This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

29933 

Vol. 74, No. 120 

Wednesday, June 24, 2009 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AD64 

Exception to the Maturity Limit on 

Second Mortgages 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: NCUA is amending its 

lending rules to create a limited 

exception to the 20-year maturity limit 

on second mortgage loans. The 

amendment will permit federal credit 

unions participating in the Department 

of the Treasury’s Making Home 

Affordable Program to modify a second 

mortgage loan, beyond 20 years, to 

match the term of a modified first 

mortgage loan. 

DATES: This rule is effective June 24, 

2009. Written comments must be 

received on or before August 24, 2009. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/

RegulationsOpinionsLaws/

proposed_regs/proposed_regs.html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Exception to the 

Maturity Limit on Second Mortgages’’ in 

the e-mail subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public Inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/comments as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library at 1775 

Duke Street, Alexandria, Virginia 22314, 

by appointment weekdays between 9 

a.m. and 3 p.m. To make an 

appointment, call (703) 518–6546 or 

send an e-mail to OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Pamela Yu, Staff Attorney, at the above 

address, or telephone: (703) 518–6593. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. The Financial Stability Plan 

The Emergency Economic 

Stabilization Act of 2008 (EESA) granted 

the Secretary of the Treasury emergency 

authorities and facilities to help restore 

liquidity and stability to the U.S. 

financial system. To address the 

ongoing financial crisis, the Department 

of the Treasury (Treasury) established 

the Financial Stability Plan, a 

comprehensive plan designed to address 

the credit crisis on multiple fronts. As 

part of this plan, Treasury has launched 

a series of initiatives toward financial 

recovery, including the Making Home 

Affordable (MHA) Program. 

B. Making Home Affordable Program 

In February 2009, Treasury 

introduced the MHA Program to 

stabilize the American housing market 

and help struggling homeowners reduce 

their monthly mortgage payments to 

more affordable levels. The MHA 

Program aims to help millions of 

homeowners by providing new access to 

low-cost refinancing and by creating an 

affordable loan modification program to 

help families stay in their homes. 

Treasury estimates up to 50 percent of 

at-risk mortgages currently have second 

liens. In these cases, even if the first lien 

is modified to improve affordability, a 

second lien can put a homeowner at risk 

of foreclosure. To address this problem, 

Treasury recently launched a Second 

Lien Program in an effort to reach more 

troubled homeowners, and to maximize 

the effectiveness of the first lien 

modification program. The MHA 

Second Lien Program coordinates with 

the first lien program to help create a 

sustainable mortgage payment for those 

homeowners whoqualify for a first 

mortgage modification, yet are still 

faced with the difficulty of affording 

their housing payments due to a second 

lien. 

Highlights of the MHA Second Lien 

Program: 

• In general, MHA will share the cost 

with lenders of reducing payments for 

homeowners on second mortgages by: 

Æ Reducing the interest rate; 

Æ Extending the term of the modified 

second mortgage to match the term of 

the modified first mortgage; 

Æ Forbearing principal in the same 

proportion as any principal forbearance 

on the first lien, with the option of 

extinguishing principal under a set 

extinguishment schedule; 

Æ After five years, the interest rate on 

the second lien will step up to the then 

current interest rate on the modified 

first mortgage, subject to certain 

conditions; and 

Æ Investors will receive an incentive 

payment from Treasury. 

The MHA Second Lien Program 

includes pay-for-success incentives and 

guidelines for servicers modifying 

amortizing and interest-only second 

liens. Full details about the MHA 

Second Lien Program are available 

online at http:// 

makinghomeaffordable.gov and http:// 

www.financialstability.gov/docs/ 

042809SecondLienFactSheet.pdf. 

C. Loans to Members 

Absent this rulemaking, federal credit 

union participation in the MHA Second 

Lien Program would be limited because 

NCUA’s lending rules impose a 20-year 

maturity limit on second mortgage loans 

that are secured by the memberborrower’s primary residence. 12 CFR 

701.21(f)(1)(ii). First mortgages, 

however, may be made with maturities 

of up to 40 years, or longer if permitted 

by the NCUA Board. 12 CFR 701.21(g). 

The MHA Secondary Lien Program 

guidelines require that, for amortizing 

loans, mortgage servicers ‘‘[e]xtend the 

term of the modified second mortgage to 

match the term of the modified first 

mortgage, by amortizing the unpaid 

principal balance of the second lien 

over a term that matches the term of the 

29934 Federal Register / Vol. 74, No. 120 / Wednesday, June 24, 2009 / Rules and Regulations 

modified first mortgage.’’ For interestonly loans, ‘‘[t]he second lien will 

amortize over the longer of the 

remaining term of the modified first lien 

or the originally scheduled amortization 

term, with amortization to begin at the 

time specified in the original contract.’’ 

Without an amendment to § 701.21(f), 

federal credit unions cannot participate 

in the MHA Second Lien Program if the 

first mortgage is for a term longer than 

20 years. 

This interim final rule creates a 

limited exception to the 20-year 

maturity limit on second mortgage 

loans. The new provision, § 701.21(f)(3), 

will permit federal credit unions 

participating in Treasury’s MHA 

Program to modify a second mortgage to 

match the term of a modified first 

mortgage, beyond 20 years. Credit 

unions that are not participating in the 

MHA Second Lien Program will still be 

subject to the current 20-year maturity 

limitation on second liens. 

II. Interim Rule and Immediate 

Effective Date 

NCUA is issuing this rulemaking as 

an interim final rule, effective upon 

publication. The Administrative 

Procedure Act (APA), 5 U.S.C. 553, 

requires that, before a rulemaking can be 

finalized, it must first be published as 

a notice of proposed rulemaking with 

the opportunity for public comment, 

unless the agency for good cause finds 

that notice and public comment are 

impracticable, unnecessary, or contrary 

to the public interest. Additionally, the 

APA requires that, once finalized, a 

rulemaking must have a delayed 

effective date of 30 days from the date 

of publication, except for good cause. 

In this regard, NCUA invokes the 

good cause exception to the 

requirements of the APA. NCUA 

believes good cause exists for issuing 

these amendments as an interim rule 

effective immediately. Due to the deep 

contraction in the American economy 

and, in particular, the housing market, 

millions of homeowners are struggling 

with unaffordable housing payments 

and are at risk of foreclosure. The 

interim rule provides credit unions with 

the ability to participate in the MHA 

Second Lien Program and, thus, to 

better assist struggling homeowners 

unable to afford their housing payments. 

The interim rule is limited in scope and 

does not impose any regulatory burden; 

rather, the rule provides greater 

flexibility for credit unions to assist 

their members in these turbulent 

economic times. 

For these reasons, NCUA has 

determined that the public notice and 

participation that the APA ordinarily 

requires before a regulation may take 

effect would, in this case, be contrary to 

the public interest and, further, that 

good cause exists for waiving the 

customary 30-day delayed effective 

date. Nevertheless, NCUA would like 

the benefit of public comment before 

adopting a permanent final rule and, 

thus, invites interested parties to submit 

comments during a 60-day comment 

period. In adopting the final regulation, 

NCUA will revise the interim rule in 

light of the comments received on the 

interim rule, if appropriate. 

III. Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a rule may have on a substantial 

number of small entities (primarily 

those under ten million dollars in 

assets). This interim final rule does not 

impose any regulatory burden but 

provides flexibility to all federal credit 

unions to allow for participation in the 

MHA Second Lien Program. 

Accordingly, it will not have a 

significant economic impact on a 

substantial number of small credit 

unions, and therefore, no regulatory 

flexibility analysis is required. 

Paperwork Reduction Act 

NCUA has determined that this rule 

will not increase paperwork 

requirements under the Paperwork 

Reduction Act of 1995 and regulations 

of the Office of Management and 

Budget. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Federal Regulations and Policies on 

Families 

NCUA has determined that this rule 

will not affect family well-being within 

the meaning of section 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 (Pub. 

L. 104–121) (SBREFA) provides 

generally for congressional review of 

agency rules. A reporting requirement is 

triggered in instances where NCUA 

issues a final rule as defined by Section 

551 of the APA. 5 U.S.C. 551. NCUA 

does not believe this interim final rule 

is a ‘‘major rule’’ within the meaning of 

the relevant sections of SBREFA. NCUA 

has submitted the rule to the Office of 

Management and Budget for its 

determination in that regard. 

List of Subjects in 12 CFR Part 701 

Credit, Credit unions, Mortgages. 

By the National Credit Union 

Administration Board, this 18th day of June 

2009. 

Mary F. Rupp, 

Secretary of the Board. 

■ For the reasons discussed above, 

NCUA amends 12 CFR Part 701 as 

follows: 

PART 701—ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

UNIONS 

■ 1. The authority citation for Part 701 

continues to read as follows: 

Authority: 12 U.S.C. 1752(5), 1755, 1756, 

1757, 1759, 1761a, 1761b, 1766, 1767, 1782, 

1784, 1787, and 1789. 

Section 701.6 is also authorized by 15 

U.S.C. 3717. 

Section 701.31 is also authorized by 15 

U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601– 

3610. 

Section 701.35 is also authorized by 42 

U.S.C. 4311–4312. 

■ 2. Section 701.21 is amended by 

adding new paragraph (f)(3) to read as 

follows: 

§ 701.21 Loans to members and lines of 

credit to members. 

* * * * * 

(f) * * * 

(3) Notwithstanding the general 20- 

year maturity limit on second mortgage 

loans, a federal credit union 

participating in the Department of the 

Treasury’s Making Home Affordable 

Program may extend the term of a 

modified second mortgage to match the 

term of a modified first mortgage, in 

accordance with applicable program 

guidelines. 

* * * * * 

[FR Doc. E9–14759 Filed 6–23–09; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AD60 

Operating Fees 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: NCUA is amending its rule on 

the assessment of the Federal credit 

union (FCU) operating fee by permitting 

FCUs to subtract investments made 

under the Credit Union System 

Investment Program (CU SIP) and the