[Federal Register Volume 79, Number 241 (Tuesday, December 16, 2014)]
[Rules and Regulations]
[Pages 74612-74613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29464]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5 and 232

[Docket No. FR-5794-F-03]
RIN 2502-AJ25


Federal Housing Administration (FHA): Section 232 Healthcare 
Facility Insurance Program--Aligning Operator Financial Reports With 
HUD's Uniform Financial Reporting Standards

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

ACTION: Final rule.

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SUMMARY: On September 16, 2014, HUD published an interim rule that 
revised the financial reporting deadlines for operators participating 
in FHA's program for insurance of health care facilities under section 
232 of the National Housing Act (Section 232 program) to bring them in-
line with the reporting periods prescribed in HUD's Uniform Financial 
Reporting Standards, to which owners and borrowers participating in the 
Section 232 program are subject. HUD received no public comments in 
response to its solicitation of comment in the September 16, 2014, 
rule, and is therefore adopting the interim rule without change.

DATES: Effective date: January 15, 2015.

FOR FURTHER INFORMATION CONTACT: Vance T. Morris, Office of Residential 
Care Facilities, Office of Healthcare Programs, Office of Housing, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
6264, Washington, DC 20410-8000; telephone number 202-708-0599 (this is 
not a toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 232 of the National Housing Act (12 U.S.C. 1715w) (Section 
232) authorizes FHA to insure mortgages made by private lenders to 
finance the development of nursing homes, intermediate care facilities, 
board and care homes, and assisted living facilities (collectively, 
residential healthcare facilities). The Section 232 program allows for 
long-term, fixed-rate financing for new and rehabilitated properties 
for up to 40 years. Existing properties without rehabilitation can be 
financed with or without Ginnie Mae[supreg] \1\ Mortgage Backed 
Securities for up to 35 years. Eligible borrowers under the Section 232 
program include investors, builders, developers, public entities, and 
private nonprofit corporations and associations. The documents executed 
at loan closing provide that the borrower may not engage in any other 
business or activity. The Section 232 program regulations are codified 
in 24 CFR part 232.
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    \1\ Ginnie Mae is a registered service mark of the Government 
National Mortgage Association; see http://www.ginniemae.gov/.
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    In 2012, HUD commenced the rulemaking to update the Section 232 
program regulations, regulations that had not been revised since 1996. 
By final rule published on September 7, 2012, at 77 FR 55120, HUD 
revised the Section 232 program regulations to reflect current policy 
and practices, and improve accountability and strengthen risk 
management in the Section 232 program. The September 7, 2012, final 
rule was preceded by a proposed rule published on May 3, 2012, at 77 FR 
26304.
    Included in the updates made by the 2012 rulemaking were revisions 
to 24 CFR 5.801 (Uniform Financial Reporting Standards) and 24 CFR 
232.1009 (Financial Reports), both of which contained reporting 
requirements applicable to the Section 232 program. HUD revised these 
regulatory sections to include operators of projects insured or held by 
HUD as entities that must submit financial statements to HUD. Owners 
and borrowers have long been required to submit financial reports.
    Sections 5.801(c)(4) and 232.1009 provide that operators must 
submit financial statements to HUD quarterly within 30 calendar days of 
the date of the end of each fiscal quarter, and 60 calendar days from 
the end of the fiscal-year-end quarter to submit final fiscal year end 
quarter and fiscal year-to-date reports to HUD. The other entities 
required to submit reports were provided slightly longer periods to 
prepare and submit the reports than that provided to operators. In the 
September 7, 2012, final rule, commenters asked that HUD extend the 30-
day filing deadline for end-of-each quarterly report to 60 days. HUD 
declined to provide the extension and stated that receipt of unaudited 
quarterly and year-to-date operator financial statements promptly at 
the end of each quarter is needed for effective monitoring of a 
property's financial operations and the trend of those operations.
    HUD's September 16, 2014, interim rule, published at 79 FR 55360, 
revised the Section 232 program regulation to increase the amount of 
time operators have to comply with the reporting requirements provided 
in Sec. Sec.  5.801(c)(4) and 232.1009. In the interim rule, HUD 
advised that with almost two years of administering the Section 232 
program under the revised regulations, HUD determined that it can 
provide operators additional time to submit financial reports and 
maintain the effective monitoring of a property's financial operations 
and the trend of those operations, which was of concern to HUD in the 
September 7, 2012, rule.
    The September 16, 2014, interim rule provided operators with 60 
calendar days following the end of a fiscal quarter and 90 calendar 
days following the end of the fiscal-year-end quarter to comply with 
HUD's financial statement reporting requirements. HUD solicited comment 
on the changes made to Section 232 program regulations by the September 
16, 2014, interim rule, but received no public comments in response to 
this solicitation.
    On October 3, 2014, HUD published a notice in the Federal Register, 
at 79 FR 59646, announcing the commencement of compliance with the 
Uniform Financial Reporting Standards. Section 5.801(d)(4) of HUD's 
Uniform Financial Reporting Standards regulations provides that 
operators of projects with Section 232 insured mortgages (the entities 
described in Sec.  5.801(a)(6)) must comply with the requirements of 
Sec.  5.801 with respect to fiscal years commencing on or after the 
date that is 60 calendar days after the date on which HUD announces, 
through Federal Register notice, that it has issued guidance on the 
manner in which these reports will be transmitted to HUD. The October 
3, 2014, notice served as the notice required by Sec.  5.801(d)(4) that 
HUD has issued guidance on the manner in which the operator financial 
reports will be transmitted to HUD.\2\ Accordingly, operators must 
comply with the operator financial report requirements for fiscal years 
commencing on or after December 2, 2014.
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    \2\ That guidance can be found under the Guidance for Lenders' 
Operator Financial Statement section at http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration/healthcare_facilities/residential_care.

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[[Page 74613]]

B. This Final Rule

    As noted above, HUD received no public comments in response to the 
September 16, 2014, interim rule, and is adopting the interim rule 
without change.

Findings and Certifications

Executive Order 13563, Regulatory Review
    The President's Executive Order (EO) 13563, entitled ``Improving 
Regulation and Regulatory Review,'' was signed by the President on 
January 18, 2011, and published on January 21, 2011, at 76 FR 3821. 
This EO requires executive agencies to analyze regulations that are 
``outmoded, ineffective, insufficient, or excessively burdensome, and 
to modify, streamline, expand, or repeal them in accordance with what 
has been learned.'' Section 4 of the EO, entitled ``Flexible 
Approaches,'' provides, in relevant part, that where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, each agency shall identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. HUD submits that the changes made by this rule 
to the Section 232 regulations are consistent with the EO's directions 
as the rule reduces the burden on regulated parties by allowing for 
less restrictive reporting periods.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities.
    The changes required by this rule do not impose significant 
economic impacts on these small entities or otherwise adversely 
disproportionately burden such small entities. In fact, such small 
entities should benefit from the less restrictive reporting period. 
Accordingly, the undersigned certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.
Environmental Impact
    This rule does not direct, provide for assistance or loan and 
mortgage insurance for, otherwise govern or regulate real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction; or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. This rule is limited to changing submission 
deadlines for required reports. Accordingly, under 24 CFR 50.19(c)(1), 
this rule is categorically excluded from environmental review under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321).
Executive Order 13132, Federalism
    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either: (1) Imposes substantial direct compliance costs on State and 
local governments and is not required by statute, or (2) preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule does not have federalism 
implications and does 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) (UMRA) 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 rule does not 
impose any federal mandates on any state, local, or tribal governments, 
or on the private sector, within the meaning of UMRA.
Information Collection Requirements
    The information collection requirements contained in this rule were 
reviewed by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), and assigned OMB 
Control Number 2502-0605. In accordance with the Paperwork Reduction 
Act, an agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information, unless the collection 
displays a currently valid OMB control number.
Catalogue of Federal Domestic Assistance
    The Catalogue of Federal Domestic Assistance Number for the 
Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board 
and Care Homes and Assisted Living Facilities mortgage insurance 
programs is 14.129.

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Grant 
programs--housing and community development, Individuals with 
disabilities, Intergovernmental relations, Loan programs--housing and 
community development, Low and moderate income housing, Mortgage 
insurance, Penalties, Pets, Public housing, Rent subsidies, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

24 CFR Part 232

    Fire prevention, Health facilities, Loan programs--health, Loan 
programs--housing and community development, Mortgage insurance, 
Nursing homes, Reporting and recordkeeping requirements.

 PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

PART 232--MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE 
FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES

0
Accordingly, the interim rule amending parts 5 and 232 of title 24 of 
the Code of Federal Regulations, which was published at 79 FR 55360 on 
September 16, 2014, is adopted as final without change.

    Date: December 5, 2014.
Biniam Gebre,
 Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2014-29464 Filed 12-15-14; 8:45 am]
BILLING CODE 4210-67-P