Accelerated Claim and Asset Disposition (ACD) Program; Advance Notice of Proposed Rulemaking, 32392-32393 [E6-8637]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 71, Number 107 (Monday, June 5, 2006)]
[Proposed Rules]
[Pages 32392-32393]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8637]



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Part III





Department of Housing and Urban Development





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24 CFR Parts 203 and 291



 Accelerated Claim and Asset Disposition (ACD) Program; Advance Notice 
of Proposed Rulemaking; Proposed Rule

Federal Register / Vol. 71, No. 107 / Monday, June 5, 2006 / Proposed 
Rules

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 203 and 291

[Docket No. FR-4887-A-01; HUD-2006-0007]
RIN 2502-AI14


Accelerated Claim and Asset Disposition (ACD) Program; Advance 
Notice of Proposed Rulemaking

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

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: This notice solicits comments on HUD's Accelerated Claim and 
Asset Disposition (ACD) program before HUD proceeds to issue a proposed 
rule that will commence the rulemaking process that will result in 
codification of the requirements for the ACD program, thus making the 
ACD program a permanent part of HUD's single family mortgage insurance 
programs. Under the ACD program, HUD will pay claims upon assignment of 
certain defaulted mortgage loans (``assets'') insured by the Federal 
Housing Administration (FHA). The purpose of the ACD program is to help 
FHA maximize the recovery on assets sold by HUD. HUD seeks comments on 
the ACD Demonstration program, including recommendations of cost-
effective, efficient improvements and alternatives that should be made 
part of the permanent program.

DATES: Comment Due Date: August 4, 2006.

ADDRESSES: Interested persons are invited to submit comments regarding 
this advance notice of proposed rulemaking to the Regulations Division, 
Office of General Counsel, Department of Housing and Urban Development, 
451 Seventh Street, SW., Room 10276, Washington, DC 20410-0500. 
Interested persons also may submit comments electronically through the 
Federal eRulemaking Portal at: https://www.regulations.gov. Commenters 
should follow the instructions provided on that site to submit comments 
electronically. HUD strongly encourages commenters to submit comments 
electronically in order to make them immediately available to the 
public.
    Facsimile (FAX) comments are not acceptable. In all cases, 
communications must refer to the docket number and title. All comments 
and communications submitted will be available, without charge, 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, please schedule an appointment to review the public comments 
by calling the Regulations Division at (202) 708-3055 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access the above telephone number via TTY (text telephone) by calling 
the Federal Relay Service at 1(800) 877-8339 (this is a toll-free 
number). Copies of all comments submitted are available for inspection 
and downloading at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kathleen S. Malone, Director, Asset 
Sales Office, Office of Finance and Budget, Department of Housing and 
Urban Development, 451 Seventh Street SW., Room 3136, Washington, DC 
20410-8000; telephone (202) 708-2625 (this is not a toll-free number). 
Hearing-or speech-impaired individuals may access this number through 
TTY by calling the toll-free Federal Information Relay Service at (800) 
877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 29, 2002 (67 FR 66038), HUD published a notice in the 
Federal Register announcing the establishment of the Accelerated Claim 
and Asset Disposition (ACD) Demonstration program. The October 29, 
2002, notice followed a February 5, 2002 (67 FR 5418), notice that 
announced HUD's intent to establish the ACD Demonstration program and 
solicited public comments on the proposal. The ACD process is 
authorized under section 601 of the Departments of Veterans Affairs and 
Housing and Urban Development and Independent Agencies Appropriations 
Act, 1999 (Pub. L. 105-276, approved October 21, 1998), which amended 
section 204 of the National Housing Act (12 U.S.C. 1710) to increase 
recoveries, produce savings, and improve the overall efficiency of the 
disposition of HUD-acquired single family assets.
    Under amended section 204(a)(1)(A) of the National Housing Act, the 
Secretary of HUD is authorized to pay claims upon assignment of certain 
defaulted FHA-insured mortgage loans. Before implementing the new ACD 
disposition process on a nationwide basis, HUD has conducted an ACD 
Demonstration program involving a group of defaulted mortgages. This 
has allowed HUD to assess the overall effectiveness of this disposition 
process. HUD believes that improvements can be made to the program to 
make it more effective. Consequently, before proceeding with the 
regulatory codification of the ACD program, HUD is soliciting comments 
from all interested parties, especially those who participated or 
declined to participate in the Demonstration program, on possible 
improvements to the program.

II. This Advance Notice of Proposed Rulemaking

    This notice solicits comments on HUD ACD Demonstration program 
before HUD issues a proposed rule to codify the requirements for the 
ACD program. When codified, the ACD program will become a permanent 
part of HUD's single family mortgage insurance programs. Also upon 
codification, the current regulations in 24 CFR part 203 governing the 
assignment of mortgages to HUD and related claim procedures will be 
amended to reflect the new requirements for assignments made pursuant 
to the ACD program. The proposed rule would also revise 24 CFR part 
291, which governs the disposition of HUD-acquired single family 
property, to incorporate the policies and procedures for the sale of 
loans assigned to HUD under the ACD program. The ACD program 
regulations would provide for the ACD payment of claims. An objective 
of the ACD Program will be to maximize the return to the FHA insurance 
fund. One way to maximize returns to FHA is to minimize the time an 
asset is held.
    Possible components of the ACD program would be as follows:
    1. Mandatory and voluntary components. HUD is considering 
establishing two program components: (1) A mandatory component under 
which mortgagees that elect to file claims on certain defaulted 
mortgages (such as vacant homes) would be required to submit the 
mortgages for assignment and payment of a claim pursuant to the ACD 
program; and (2) a voluntary component under which eligible mortgagees 
would be permitted to submit other types of defaulted mortgages that 
meet specified eligibility criteria, pursuant to the ACD program, for 
assignment and payment of a claim.
    2. Disposition alternatives. To date, sales awarded based on 
competitive bids under the ACD Demonstration program have been 
conducted using joint ventures as the vehicle for disposing of 
defaulted assets. The proposed rule would build upon the experience of 
the ACD Demonstration program by granting HUD the flexibility to choose 
from a variety of disposition alternatives, including the joint 
ventures. In addition to joint ventures, another possible disposition 
method would be whole loan or bulk sales

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involving the disposal of a portfolio of assets to the highest bidder. 
Another possible option would be the packaging of loans into securities 
that are then sold to investors. Flexibility in the choice of 
disposition alternatives would increase HUD's ability to respond to 
changes in both the economy and the financial real estate market.
    3. Asset management alternatives. The proposed rule would also 
describe the asset management (``servicing'') requirements applicable 
to loans assigned under the ACD program. HUD is considering several 
asset management alternatives for inclusion in the proposed rule. For 
example, the current FHA servicer may be required to continue servicing 
the loan on a fee basis until notice by HUD to transfer the loan to the 
servicer's designee. Another alternative would be for HUD to transfer 
the servicing of the loan to a servicer who would be responsible for 
servicing, foreclosing, and selling the assets. Based on the public 
comments received on this notice, the proposed rule might provide for 
one or more asset management alternatives, including those outlined 
above.

III. Public Comments

    HUD is requesting interested members of the public, particularly 
those who participated in the ACD Demonstration program, to submit 
comments on the ACD Program and, specifically, on the main program 
components identified in Section II of this notice and the following 
issues and questions. In proposing procedural or program 
recommendations for disposition or asset management alternatives and 
claim payment, HUD asks commenters to address:
    (1) Methods and/or criteria that would assist in identifying loans 
with high probability of foreclosure and conveyance;
    (2) Asset eligibility criteria (``criteria'') that should be 
considered for the proposed voluntary or mandatory components of the 
ACD program;
    (3) Any procedural and staffing efficiencies that may be 
anticipated from implementation of such criteria;
    (4) Selection of a control group of non-ACD loans for evaluation 
purposes;
    (5) Measures that may assist in assessing the effectiveness of the 
disposition process; and
    (6) Criteria that may be useful to HUD in determining the 
advantages and disadvantages of claim submission, including timing or 
reversal of termination of FHA insurance, acquisition, and disposition 
of loans and properties.
    Public comments received in response to this notice will be used to 
develop a proposed rule that will commence the rulemaking process to 
codify the ACD program. HUD may also seek additional feedback from 
those entities that participated or have been impacted by the 
Demonstration program.
    To assist the public, HUD wishes to share the preliminary 
evaluation that has been performed on the Demonstration program. This 
evaluation can be obtained by contacting the contact person listed in 
this notice, or by visiting https://www.hud.gov/offices/hsg/
hsgrroom.cfm.

IV. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this advance 
notice of proposed rulemaking under Executive Order 12866 (entitled 
``Regulatory Planning and Review''). OMB determined that this notice is 
a ``significant regulatory action,'' as defined in section 3(f) of the 
Order (although not economically significant, as provided in section 
3(f)(1) of the Order). The docket file is available for public 
inspection between the hours of 8 a.m. and 5 p.m. in the Regulations 
Division, Office of General Counsel, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 10276, Washington, DC 20410-
0500. Due to security measures at the HUD Headquarters building, please 
schedule an appointment to review the docket file by calling the 
Regulations Division at (202) 708-3055 (this is not a toll-free 
number). Persons with hearing or speech challenges may access the above 
telephone number via TTY (text telephone) by calling the Federal Relay 
Service at 1-800-877-8339 (this is a toll free number).

    Dated: May 23, 2006.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. E6-8637 Filed 6-2-06; 8:45 am]
BILLING CODE 4210-67-P