Federal Housing Administration (FHA): Single Family Quality Assurance-Solicitation of Information on Quality Lending Practices, 41075-41077 [2013-16483]

Download as PDF 41075 Federal Register / Vol. 78, No. 131 / Tuesday, July 9, 2013 / Notices Comments Due Date: September 9, 2013. ADDRESSES: Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Room 4176, Washington, DC 20410–5000; telephone 202–402–3400 (this is not a toll-free number) or email at Colette.Pollard@hud.gov for a copy of the proposed forms or other available information. Persons with hearing or speech impairments may access this number through TTY by calling the tollfree Federal Relay Service at (800) 877– 8339. FOR FURTHER INFORMATION CONTACT: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410; email DATES: Information collection Number of respondents Primary Applications .... Finalists ........................ Total ............................. mstockstill on DSK4VPTVN1PROD with NOTICES Title of Information Collection: Innovation in Affordable Housing Design Student Competition. OMB Approval Number: N/A. Type of Request: New. Form Number: N/A. Description of the need for the information and proposed use: The 30 4 14 Authority: Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35. Jkt 229001 Responses per annum 1 1 2 This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency’s estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. HUD encourages interested parties to submit comment in response to these questions. 17:44 Jul 08, 2013 A. Overview of Information Collection Frequency of response B. Solicitation of Public Comment VerDate Mar<15>2010 Colette Pollard at Colette.Pollard@hud.gov or telephone 202–402–3400. 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 (800) 877–8339. Copies of available documents submitted to OMB may be obtained from Ms. Pollard. SUPPLEMENTARY INFORMATION: This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A. Burden hour per response 30 4 14 [FR Doc. 2013–16452 Filed 7–8–13; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–5723–N–01] Federal Housing Administration (FHA): Single Family Quality Assurance— Solicitation of Information on Quality Lending Practices Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD. ACTION: Notice. AGENCY: Through this notice, FHA solicits comment from its approved lenders, the lending industry generally, consumers, consumer protection agencies, and interested members of the public on ways to improve the efficiency and effectiveness of FHA’s quality assurance process (QAP). The objective of FHA’s QAP is to promote quality lending practices by FHA’s approved lenders; practices that protect the consumer and mitigate risk for the lender and FHA. The feedback that FHA PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 Annual burden hours 80 40 120 Dated: July 1, 2013. Jean Lin Pao, General Deputy Assistant Secretary, Office of Policy Development and Research. SUMMARY: Innovation in Affordable Housing Design Student Competition is a new initiative in which multidisciplinary teams of graduate students will compete to solve a real life problem faced by public housing authorities using innovations in affordable housing design. The Competition aims to: Encourage research and innovation in quality affordable housing design that strengthens the social and physical fabric of low- and moderate-income communities and neighborhoods; raise practitioner and future practitioner capacity to produce more livable and sustainable housing for low- and moderate-income people through disseminating best practices; and to foster cross-cutting team-work within the design and community development process. Respondents (i.e. affected public): Graduate Student Teams. 2400 160 2560 Hourly cost per response N/A N/A N/A Annual cost N/A N/A N/A receives through this solicitation will help inform FHA of next steps that FHA may want to take to strengthen its current QAP. DATES: Comment Due Date: September 9, 2013. ADDRESSES: Interested persons are invited to submit comments regarding this document to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410–0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title. 1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410–0500. 2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare E:\FR\FM\09JYN1.SGM 09JYN1 41076 Federal Register / Vol. 78, No. 131 / Tuesday, July 9, 2013 / Notices and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically. Note: To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the document. mstockstill on DSK4VPTVN1PROD with NOTICES No Facsimile Comments. Facsimile (FAX) comments are not acceptable. Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available 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, an appointment to review the public comments must be scheduled in advance by calling the Regulations Division at 202–708–3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at 800–877– 8339. Copies of all comments submitted are available for inspection and downloading at www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Kathleen A. Zadareky, Associate Deputy Assistant Secretary for Single Family Housing, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410–8000; telephone number 202708–3175 (this is not a toll-free number). Persons with hearing or speech challenges may access this number through TTY by calling the tollfree Federal Relay Service at 800–877– 8339. SUPPLEMENTARY INFORMATION: I. Background FHA has long required its approved lenders to maintain and implement a quality control plan (QCP).1 A copy of the plan must be submitted by the lender when applying for FHA lender approval. FHA considers a QCP to be an important part of a lender’s origination and servicing operations. The purpose of the QCP is to help ensure that the lender maintains compliance with FHA requirements and the lender’s own 1 See Chapter 7 of FHA’s Mortgagee Approval Handbook (4060.1) at http://portal.hud.gov/ hudportal/HUD?src=/program_offices/ administration/hudclips/handbooks/hsgh/4060.1. VerDate Mar<15>2010 19:11 Jul 08, 2013 Jkt 229001 policies and procedures. The QCP must be sufficient in scope to enable the lender to evaluate the accuracy, validity and completeness of its loan origination and servicing operations. Specifically, the QCP should be designed to meet the following basic goals: assure compliance with FHA’s and the lender’s own origination or servicing requirements throughout its operations; protect the lender and FHA from unacceptable risk; guard against errors, omissions and fraud; and assure swift and appropriate corrective action. In addition to the lender QCP, FHA conducts an independent review of loan endorsements through one or more processes: post-endorsement technical reviews, Quality Assurance Division reviews and targeted lender reviews. Each of these approaches has a targeted sampling methodology. FHA also relies on certain metrics as part of its QAP. For example, for each lender, FHA computes a Compare Ratio, which measures the early default and claim rate on that lender’s FHA mortgages, relative to the early default and claim rate on all FHA mortgages in that given geographic area. Over the last few years, FHA has taken several steps to strengthen FHA’s oversight functions, and conducting an examination of FHA’s single family QAP is another step in that direction. FHA is evaluating single family quality assurance alternatives that would better align with FHA’s mission. Specifically, FHA seeks to ensure that it maintains and improves a quality assurance framework that does not hinder or dissuade lending to FHA-targeted populations, enhances the efficiency and effectiveness of the QAP, ensures compensation to FHA for defects resulting from the lender manufacturing process, and applies fairly to all lenders. FHA also seeks a framework that ensures that loans are reviewed within a reasonable time period, postendorsement, to allow FHA to use loan quality findings to improve credit policy and to allow lenders to improve their FHA origination practices. Any changes initiated as a result of this solicitation will be prospective only, and will not apply to any pending claims, reviews, or enforcement actions. II. Solicitation of Comment As part of FHA’s own evaluation of the QAP, FHA welcomes input from warehouse lenders, retail lenders, mortgage bankers, wholesale lenders, mortgage brokers, federal, state, and local consumer protection and enforcement agencies, consumer groups and other interested parties in the mortgage lending industry and the PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 broader public. FHA specifically seeks input that addresses one or more of the following areas, which are the current focus of FHA regarding the QAP: 1. Loan defect and appropriate consequence (e.g. indemnification, other administrative remedies). What types of loan manufacturing or compliance defects found in the QAP should be subject to indemnification or other administrative remedies or a combination of responses? 2. Annual review and comparison of rate of early defaults and claims. FHA is currently required by statute to review, at least annually, the rate of early defaults and claims for FHAinsured single family mortgages originated and underwritten by each mortgagee and, for each mortgagee, to compare these rates to those of other mortgagees originating or underwriting mortgages in the same geographic area. FHA is examining how, within the current parameters, the review and comparison may achieve an improved assessment of a mortgagee’s performance. For example, whether FHA should establish a specific standard of defaults and claims which mortgagees should not exceed within a given construct. This standard would be based on FHA’s review of all mortgagees’ performance in the area, thus undertaking the statutorily required comparative review, but would also be based on certain specified criteria that reflect generally accepted practices of prudent and responsible lending. 3. Standard of overall manufacturing quality. FHA is considering whether to establish a threshold manufacturing (or loan deficiency) risk tolerance. Such a standard might set a maximum threshold for the percent of loans with defects, or unacceptable patterns of recurring defects that, when surpassed, would automatically subject that lender to additional oversight, or trigger enforcement action. 4. Statistical sampling. FHA is also considering whether to establish a process to review a statistically significant random sample of loans for each mortgagee within a prescribed time frame after loan endorsement. Lenders would receive feedback on findings within an established timeframe. FHA would use the statistical sample, to estimate the defect rate on each lender’s overall FHA portfolio and then extrapolate the origination defect rate to all lender originations during the sampled time period, and thus have the lender compensate FHA for the estimated total risk to FHA resulting from the lender’s origination processes. The purpose of this process would be to E:\FR\FM\09JYN1.SGM 09JYN1 Federal Register / Vol. 78, No. 131 / Tuesday, July 9, 2013 / Notices increase the efficiency of FHA’s postendorsement review process. HUD invites comment on the use of and optimal methodology for a statistically significant random sample, including the nature of the loans that should be included or excluded from the sample. While FHA specifically seeks comment on the four areas identified above, FHA welcomes comment on all issues related to its QAP and how this process may be improved. Based on information received in response to this solicitation, FHA will decide what, if any, action may be appropriate with regard to FHA’s Single Family Quality Assurance practices. Dated: July 3, 2013. Carol J. Galante, Assistant Secretary for Housing–Federal Housing Commissioner. [FR Doc. 2013–16483 Filed 7–8–13; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR Bureau of Land Management [LLUT92230–13–L51100000–GA0000– LVEMJ12CJ580, UTU–88953] Notice of Availability of the Environmental Assessment and Notice of Public Hearing for Federal Coal Lease Application, UTU–88953, UT Bureau of Land Management, Interior. ACTION: Notice of Availability and Notice of Public Hearing. AGENCY: In accordance with Federal coal management regulations, the Wasatch Natural Resources, LLC, Federal Coal Lease-By-Application (LBA) Environmental Assessment (EA) is available for public review and comment. The United States Department of the Interior, Bureau of Land Management (BLM) Price Field Office will hold a public hearing to receive comments on the EA, Fair Market Value (FMV), and Maximum Economic Recovery (MER) of the coal resources for the Long Canyon Coal Lease Tract, serial number UTU–88953. DATES: The public hearing will be held at the Price Field Office on July 31, 2013 at 7:00 p.m. Written comments should be received no later than August 8, 2013. ADDRESSES: The public hearing will be held at the BLM Price Field Office, 125 South 600 West, Price, Utah 84501. Copies of the EA and the unsigned Finding of No Significant Impact (FONSI) are available at the Price Field Office. The hearing will be advertised in mstockstill on DSK4VPTVN1PROD with NOTICES SUMMARY: VerDate Mar<15>2010 17:44 Jul 08, 2013 Jkt 229001 the Sun Advocate located in Price, Utah. Written comments on the EA should be sent to: Steve Rigby at the Price Field Office address above. Written comments on the FMV and MER should be sent to Jeff McKenzie, BLM, Utah State Office, Division of Lands and Minerals, 440 West 200 South, Suite 500, Salt Lake City, Utah 84101. Please note ‘‘Coal Lease By Application UTU–88953’’ in the subject line for all emails or mailing envelops. FOR FURTHER INFORMATION CONTACT: Jeff McKenzie at 801–539–4038, jmckenzi@blm.gov or Mr. Steve Rigby, 435–636–3604, swrigby@blm.gov. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 800–877–8339 to contact the above individual(s) during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal hours. SUPPLEMENTARY INFORMATION: Wasatch Natural Resources, LLC, submitted the coal lease application. The EA addresses the cultural, socioeconomic, environmental and cumulative impacts that would likely result from leasing these coal lands. The lands included in the Long Canyon Coal Lease Tract are located in Carbon County, Utah, approximately 1 mile north and east of Scofield, Utah, on private surface with federally-administered minerals and are described as follows: Salt Lake Meridian T. 12 S., R 7 E., Sec. 28, E1⁄2E1⁄2; Sec. 33, E1⁄2NE1⁄4; T. 13 S., R 7 E., Sec. 1, SW1⁄4NW1⁄4; Sec. 2; Sec. 3, lots 1, 2, and 5 to 10, inclusive, and SE1⁄4NE1⁄4, N1⁄2SW1⁄4; Sec. 9, NE1⁄4, S1⁄2NW1⁄4, E1⁄2SW1⁄4, E1⁄2SE1⁄4; Sec. 10, and 11; Sec. 12, W1⁄2W1⁄2; Sec. 13, W1⁄2W1⁄2; Sec. 14, and 15; Sec. 16, E1⁄2E1⁄2; Sec. 23; Sec. 24, W1⁄2NW1⁄4, NW1⁄4SW1⁄4. The areas described containing approximately 5,586.90 acres. The Long Canyon Coal Lease Tract has two minable coal beds; the Hiawatha and the UP beds. The minable portions of the coal beds in this area average 101⁄2 feet in thickness for the Hiawatha and average six feet in thickness for the UP. The applicant has proposed to mine the underground coal reserves with continuous mining equipment. The tract is estimated to PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 41077 contain around 40.5 million tons of recoverable high-volatile B bituminous coal. The average coal quality, on an ‘‘as received basis,’’ in the (1) Hiawatha coal bed is as follows: 12,056 Btu/lb., 9.50 percent moisture, 6.10 percent ash, 40.80 percent volatile matter, 46.00 percent fixed carbon and 0.65 percent sulfur, and (2) UP coal bed is as follows: 12,200 Btu/lb., 9.50 percent moisture, 5.90 percent ash, 40.40 percent volatile matter, 45.60 percent fixed carbon and 0.60 percent sulfur. The public is invited to make public and/or written comments on the environmental implications of leasing the proposed tract, and also to submit comments on the FMV and the MER of the tract. Proprietary data marked as confidential may be submitted to the BLM in response to the solicitation of public comments. Data so marked shall be treated in accordance with the laws and regulations governing confidentiality of such information. A copy of the comments submitted by the public on the EA, FMV and MER, except those portions identified as proprietary by the author and meeting exemptions stated in the Freedom of Information Act, will be available for public inspection at the BLM, Utah State Office, 440 West 200 South, Suite 500, Salt Lake City, Utah, during regular business hours (7:45 a.m.– 4:30 p.m.), Monday through Friday. Substantive comments, whether written or oral, will receive equal consideration prior to any lease offering. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Comments on the FMV and MER should address, but not necessarily be limited to, the following information: 1. The quality of the coal resource; 2. The method of mining to be employed to obtain MER of the coal, including specifications of seams to be mined, and timing and rate of production; 3. Whether this tract is likely to be mined as part of an existing mine and therefore should be evaluated on a realistic incremental basis, in relation to the existing mine to which it has the greatest value; 4. Whether the tract should be evaluated as part of a potential larger mining unit and revaluated as a portion E:\FR\FM\09JYN1.SGM 09JYN1

Agencies

[Federal Register Volume 78, Number 131 (Tuesday, July 9, 2013)]
[Notices]
[Pages 41075-41077]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16483]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5723-N-01]


Federal Housing Administration (FHA): Single Family Quality 
Assurance--Solicitation of Information on Quality Lending Practices

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: Through this notice, FHA solicits comment from its approved 
lenders, the lending industry generally, consumers, consumer protection 
agencies, and interested members of the public on ways to improve the 
efficiency and effectiveness of FHA's quality assurance process (QAP). 
The objective of FHA's QAP is to promote quality lending practices by 
FHA's approved lenders; practices that protect the consumer and 
mitigate risk for the lender and FHA. The feedback that FHA receives 
through this solicitation will help inform FHA of next steps that FHA 
may want to take to strengthen its current QAP.

DATES: Comment Due Date: September 9, 2013.

ADDRESSES: Interested persons are invited to submit comments regarding 
this document to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0500. Communications must refer to the 
above docket number and title. There are two methods for submitting 
public comments. All submissions must refer to the above docket number 
and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare

[[Page 41076]]

and submit a comment, ensures timely receipt by HUD, and enables HUD to 
make them immediately available to the public. Comments submitted 
electronically through the www.regulations.gov Web site can be viewed 
by other commenters and interested members of the public. Commenters 
should follow the instructions provided on that site to submit comments 
electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
document.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available 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, an appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). Individuals with speech or 
hearing impairments may access this number via TTY by calling the 
Federal Relay Service at 800-877-8339. Copies of all comments submitted 
are available for inspection and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kathleen A. Zadareky, Associate Deputy 
Assistant Secretary for Single Family Housing, Office of Housing, 
Department of Housing and Urban Development, 451 7th Street SW., 
Washington, DC 20410-8000; telephone number 202- 708-3175 (this is not 
a toll-free number). Persons with hearing or speech challenges may 
access this number through TTY by calling the toll-free Federal Relay 
Service at 800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    FHA has long required its approved lenders to maintain and 
implement a quality control plan (QCP).\1\ A copy of the plan must be 
submitted by the lender when applying for FHA lender approval. FHA 
considers a QCP to be an important part of a lender's origination and 
servicing operations. The purpose of the QCP is to help ensure that the 
lender maintains compliance with FHA requirements and the lender's own 
policies and procedures. The QCP must be sufficient in scope to enable 
the lender to evaluate the accuracy, validity and completeness of its 
loan origination and servicing operations. Specifically, the QCP should 
be designed to meet the following basic goals: assure compliance with 
FHA's and the lender's own origination or servicing requirements 
throughout its operations; protect the lender and FHA from unacceptable 
risk; guard against errors, omissions and fraud; and assure swift and 
appropriate corrective action.
---------------------------------------------------------------------------

    \1\ See Chapter 7 of FHA's Mortgagee Approval Handbook (4060.1) 
at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4060.1.
---------------------------------------------------------------------------

    In addition to the lender QCP, FHA conducts an independent review 
of loan endorsements through one or more processes: post-endorsement 
technical reviews, Quality Assurance Division reviews and targeted 
lender reviews. Each of these approaches has a targeted sampling 
methodology. FHA also relies on certain metrics as part of its QAP. For 
example, for each lender, FHA computes a Compare Ratio, which measures 
the early default and claim rate on that lender's FHA mortgages, 
relative to the early default and claim rate on all FHA mortgages in 
that given geographic area.
    Over the last few years, FHA has taken several steps to strengthen 
FHA's oversight functions, and conducting an examination of FHA's 
single family QAP is another step in that direction. FHA is evaluating 
single family quality assurance alternatives that would better align 
with FHA's mission. Specifically, FHA seeks to ensure that it maintains 
and improves a quality assurance framework that does not hinder or 
dissuade lending to FHA-targeted populations, enhances the efficiency 
and effectiveness of the QAP, ensures compensation to FHA for defects 
resulting from the lender manufacturing process, and applies fairly to 
all lenders. FHA also seeks a framework that ensures that loans are 
reviewed within a reasonable time period, post-endorsement, to allow 
FHA to use loan quality findings to improve credit policy and to allow 
lenders to improve their FHA origination practices. Any changes 
initiated as a result of this solicitation will be prospective only, 
and will not apply to any pending claims, reviews, or enforcement 
actions.

II. Solicitation of Comment

    As part of FHA's own evaluation of the QAP, FHA welcomes input from 
warehouse lenders, retail lenders, mortgage bankers, wholesale lenders, 
mortgage brokers, federal, state, and local consumer protection and 
enforcement agencies, consumer groups and other interested parties in 
the mortgage lending industry and the broader public. FHA specifically 
seeks input that addresses one or more of the following areas, which 
are the current focus of FHA regarding the QAP:
    1. Loan defect and appropriate consequence (e.g. indemnification, 
other administrative remedies). What types of loan manufacturing or 
compliance defects found in the QAP should be subject to 
indemnification or other administrative remedies or a combination of 
responses?
    2. Annual review and comparison of rate of early defaults and 
claims. FHA is currently required by statute to review, at least 
annually, the rate of early defaults and claims for FHA-insured single 
family mortgages originated and underwritten by each mortgagee and, for 
each mortgagee, to compare these rates to those of other mortgagees 
originating or underwriting mortgages in the same geographic area. FHA 
is examining how, within the current parameters, the review and 
comparison may achieve an improved assessment of a mortgagee's 
performance. For example, whether FHA should establish a specific 
standard of defaults and claims which mortgagees should not exceed 
within a given construct. This standard would be based on FHA's review 
of all mortgagees' performance in the area, thus undertaking the 
statutorily required comparative review, but would also be based on 
certain specified criteria that reflect generally accepted practices of 
prudent and responsible lending.
    3. Standard of overall manufacturing quality. FHA is considering 
whether to establish a threshold manufacturing (or loan deficiency) 
risk tolerance. Such a standard might set a maximum threshold for the 
percent of loans with defects, or unacceptable patterns of recurring 
defects that, when surpassed, would automatically subject that lender 
to additional oversight, or trigger enforcement action.
    4. Statistical sampling. FHA is also considering whether to 
establish a process to review a statistically significant random sample 
of loans for each mortgagee within a prescribed time frame after loan 
endorsement. Lenders would receive feedback on findings within an 
established timeframe. FHA would use the statistical sample, to 
estimate the defect rate on each lender's overall FHA portfolio and 
then extrapolate the origination defect rate to all lender originations 
during the sampled time period, and thus have the lender compensate FHA 
for the estimated total risk to FHA resulting from the lender's 
origination processes. The purpose of this process would be to

[[Page 41077]]

increase the efficiency of FHA's post-endorsement review process. HUD 
invites comment on the use of and optimal methodology for a 
statistically significant random sample, including the nature of the 
loans that should be included or excluded from the sample.
    While FHA specifically seeks comment on the four areas identified 
above, FHA welcomes comment on all issues related to its QAP and how 
this process may be improved. Based on information received in response 
to this solicitation, FHA will decide what, if any, action may be 
appropriate with regard to FHA's Single Family Quality Assurance 
practices.

    Dated: July 3, 2013.
Carol J. Galante,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 2013-16483 Filed 7-8-13; 8:45 am]
BILLING CODE 4210-67-P