amended by revising

paragraphs (l) and (p) to read as follows:

§ 25.9 Grounds for an administrative

action.

* * * * *

(l) Failure of a mortgagee to respond

to inquiries from the Board;

* * * * *

(p) Business practices which do not

conform to generally accepted practices

of prudent mortgagees or which

demonstrate irresponsibility;

* * * * *

§ 25.12 [Removed]

5. Section 25.12 is removed.

§ 25.13 [Redesignated as § 25.12]

6. Section 25.13 is redesignated as

§ 25.12.

7. Section 25.14 is redesignated as

§ 25.13, and is revised to read as

follows:

§ 25.13 Notifying GNMA of withdrawal

actions.

When the Board issues a notice of

violation that could lead to withdrawal

of a mortgagee’s approval, or is notified

by GNMA of an action that could lead

to withdrawal of GNMA approval, the

Board shall proceed in accordance with

12 U.S.C. 1708(d).

(Approved by the Office of Management and

Budget under Control Number 2502–0450.)

§ 25.15 [Removed]

8. Section 25.15 is removed.

§ 25.16 [Redesignated as § 25.14]

9. Section 25.16 is redesignated as

§ 25.14.

§ 25.18 [Redesignated as § 25.15]

10. Section 25.18 is redesignated as

§ 25.15.

Dated: December 15, 1995.

Henry G. Cisneros,

Secretary.

[FR Doc. 96–113 Filed 1–8–96; 8:45 am]

BILLING CODE 4210–32–P