65140 Federal Register / Vol. 79, No. 212 / Monday, November 3, 2014 / Rules and Regulations 

questions about the obstacle departure 

procedure and terms used in the Final 

Rule. 

Conclusion 

After consideration of the comments 

submitted in response to the direct final 

rule, the FAA has determined that no 

further rulemaking action is necessary 

and believes that the Clarification of the 

Final Rule published September 30, 

2014, will clarify any questions about 

the ODP and terms used in the Final 

Rule; therefore, amendment 135–131 

remains in effect. 

How To Obtain Additional Information 

A. Rulemaking Documents 

An electronic copy of a rulemaking 

document may be obtained by using the 

Internet— 

1. Search the Federal eRulemaking 

Portal (http://www.regulations.gov); 

2. Visit the FAA’s Regulations and 

Policies Web page at http://

www.faa.gov/regulations_policies/ or 

3. Access the Government Printing 

Office’s Web page at http://

www.gpo.gov/fdsys/. 

Copies may also be obtained by 

sending a request (identified by notice, 

amendment, or docket number of this 

rulemaking) to the Federal Aviation 

Administration, Office of Rulemaking, 

ARM–1, 800 Independence Avenue 

SW., Washington, DC 20591, or by 

calling (202) 267–9680. 

B. Comments Submitted to the Docket 

Comments received may be viewed by 

going to http://www.regulations.gov and 

following the online instructions to 

search the docket number for this 

action. Anyone is able to search the 

electronic form of all comments 

received into any of the FAA’s dockets 

by the name of the individual 

submitting the comment (or signing the 

comment, if submitted on behalf of an 

association, business, labor union, etc.). 

C. Small Business Regulatory 

Enforcement Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996 requires FAA to comply with 

small entity requests for information or 

advice about compliance with statutes 

and regulations within its jurisdiction. 

A small entity with questions regarding 

this document, may contact its local 

FAA official, or the person listed under 

the FOR FURTHER INFORMATION CONTACT

heading at the beginning of the 

preamble. To find out more about 

SBREFA on the Internet, visit http://

www.faa.gov/regulations_policies/

rulemaking/sbre_act/. 

Issued under authority provided by 49 

U.S.C. 106(f), 44701(a), and 44703 in 

Washington, DC, on October 29, 2014. 

Lirio Liu, 

Director, Office of Rulemaking. 

[FR Doc. 2014–26052 Filed 10–31–14; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 203 

[Docket No. FR 5812–N–01] 

HUD’s Qualified Mortgage Rule: 

Announcement of Intention To Adopt 

Changes Pertaining to Exempted 

Transaction List 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Announcement of change to 

HUD’s exempted transaction definition. 

SUMMARY: The Consumer Financial 

Protection Bureau (CFPB) is issuing a 

final rule being published concurrently 

with this document, and it can be found 

elsewhere in this Federal Register, 

entitled ‘‘Amendments to the 2013 

Mortgage Rules under the Truth in 

Lending Act (Regulation Z),’’ amending 

certain terms in CFPB’s definition of 

‘‘qualified mortgage’’ which HUD crossreferenced in HUD’s qualified mortgage 

definition. In accordance with the 

procedures incorporated in HUD’s 

definition of ‘‘qualified mortgage,’’ this 

document advises of HUD’s intention to 

adopt, for HUD’s qualified mortgage 

rule, CFPB’s changes to the exemption 

for non-profit transactions from the 

qualified mortgage standards. HUD is 

not, however, adopting the new points 

and fees cure provision adopted by 

CFPB for the reasons stated in this 

document, but is providing guidance to 

mortgagees on curing points and fees 

errors prior to insurance endorsement. 

DATES: Effective Date: November 3, 

2014. 

FOR FURTHER INFORMATION CONTACT: 

Michael P. Nixon, Office of Housing, 

Department of Housing and Urban 

Development, 451 7th Street SW., Room 

9278, Washington, DC 20410; telephone 

number 202–402–5216, ext. 3094 (this is 

not a toll-free number). Persons with 

hearing or speech impairments may 

access this number through TTY by 

calling the Federal Relay Service at 800– 

877–8339 (this is a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

On December 11, 2013, at 78 FR 

75215, HUD published a final rule that 

established a definition of ‘‘qualified 

mortgage’’ for single family residential 

mortgages that HUD insures, guarantees, 

or administers. Under HUD’s qualified 

mortgage rule, qualified mortgage status 

attaches at origination and insurance 

endorsement to those single family 

residential mortgages insured under the 

National Housing Act (12 U.S.C. 1701 et 

seq.), section 184 loans for Indian 

housing under the Housing and 

Community Development Act of 1992 

(12 U.S.C. 1715z–13a) (Section 184 

guaranteed loans), and section 184A 

loans for Native Hawaiian housing 

under the Housing and Community 

Development Act of 1992 (1715z–13b) 

(Section 184A guaranteed loans). HUD’s 

definition of ‘‘qualified mortgage’’ is 

codified for each program at 24 CFR 

201.7, 203.19, 1005.120 and 1007.80. 

HUD defined ‘‘qualified mortgage’’ in 

a manner that aligned HUD’s definition, 

to the extent feasible and consistent 

with HUD’s mission, with that of the 

qualified mortgage definition 

promulgated by the CFPB, and which is 

codified at 12 CFR 1026.43. HUD 

undertook the alignment for the purpose 

of lessening future differences in 

standards for HUD’s single family 

residential insured mortgages and those 

established by the CFPB, which apply to 

conventional mortgages seeking 

designation as qualified mortgage. 

HUD’s alignment to CFPB’s standards 

also included cross-references to CFPB’s 

list of transactions exempted from the 

qualified mortgage definition, including 

a non-profit transaction exemption, and 

CFPB’s limit on points and fees for 

qualified mortgage status as of January 

10, 2014. HUD’s definition of qualified 

mortgage provides that when CFPB 

amends its definition of qualified 

mortgage, HUD may announce the 

adoption of CFPB change or changes 

through publication of a notice and after 

providing FHA-approved mortgagees 

with time, as may be determined 

necessary, to implement. Members of 

the public interested in more detail 

about HUD’s qualified mortgage 

regulations may refer to the preamble of 

HUD’s September 30, 2013, proposed 

rule and HUD’s December 11, 2013, 

final rule, at 78 FR 59890, 78 FR 75215. 

II. HUD Notice of CFPB’s Final Rule 

Published elsewhere in this Federal 

Register is CFPB’s final rule amending 

the non-profit transaction exemption 

from the ability-to-repay rule and 

providing a limited cure mechanism for 


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Federal Register / Vol. 79, No. 212 / Monday, November 3, 2014 / Rules and Regulations 65141 

1The list of mortgage transactions exempted 

under12 CFR 1026.43(a)(2) in the Title II program 

at 24 CFR 203.19 is also included in the Title I 

program at 24 CFR 201.7, the Section 184 

guaranteed loan program at 24 CFR 1005.120 and 

the Section 184A guaranteed loan program at 24 

CFR 1007.80 by cross-reference to 24 CFR 

203.19(c)(2). 

2Cure means a procedure to reduce points and 

fees or debt-to-income ratios after consummation 

when the qualified mortgage limits have been 

inadvertently exceeded. See 79 FR 25740 and the 

CFPB’s final rule published elsewhere in this 

Federal Register entitled ‘‘Amendments to the 2013 

Mortgage Rules under the Truth in Lending Act 

(Regulation Z).’’ 

3See section 203(b)(9) of the National Housing 

Act (12 USC 1709(b)(9)) which requires the 

homebuyer to pay in cash or equivalent on account 

of the property an amount equal to not less than 3.5 

percent of the appraised value of the property. 

the points and fees limit that applies to 

qualified mortgages. 

A. Amendment to the Non-Profit 

Transaction Exemption 

CFPB’s final rule amended the 

‘‘exempted transaction’’ list to provide 

that certain interest-free, contingent 

subordinate liens originated by nonprofit creditors would not be counted 

towards the credit extension limit of 200 

transactions that qualifies a nonprofit 

for the nonprofit exemption at 12 CFR 

1026.43(a)(3)(v)(D). Specifically, the 

rule excludes consumer credit 

transactions if the transaction is secured 

by a subordinate lien; for the purpose of 

down payment, closing costs, or other 

similar home buyer assistance, such as 

principal or interest subsidies; for 

property rehabilitation assistance; for 

energy efficiency assistance; or for the 

purpose of foreclosure avoidance or 

prevention. Additionally, the consumer 

credit contract must not require 

payment of interest; must provide that 

repayment of the amount of the credit 

extended is forgiven either 

incrementally or in whole, at a date 

certain, and subject only to specified 

ownership and occupancy conditions; 

and the total of costs payable by the 

consumer in connection with the 

transaction at consummation is less 

than 1 percent of the amount of credit 

extended and includes no charges other 

than: Fees for recordation of security 

instruments, deeds, and similar 

documents, a bona fide and reasonable 

application fee and a bona fide and 

reasonable fee for housing counseling 

services. Lastly, the creditor must also 

comply with all other applicable 

requirements of this part in connection 

with the transaction. 

By excluding these interest-free, 

contingent subordinate liens from 

determining if a non-profit creditor 

qualifies for the non-profit exemption 

(i.e. extends credit secured by a 

dwelling no more than 200 times), more 

non-profit creditors will qualify for the 

exemption and additional consumers 

with income that does not exceed the 

low- and moderate-income household 

limit, as established pursuant to section 

102 of the Housing and Community 

Development Act of 1974 (42 U.S.C. 

5302(a)(20)), will have access to credit. 

For additional information about CFPB’s 

change, interested members of the 

public should refer to the CFPB’s 

proposed and final rules. See 79 FR 

25730 and the CFPB’s final rule 

published elsewhere in this Federal 

Register entitled ‘‘Amendments to the 

2013 Mortgage Rules under the Truth in 

Lending Act (Regulation Z).’’ 

HUD sees value in maintaining 

consistency with CFPB’s rule when it is 

consistent with HUD’s mission and 

statutes. HUD believes that the 

amendment to the non-profit exemption 

in the exempted transaction list is 

balanced in a way to protect against 

abuse while providing more access to 

credit for borrowers with low- and 

moderate-incomes, consistent with 

HUD’s mission. Therefore, HUD is 

adopting the amendment and 

maintaining consistency with the 

CFPB’s list of exempted transactions at 

12 CFR 1026.43(a)(3), as crossreferenced in HUD’s definition at 24 

CFR 203.19.1 HUD’s definition will thus 

track the new CFPB definition as of 

November 3, 2014. This change will be 

effective for all case numbers assigned 

on or after the effective date of this 

document. 

B. Amendment to the Points and Fees 

Limit Provision—Post Consummation 

Cure Provision 

CFPB’s final rule also provides a 

limited, post-consummation cure 

mechanism for loans that are originated 

with the expectation of qualified 

mortgage status but actually exceed the 

points and fees limit for qualified 

mortgage status. The CFPB’s final rule 

amends the points and fees provision at 

12 CFR 1026.43(e)(3) to permit a 

creditor or assignee to cure an 

inadvertent excess over the qualified 

mortgage points and fees limits by 

refunding to the consumer the amount 

of excess, under certain conditions.2

Given the complexity and exercise of 

judgment involved in determining 

points and fees, CFPB found that some 

creditors may not originate and 

secondary market participants may not 

purchase mortgage loans that are near 

the qualified mortgage points and fees 

limit. Given the establishment of this 

buffer, CFPB was concerned that access 

to credit for consumers seeking loans at 

the margins of the limits might be 

negatively affected. Therefore, the 

provision would permit a creditor or 

assignee to cure an inadvertent excess 

over the qualified mortgage points and 

fees limit and the creditor or assignee 

must refund to the consumer within 210 

days after consummation the amount of 

money over the points and fees limit. 

This new provision is intended to ease 

the current burden on the market, but 

will expire on January 10, 2021. For 

additional information about CFPB’s 

change interested members of the public 

should refer to the CFPB’s proposed and 

final rules. See 79 FR 25730 and the 

CFPB’s final rule published elsewhere 

in this Federal Register entitled 

‘‘Amendments to the 2013 Mortgage 

Rules under the Truth in Lending Act 

(Regulation Z).’’ 

Despite HUD’s authority under 24 

CFR 203.19 to adopt the CFPB’s changes 

to points and fees by notice for this 

subset of loans, and while recognizing 

the usefulness of a cure provision for 

these loans, HUD cannot adopt the 

CFPB’s cure provision for the following 

reasons, including but not limited to: 

First, the CFPB’s cure provision requires 

that the cured loan meet CFPB’s 

qualified mortgage definition in order to 

qualify for the cure, but HUD has 

codified its own definition, which 

differs. Second, if HUD permitted a FHA 

lender to return funds to a borrower or 

pay down the principal balance for a 

single family mortgage insured under 

Title II, the amount returned could 

result in a violation of the statutorily 

required borrower minimum cash 

investment of 3.5 percent or other FHA 

requirements relating to interested party 

contributions and the calculation of the 

maximum insured mortgage value.3 In 

addition, unlike the general market, the 

points and fees limit for Title II 

mortgages is a requirement for 

insurability of the mortgage by FHA. As 

an insurer of the mortgage, it is 

imperative that FHA ensure all 

eligibility requirements are met prior to 

insurance endorsement. Therefore, 

while permitting a cure in connection 

with FHA-insured mortgages may have 

the same benefit for the FHA-approved 

lender as a lender in the general market, 

the impact on FHA as the insurer is 

substantially different. 

While FHA is not able to adopt the 

CFPB’s cure provision that allows the 

cure period to extend beyond insurance 

endorsement, FHA approved lenders are 

not without the ability to cure errors 

that occur in origination before 

submission for insurance endorsement. 

FHA reminds all FHA-approved 

mortgagees that, consistent with FHA’s 

existing Notice of Return/Notice of NonVerDate Sep<11>2014 13:20 Oct 31, 2014 Jkt 235001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\03NOR1.SGM 03NOR1

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65142 Federal Register / Vol. 79, No. 212 / Monday, November 3, 2014 / Rules and Regulations 

Endorsement (NOR) process, mortgagees 

may continue to cure errors and 

resubmit mortgages for insurance 

endorsement, provided all eligibility 

criteria are met at the time of insurance 

endorsement. FHA believes that the 

existing ability to cure errors is 

sufficient and is consistent with the 

attachment of qualified mortgage status 

at endorsement. As such, HUD is not 

adopting the CFPB’s cure provisions 

and does not believe any further ability 

to cure is warranted. 

In summary, HUD’s qualified 

mortgage definition for Title II 

mortgages, except for manufactured 

housing and exempted transactions, will 

continue to use the CFPB’s points and 

fees limit at 12 CFR 1026.43(e)(3) as of 

January 10, 2014 and not include the 

change published on November 3, 2014. 

Dated: October 21, 2014. 

Carol J. Galante, 

Assistant Secretary for Housing-Federal 

Housing Commissioner. 

[FR Doc. 2014–25492 Filed 10–31–14; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9696] 

RIN 1545–BH60 

Local Lodging Expenses; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations; correction. 

SUMMARY: This document contains 

corrections to final regulations (TD 

9696) that were published in the 

Federal Register on October 1, 2014 (79 

FR 59112). The final regulations are 

relating to the deductibility of expenses 

for lodging when an individual is not 

travelling away from home (local 

lodging). 

DATES: This correction is effective on 

November 3, 2014 and applicable 

beginning October 1, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Peter Ford, at (202) 317–7011 (not a toll 

free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9696) that 

are the subject of this correction is 

under sections 162 and 262 of the 

Internal Revenue Code. 

Need for Correction 

As published, the final regulations 

(TD 9696) contain an error that may 

prove to be misleading and is in need 

of clarification. 

Correction of Publication 

Accordingly, the final regulations (TD 

9696), that are the subject of FR Doc. 

2014–23306, are corrected as follows: 

On page 59115, first column, the 

fourth line of the signature block, the 

language ‘‘Approved: August 22, 2013.’’ 

Is corrected to read ‘‘Approved: July 11, 

2014.’’ 

Martin V. Franks, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. 2014–26068 Filed 10–31–14; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2014–0889] 

Drawbridge Operation Regulation; 

Cerritos Channel, Long Beach, CA 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of deviation from 

drawbridge regulation. 

SUMMARY: The Coast Guard has issued a 

temporary deviation from the operating 

schedule that governs the Henry Ford 

Avenue railroad drawbridge across 

Cerritos Channel, mile 4.8, at Long 

Beach, CA. The deviation is necessary to 

allow the bridge owner to make 

necessary bridge maintenance repairs. 

This deviation allows the bridge to 

remain in the closed-to-navigation 

position during the deviation period. 

DATES: This deviation is effective from 

5 a.m. on November 12, 2014, to 5 p.m. 

on November 17, 2014. 

ADDRESSES: The docket for this 

deviation, [USCG–2014–0889], is 

available at http://www.regulations.gov. 

Type the docket number in the 

‘‘SEARCH’’ box and click ‘‘SEARCH.’’ 

Click on Open Docket Folder on the line 

associated with this deviation. You may 

also visit the Docket Management 

Facility in Room W12–140 on the 

ground floor of the Department of 

Transportation West Building, 1200 

New Jersey Avenue SE., Washington, 

DC 20590, between 9 a.m. and 5 p.m., 

Monday through Friday, except Federal 

holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

deviation, call or email David H. 

Sulouff, Chief, Bridge Section, Eleventh 

Coast Guard District; telephone 510– 

437–3516, email 

David.H.Sulouff@uscg.mil. If you have 

questions on viewing the docket, call 

Cheryl Collins, Program Manager, 

Docket Operations, telephone 202–366– 

9826. 

SUPPLEMENTARY INFORMATION: The Port 

of Los Angeles has requested a 

temporary change to the operation of the 

Henry Ford Avenue railroad 

drawbridge, mile 4.8, over Cerritos 

Channel, at Long Beach, CA. The 

drawbridge navigation span provides 7 

feet vertical clearance above Mean High 

Water in the closed-to-navigation 

position. In accordance with 33 CFR 

117.147(b), the drawspan is maintained 

in the fully open position, except when 

a train is crossing or for maintenance. 

When the draw is in the closed position, 

it opens on signal. Navigation on the 

waterway is mainly recreational, 

emergency response and commercial tug 

and barge combinations between the 

ports of Los Angeles and Long Beach. 

The Port of Los Angeles has requested 

the drawbridge be allowed to remain 

closed to navigation at various times 

from 5 a.m. on November 12, 2014 to 5 

p.m. on November 17, 2014, so they can 

perform replacement of the auxiliary 

counterweight wire ropes on the 

drawbridge. The vertical lift span will 

be secured in the closed to navigation 

position at various times as follows: 

6 a.m. to 10 a.m. November 12, 2014; 

2:30 p.m. on November 12, 2014 to 6:30 

a.m. on November 13, 2014; 6 a.m. to 3 

p.m. November 14, 2014; and 6 a.m. to 

3 p.m. on November 17, 2014. 

Mariners must contact the bridge 

tender to obtain status of the drawbridge 

when planning transits between the 

ports. This temporary deviation has 

been coordinated with the waterway 

users. No objections to the proposed 

temporary deviation were raised. 

Vessels able to pass through the 

bridge in the closed position may do so 

at anytime. The bridge will not be able 

to open for emergencies. There is an 

alternative route, transiting around the 

south side of Terminal Island, for 

vessels unable to pass through the 

bridge in the closed position. The Coast 

Guard will inform waterway users of 

this temporary deviation via our Local 

and Broadcast Notices to Mariners, to 

minimize resulting navigational 

impacts. 

In accordance with 33 CFR 117.35(e), 

the drawbridge must return to its regular 

operating schedule immediately at the 


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