Disposition of HUD-Acquired Single Family Properties; Updating HUD's Single Family Property Disposition Regulations, 59690-59695 [2015-24837]
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Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Proposed Rules
A. Metallic Structures
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[FR Doc. 2015–24841 Filed 10–1–15; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT‘
24 CFR Part 291
RIN 2502–AJ32
Disposition of HUD-Acquired Single
Family Properties; Updating HUD’s
Single Family Property Disposition
Regulations
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
revise HUD’s regulations that address
property disposition. This rule proposes
to consolidate and reorganize HUD’s
property disposition regulations so that
they better reflect industry standards
and allow HUD to conduct its Single
Family Property Disposition Program
more efficiently and more effectively so
that HUD can obtain the greatest value
for its real estate-owned (REO)
properties in different market
conditions.
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Comment Due Date: December 1,
2015.
Interested persons are
invited to submit comments regarding
this proposed rule 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
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.
ADDRESSES:
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 rule.
[Docket No. FR–5776–P–01]
SUMMARY:
DATES:
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.
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FOR FURTHER INFORMATION CONTACT:
Thomas Kumi, Director, Single Family
Asset Management and Disposition
Division, Office of Single Family
Housing, Department of Housing and
Urban Development, 451 7th Street SW.,
Room 9172, Washington, DC 20410–
8000, telephone number 202–708–1672.
Persons with hearing or speech
impairments may access this number
through TTY by calling the toll-free
Federal Relay Service at 800–877–8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 204(g) of the National
Housing Act (12 U.S.C. 1710g) addresses
the management and disposition of
HUD-acquired single family property,
which includes HUD-acquired real and
personal property assets. HUD’s
implementing regulations are codified
in 24 CFR part 291 (currently entitled,
‘‘Disposition of HUD-Acquired Single
Family Property’’). Under these
statutory and regulatory authorities,
HUD is charged with carrying out a
program of sales of HUD-acquired and
owned properties along with
appropriate credit terms and standards
to be used in carrying out the program.
Property owned by HUD as a result of
acquisition includes REO. The goals of
HUD’s Single Family Property
Disposition program are to reduce the
inventory of single family properties in
a manner that minimizes losses to the
Mutual Mortgage Insurance Fund,
promote the expansion of
homeownership opportunities for
American families by, among other
things, selling such properties at a
discount to state and local governments
and HUD-approved nonprofit entities,
and help stabilize distressed
communities.
As a result of recent changes in the
housing market, specifically the
economic and housing crisis that
commenced in 2008, HUD acquired an
unprecedented number of REO
properties—98,342, 90,943, 103,215 and
111,416 in FY 2010, FY 2011, FY 2012,
and FY 2013 respectively. This increase
caused FHA to reexamine its disposition
strategy for HUD-acquired single family
properties and determine that it needed
to revise, consolidate and reorganize its
property disposition regulations to
facilitate the expeditious sale of REO
properties acquired and provide greater
efficiency in the administration of
HUD’s property disposition program.
While part 291 addresses both HUDacquired real and personal property
assets, the focus of this proposed rule is
on HUD’s disposition of REO properties.
FHA’s intent is to bring its practices into
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conformance with industry standards
and allow HUD to conduct its Single
Family Property Disposition Program
more efficiently and more effectively so
that it can obtain the greatest value for
REO properties in different market
conditions.
II. This Proposed Rule
The proposed amendments to part
291 would make several changes to the
administration of HUD’s single-family
property disposition program with
respect to the disposition of REO
properties. These changes seek to
provide greater efficiency in the
administration of HUD’s property
disposition program for REO properties,
align FHA’s regulatory authority with its
business practices, and provide
flexibility in anticipation of future
changes to the property disposition
program for REO properties. The
following section of this preamble
describes the changes to the property
disposition process proposed by this
rule.
1. Ownership and Disposition
Authority. HUD proposes to revise the
heading of part 291 from ‘‘Disposition of
HUD-Acquired Single Family Property’’
to ‘‘Disposition of HUD-Acquired and
Owned Single Family Property’’ to
better reflect the fact that HUD not only
receives REO properties, but also holds
and maintains them throughout the
disposition process. For similar reasons,
the heading of § 291.100, which states
HUD’s general policy on disposition,
would be changed from ‘‘General
policy’’ to ‘‘General policy on HUD
acquisition, ownership, and disposition
of real estate assets’’. Under section
204(g) of the National Housing Act (12
U.S.C. 1710(g)), HUD is authorized to
carry on activity necessary for receiving,
owning, holding and maintaining
property before selling it. Section
291.1(a), which states the purpose of
part 291, would be amended to
reference HUD’s authority to acquire
and possess properties. This authority
would also be cited in § 291.90
governing sales methods to reiterate
HUD’s authority to prescribe methods of
sale and dispose of properties.
2. Appraisal of HUD REO Properties.
Section 291.100(b) of the proposed rule
would be revised to clarify that the list
price for HUD REO properties may be
established utilizing one or more
evaluation tools. When an appraisal is
ordered as part of the process of
establishing list price, the value must be
established by an appraiser who meets
the requirements in 24 CFR part 200,
subpart G (Appraiser Roster), and who
is in good standing on the appraiser
roster established under that section. All
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methods used by appraisers must be
consistent with FHA appraisal
requirements at the time the appraisal is
made. This change will align
requirements for REO appraisers with
requirements for appraisers found in
part 200, subpart G, to ensure
consistency. The proposed rule would
expand the valuation methods available
to include alternative methods
commonly used in the real estate
industry, such as Broker Price
Opinions 1 and Automated Valuation
Models.2
3. Escrow Amount Required for
Properties Needing Repairs. Currently,
buyers of HUD-acquired properties can
qualify for FHA mortgage insurance
even if the property does not meet
FHA’s minimum property standards,
provided that they put money into
escrow to make necessary repairs to
bring the property up to standard. As
currently codified in § 291.100(c)(2), a
property that requires no more than
$5,000 for repairs may be offered for
sale in an ‘‘as-is’’ condition if the
purchaser establishes a cash escrow in
the amount of $5,000. This amount has
not been increased since 1994. Based on
present value calculations with an
escalation of 3.5 percent, HUD estimates
that repairs costing $5,000 in 1994
would cost $10,000 in 2015. Therefore,
the proposed rule would increase the
maximum repair amount that would
allow a purchaser to acquire property
under § 291.100(d)(1)(ii) to $10,000. In
addition, in order to ensure that HUD
can keep this amount updated, this rule
proposes to add a provision at
§ 291.100(d)(1)(ii)(B) that would allow
HUD to increase or decrease this
amount based on changes to the
Consumer Price Index 3 by issuing a
1 A Broker’s Price Opinion (BPO) is the process
a hired sales agent utilizes to determine the selling
price of a real estate property. BPOs are popularly
used in situations where lenders and mortgage
companies believe the expense and delay of an
appraisal to determine the value of properties is
unnecessary. See https://
www.brokerpriceopinion.com.
2 Automated valuation model (AVM) is the name
given to a service that can provide real estate
property valuations using mathematical modeling
combined with a database. Most AVMs calculate a
property’s value at a specific point in time by
analyzing values of comparable properties. Some
also take into account previous surveyor valuations,
historical house price movements and user inputs
(e.g. number of bedrooms, property improvements).
Appraisers, investment professionals and lending
institutions use AVM technology in their analysis
of residential property. It is a technology-driven
report. The product of an automated valuation
technology comes from analysis of public record
data and computer decision logic combined to
provide a calculated estimate of a probable selling
price of a residential property.
3 The Consumer Price Index (CPI) is prepared by
the Department of Labor’s Bureau of Labor Statistics
and is a measure of the average change over time
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59691
Federal Register notice for comment.
After consideration of public comments
received on the notice, HUD would then
publish the revised escrow amounts in
a Federal Register notice. Finally, the
rule would revise §§ 291.100(c) and (d)
to better reflect the distinction between
FHA’s role in the property disposition
process and FHA’s role as an insurer of
qualified properties when they are sold.
4. Listings. The proposed rule would
clarify that HUD has the statutory
authority to allow for a number of
listings options in § 291.100(h) that real
estate brokers may use to list REO
properties. In addition to asset
management and listing contracts, this
rule would provide that HUD may use
other methods deemed to be
appropriate. This will provide HUD
with additional flexibility to expedite
the sales process, thereby ensuring that
properties are disposed of efficiently
and at minimum cost to HUD. In
addition, the proposed rule would
revise § 291.100(h)(2)(ii) to require the
purchaser’s broker to submit bids
through HUD’s designated electronic
bid system rather than through the
exclusive broker.
5. Settlement Cost Assistance
Available to Owner-Occupant
Purchasers. Section 291.205(b) currently
provides that, in the case of competitive
sales, HUD, upon request by the
purchaser, may elect to pay all or a
portion of the financing and loan
closing costs as well as the broker’s
sales commission, not to exceed the
percentage of the purchase price
determined appropriate by the Secretary
for the area. The proposed rule would
remove HUD’s obligation to pay the
broker’s sales commission and specify
that settlement cost assistance is only
available to owner-occupant purchasers
and not available to investor purchasers.
Both ‘‘owner-occupant purchaser’’ and
‘‘investor purchaser’’ are defined in
§ 291.5.
6. Bidding Process for Competitive
Sales: The proposed rule would update
the bidding process established under
the competitive sales procedures in
§ 291.205. Section 291.205(k) would be
revised to provide for winning bids to
be made available publicly rather than
making them available for inspection at
a time and place designated by the HUD
local office. Losing bids would no
longer be made available either through
electronic posting or through the HUD
local office. In addition, the rule would
specify that winning bidders may be
notified by their brokers using
in the prices paid by urban consumers for a market
basket of consumer goods and services. For more
information, see https://stats.bls.gov/cpi/home.htm.
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Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Proposed Rules
electronic mail and that an executed
sales contract will be deemed final
when, after being signed by both parties,
the executed contract is sent by email
rather than via postal service delivery to
the successful bidder.
7. Good Neighbor Next Door (GNND).
The objective of the GNND program is
to improve the quality of life in
distressed urban communities by
encouraging law enforcement officers,
teachers, and firefighters/emergency
medical technicians, whose daily
responsibilities reflect a high level of
public service commitment and
represent a nexus to the needs of the
community, to purchase and live in
homes in these communities, as the
preamble to that final rule made clear.
(See 71 FR 64422, November 1, 2006.)
As to law enforcement officers
specifically, one of the purposes of the
GNND Sales Program is to revitalize
distressed communities by deterring the
commission of crimes with the presence
of law enforcement officers in these
areas. (See 71 FR 64424.) However, the
currently codified rule, while it requires
teachers and firefighters in the GNND
program to live in the areas they serve,
does not do so with respect to police
officers. Therefore, this rule would add
this requirement for police officers in
accordance with the purpose of the rule.
This proposed rule further clarifies
that similar requirements apply to all of
the GNND participants by making a
parallel change to §§ 291.500, 291.525
and 291.530, which are the sections on
purpose and purchaser qualifications, in
general. This rule also adds a definition
of ‘‘locality’’ to § 291.505, and uses that
term in this proposed rule rather than
‘‘area,’’ which is the current
terminology, to avoid repetitive
language and confusion with the
concept of a ‘‘revitalization area’’ used
in codified § 291.510.
Technical Changes
This proposed rule would revise the
structure of § 291.5 to consolidate the
definition for ‘‘Secretary’’ with the other
definitions in this section.
III. Findings and Certifications
Executive Order 12866 and Executive
Order 13563
Under Executive Order 12866
(Regulatory Planning and Review), a
determination must be made whether a
regulatory action is significant and
therefore, subject to review by the Office
of Management and Budget (OMB) in
accordance with the requirements of the
order. Executive Order 13563
(Improving Regulations and Regulatory
Review) directs 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. The
majority of the proposed changes to part
291 described above would streamline
HUD’s property disposition program by
bringing its practices into conformance
with industry standards and allowing
HUD to administer its Single Family
Property Disposition Program more
efficiently and more effectively. These
changes would not create additional
significant burdens for the public. As a
result, this rule was determined to not
be a significant regulatory action under
section 3(f) of Executive Order 12866,
Regulatory Planning and Review, and
therefore was not reviewed by the Office
of Management and Budget.
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. HUD defines
‘‘small supervised lenders’’ as those
depository institutions that are
regulated by the Federal Reserve, the
Office of the Comptroller of the
Currency, the Federal Deposit Insurance
Corporation, or the National Credit
Union Administration, and which have
a depository asset base of less than $500
million.4 This rule proposes to make
changes to the administration of HUD’s
property disposition and acquisition
activities carried out as part of the FHA
insurance program for one-to-four
family homes. These changes include
limiting the provision of settlement cost
assistance to owner-occupants,
providing HUD flexibility to run the
bidding process for REO properties,
changes to the direct sales process, the
additional flexibility to list properties
electronically, changes to the required
escrow amount for purchasers obtaining
property not meeting HUD’s property
standards, and clarifications in the rule
governing HUD’s appraisal process.
These changes would streamline HUD’s
administration of its Single Family
Property Disposition Program and adopt
measures that reflect industry practice.
For these reasons, HUD has determined
that this rule would not have a
significant economic impact on a
substantial number of small entities.
Notwithstanding HUD’s
determination that this rule will not
have a significant effect on a substantial
number of small entities, HUD
specifically invites comments regarding
any less burdensome alternatives to this
rule that will meet HUD’s objectives as
described in this preamble.
Paperwork Reduction Act
The information collection
requirements contained in this proposed
rule have been submitted to the Office
of Management and Budget (OMB)
under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3520). 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. The burden of information
collection in this proposed rule is
estimated as follows:
INFORMATION COLLECTION UNDER PROPOSED PROCESS
Number of
respondents
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Information collection
2502–0306—Acquisition/Disposition of Mortgaged
Single
Family
Properties
(§ 291.100) .................................................
2502–0189—Repair Completion Escrow Requirement (§ 291.100) ................................
Frequency of
response
Total annual
responses
Burden hours
per response
Total annual
burden hours
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Total annual
cost
65,000
1
65,000
.08
5200
$63.67
$331,084
35,000
1
35,000
.02
700
63.67
44,569
4 Of HUD’s 1,459 supervised lenders, 598 are
considered, by HUD, to be ‘‘small supervised
lenders.’’
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Hourly cost
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INFORMATION COLLECTION UNDER PROPOSED PROCESS—Continued
Number of
respondents
Information collection
Frequency of
response
Total annual
responses
Burden hours
per response
Total annual
burden hours
Hourly cost
Total annual
cost
65,000
1
65,000
.02
1300
63.67
82,771
Totals .....................................................
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2502–0570—HUD-Owned Real Estate—
Good Neighbor Next Door Program
(§ 291.500) .................................................
165,000
3
165,000
1.2
7200
........................
458,424
In accordance with 5 CFR
1320.8(d)(1), HUD is soliciting
comments from members of the public
and affected agencies concerning the
information collection requirements in
the proposed rule regarding:
(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) Whether the proposed collection
of information enhances the quality,
utility, and clarity of the information to
be collected; and
(4) Whether the proposed information
collection minimizes 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).
Interested persons are invited to
submit comments regarding the
information collection requirements in
this rule. Under the provisions of 5 CFR
part 1320, OMB is required to make a
decision concerning this collection of
information between 30 and 60 days
after the publication date. Therefore, a
comment on the information collection
requirements is best assured of having
its full effect if OMB receives the
comment within 30 days of the
publication date. This time frame does
not affect the deadline for comments to
the agency on the proposed rule,
however. Comments must refer to the
proposal by name and docket number
(FR–5776–P–01) and must be sent to:
HUD Desk Officer, Office of
Management and Budget, New
Executive Office Building, Washington,
DC 20503, Fax number: (202) 395–6947,
and Colette Pollard, HUD Reports
Liaison Officer, Department of Housing
and Urban Development, 451 7th Street
SW., Room 2204, Washington, DC
20410.
Interested persons may submit
comments regarding the information
collection requirements electronically
through the Federal eRulemaking Portal
at https://www.regulations.gov. HUD
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strongly encourages commenters to
submit comments electronically.
Electronic submission of comments
allows the commenter maximum time to
prepare 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
https://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.
within the meaning of the Executive
order.
Environmental Impact
List of Subjects in 24 CFR Part 291
A Finding of No Significant Impact
(FONSI) with respect to environment
has been made in accordance with HUD
regulations at 24 CFR part 50, which
implement section 102(2)(C) of National
Environmental Policy Act (42 U.S.C.
4332(2)(C)). The Finding of No
Significant Impact is available for public
inspection between the hours of 8 a.m.
and 5 p.m. weekdays in the Regulations
Division, Office of General Counsel,
Department of Housing and Urban
Development, 451 7th Street SW., Room
10276, Washington, DC 20410. Due to
security measures at the HUD
Headquarters building, please schedule
an appointment to review the FONSI 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 toll-free
Federal Relay Service at 800–877–8339.
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has federalism
implications if the rule either (i)
imposes substantial direct compliance
costs on state and local governments
and is not required by statute, or (ii)
preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the
Executive order. This proposed rule
would not have federalism implications
and would not impose substantial direct
compliance costs on state and local
governments or preempt state law
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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 proposed rule
would not impose any Federal mandates
on any state, local, or tribal
governments, or on the private sector,
within the meaning of the UMRA.
Community facilities, Conflict of
interests, Homeless, Lead poisoning,
Low and moderate income housing,
Mortgages, Reporting and recordkeeping
requirements, Surplus government
property.
Accordingly, for the reasons stated in
the preamble above, HUD proposes to
amend 24 CFR part 291 as follows:
PART 291—DISPOSITION OF HUDACQUIRED AND OWNED SINGLE
FAMILY PROPERTY
1. The authority citation for part 291
continues to read as follows:
■
Authority: 12 U.S.C. 1701 et seq., 42
U.S.C. 1441, 1441a, 1551a and 3535(d).
2. Revise the heading of part 291 to
read as set forth above.
■ 3. Revise § 291.1(a)(1) to read as
follows:
■
§ 291.1
Purpose and general requirements.
(a) * * *
(1) This part governs the acquisition,
possession and disposition of one-tofour family properties acquired by the
Federal Housing Administration (FHA)
through foreclosure of an insured or
Secretary-held mortgage or loan under
the National Housing Act, or acquired
by HUD under section 204(g) of the
National Housing Act (12 U.S.C.
1710(g)). HUD will issue detailed
policies and procedures that must be
followed in specific areas.
*
*
*
*
*
■ 4. Amend § 291.5 by removing
paragraphs (a) and (b), adding
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introductory text, and revising the
definition of ‘‘Secretary.’’
The addition and revision to read as
follows:
§ 291.5
Definitions.
Terms used in this part are defined as
follows:
*
*
*
*
*
Secretary is defined in 24 CFR 5.100.
*
*
*
*
*
■ 5. Amend § 291.90 by revising the
introductory paragraph to read as
follows:
§ 291.90
Sales methods.
In accordance with section 204(g) of
the National Housing Act (12 U.S.C.
1710(g)), HUD will prescribe the terms
and conditions for all methods of sale.
HUD may dispose of assets using any
method that the Secretary deems
appropriate, including, but not limited
to the following:
*
*
*
*
*
■ 6. Amend § 291.100 by revising the
section heading and paragraphs (b), (c),
(d), and (h) to read as follows:
asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
§ 291.100 General policy on HUD
acquisition, ownership and disposition of
real estate assets.
(a) * * *
(b) List price. The list price, or ‘‘asking
price,’’ assigned to the property is based
upon one or more evaluation tools (e.g.
appraisal, Broker Price Opinion,
Automated Valuation Model). An
appraisal, when used, must be
conducted by an independent real estate
appraiser who meets all of the
requirements of 24 CFR part 200,
subpart G, and is in good standing on
the appraiser roster established under
that section. The appraiser must provide
an opinion of the ‘‘as-is’’ market value
using a valuation method that is
commonly employed in the industry
and that is consistent with FHA
appraisal requirements.
(c) Insurance. When listing properties,
HUD may elect to only identify property
not eligible for mortgage insurance
under section 203(b) of the National
Housing Act (12 U.S.C. 1709(b)).
(d) Financing. (1) Subject to
underwriting requirements, REO
properties that have not been identified
as uninsurable in accordance with
paragraph (c) of this section can be
purchased and financed with a mortgage
insured under section 203(b) or 203(k)
of the National Housing Act (12 U.S.C.
1709(b), 1709(k)), if supported by an
FHA appraisal, in one of the following
ways:
(i) Insured. A property that meets the
Minimum Property Standards (MPS) as
defined in HUD Handbook 4905.1 or
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Jkt 238001
any successor handbook, as determined
by the Secretary, for existing dwellings
will be offered for sale in ‘‘as-is’’
condition with FHA mortgage insurance
available as provided in part 203 of this
chapter.
(ii) Insured with repair escrow. (A) A
property that requires no more than
$10,000 for repairs to meet the MPS as
defined in HUD Handbook 4905.1 or
any successor handbook or, as
determined by the Secretary, will be
offered for sale in ‘‘as-is’’ condition with
FHA mortgage insurance available, as
provided in part 203 of this chapter,
provided the mortgagor establishes a
cash escrow to ensure the completion of
the required repairs.
(B) Changes in repair escrow. HUD
may adjust the escrow balance required
under this paragraph based on changes
to the Consumer Price Index by
publishing a Federal Register notice
that provides for a public comment
period of 30 calendar days for the
purpose of accepting comments on the
amount of the change. After comments
have been considered, HUD will publish
a final notice announcing the revised
escrow amounts.
(iii) Insured with rehabilitation loan
in accordance with 203(k) of the
National Housing Act and pursuant to
§ 203.50 of this chapter.
(2) REO properties that have been
identified as uninsurable in accordance
with paragraph (c) of this section can be
purchased and financed with a mortgage
insured under section 203(k) of the
National Housing Act (12 U.S.C.
1709(k)), subject to underwriting
requirements supported by an FHAspecified appraisal and in accordance
with 24 CFR 203.50.
(3) HUD, in its sole discretion, may
take back purchase money mortgages
(PMMs) on property purchased by
governmental entities or private
nonprofit organizations who buy
property for ultimate resale to owneroccupant purchasers with incomes at or
below 115 percent of the area median
income. When offered by HUD, a PMM
will be available in an amount
determined by the Secretary to be
appropriate, at market rate interest, for
a period not to exceed 5 years.
Mortgagors must meet FHA mortgage
credit standards.
(i) For purposes of this section, the
term ‘‘purchase money mortgage,’’ or
PMM means a note secured by a
mortgage or trust deed given by a buyer,
as mortgagor, to the seller, as mortgagee,
as part of the purchase price of the real
estate.
(ii) Except as provided in paragraph
(d)(3) of this section, the purchaser is
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Fmt 4702
Sfmt 4702
entirely responsible for obtaining
financing for purchasing a property.
(e) * * *
(h) Any real estate broker who has
agreed to comply with HUD
requirements may be eligible to
participate in the sales program.
Purchasers participating in the
competitive sales program, except
government entities and nonprofit
organizations, must submit bids through
a participating broker. In accordance
with section 204(g) of the National
Housing Act (12 U.S.C. 1710(g)), HUD
will prescribe the terms and conditions
for all methods of listing properties.
HUD may dispose of properties using
any method that the Secretary deems
appropriate, including, but not limited
to the following:
(1) Open listings. Properties may be
sold on an open listing basis with
participating real estate brokers.
(2) Asset management and listing
contracts. (i) HUD may invite firms
experienced in property management to
compete for contracts that provide for
an exclusive right to manage and list
specified properties in a given area.
(ii) In areas where a broker has an
exclusive right to list properties, a
purchaser may use a broker of his or her
choice. The purchaser’s broker must
submit the bid through HUD’s
designated electronic bid system.
*
*
*
*
*
■ 7. Amend § 291.205 by revising the
introductory text and paragraphs (b),
(k)(1), (k)(2), and (l) to read as follows:
§ 291.205 Competitive sales of individual
properties.
When HUD conducts competitive
sales of individual properties to
individual buyers, it will generally sell
the properties on an ‘‘as-is’’ basis,
without repairs or warranties, and it
will follow the sales procedures
provided in this section.
*
*
*
*
*
(b) * * *
(1) The net offer is calculated by
subtracting from the bid price the dollar
amounts for the financing and loan
closing costs and the broker’s sales
commission, as described in paragraph
(b)(2) of this section.
(2) If an owner-occupant purchaser of
the property requests in the bid, HUD
may pay all or a portion of the financing
and loan closing costs, not to exceed the
percentage of the purchase price
determined appropriate by the Secretary
for the area. In no event will the total
amount for broker’s sales commission
exceed 6 percent of the purchase price,
except for cash bonuses offered to
brokers by HUD for the sale of hard-tosell properties. No assistance for
E:\FR\FM\02OCP1.SGM
02OCP1
Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Proposed Rules
financing and loan closing costs or for
the broker’s sales commission will be
provided to investor purchasers.
*
*
*
*
*
(k) * * *
(1) The Secretary will make all
winning bids available publicly.
(2) Successful bidders will be notified
through their real estate brokers by
electronic mail, mail, telephone, or
other means. Acceptance of a bid is final
and effective only upon HUD’s
execution of the sales contract, signed
by both the submitting real estate broker
and the prospective purchaser, and
sending a copy of the executed contract
by electronic mail to the successful
bidder or the bidder’s agent.
(l) Counteroffers. HUD may present
counteroffers during competitive bid
periods as it deems appropriate to
minimize losses to its insurance fund.
‘‘Best and Final’’ offers requested by
HUD are considered counteroffers.
Subpart F—Good Neighbor Next Door
Sales Program
■
8. Revise § 291.500 to read as follows:
§ 291.500
Purpose.
This subpart describes the policies
and procedures governing the Good
Neighbor Next Door (GNND) Sales
Program. The purpose of the GNND
Sales Program is to improve the quality
of life in distressed urban communities.
This is to be accomplished by
encouraging law enforcement officers,
teachers, and firefighters/emergency
medical technicians to purchase and
live in homes that are located in the
same communities where they perform
their daily responsibilities and duties.
■ 9. Revise § 291.505 to read as follows:
asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
§ 291.505
Definitions.
For purposes of this subpart:
Locality means the community,
neighborhood, or jurisdiction of the unit
of general local government, or Indian
tribal government;
Unit of general local government
means a county or parish, city, town,
township, or other political subdivision
of a state.
■ 10. In § 291.520, remove ‘‘and’’ from
the end of paragraph (a), add the word
‘‘and’’ at the end of paragraph (b), and
add paragraph (c).
The addition reads as follows:
§ 291.520
officers.
Eligible law enforcement
*
*
*
*
*
(c) The full time employment in
paragraph (a) of this section must, in the
normal course of business, directly
serve the locality in which the home is
located.
VerDate Sep<11>2014
19:21 Oct 01, 2015
Jkt 238001
11. Revise § 291.525(b) to read as
follows:
■
§ 291.525
Eligible teachers.
*
*
*
*
*
(b) The full time employment in
paragraph (a) of this section must, in the
normal course of business, serve
students from the locality where the
home is located.
■ 12. Revise § 291.530 to read as
follows:
§ 291.530 Eligible firefighter/emergency
medical technicians.
A person qualifies as a firefighter/
emergency medical technician for the
purposes of the GNND Sales Program if
the person is:
(a) Employed full-time as a firefighter
or emergency medical technician by a
fire department or emergency medical
services responder unit of the federal
government, a state, unit of general local
government, or an Indian tribal
government; and
(b) The full time employment in
paragraph (a) of this section must, in the
normal course of business, directly
serve the locality where the home is
located.
Dated: August 13, 2015.
Edward L. Golding,
Principal Deputy Assistant Secretary for
Housing.
[FR Doc. 2015–24837 Filed 10–1–15; 8:45 am]
BILLING CODE 4210–67–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R07–OAR–2015–0582; FRL–9935–00–
Region 7]
Approval and Promulgation of Air
Quality Implementation Plans; State of
Iowa; 2015 Iowa State Implementation
Plan for the 2008 Lead Standard
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
The Environmental Protection
Agency (EPA) proposes to grant full
approval of Iowa’s attainment
demonstration State Implementation
Plan (SIP) for the lead National Ambient
Air Quality Standard (NAAQS)
nonattainment area of Council Bluffs,
Pottawattamie County, Iowa, received
by EPA on February 9, 2015. The
applicable standard addressed in this
action is the lead NAAQS promulgated
by EPA in 2008. EPA believes that the
SIP submitted by the state satisfies the
applicable requirements of the Clean Air
SUMMARY:
PO 00000
Frm 00029
Fmt 4702
Sfmt 4702
59695
Act, and will bring the designated
portions of Council Bluffs, Iowa into
attainment of the 0.15 microgram per
cubic meter (ug/m3) lead NAAQS.
DATES: Comments must be received on
or before November 2, 2015.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R07–
OAR–2015–0582, by one of the
following methods:
SUPPLEMENTARY INFORMATION:
1. www.regulations.gov: Follow the
on-line instructions for submitting
comments.
2. Email: doolan.stephanie@epa.gov.
3. Mail or Hand Delivery: Stephanie
Doolan, Environmental Protection
Agency, Air Planning and Development
Branch, 11201 Renner Boulevard,
Lenexa, Kansas 66219.
Instructions: Direct your comments to
Docket ID No. EPA–R07–OAR–2015–
0582. EPA may publish any comment
received to its public docket. Do not
submit electronically any information
you consider to be Confidential
Business Information (CBI) or other
information whose disclosure is
restricted by statute. Multimedia
submissions (audio, video, etc.) must be
accompanied by a written comment.
The written comment is considered the
official comment and should include
discussion of all points you wish to
make. EPA will generally not consider
comments or comment contents located
outside of the primary submission (i.e.
on the web, cloud, or other file sharing
system). For additional submission
methods, the full EPA public comment
policy, information about CBI or
multimedia submissions, and general
guidance on making effective
comments, please visit https://
www2.epa.gov/dockets/commentingepa-dockets. The www.regulations.gov
Web site is an ‘‘anonymous access’’
system, which means EPA will not
know your identity or contact
information unless you provide it in the
body of your comment. If you send an
email comment directly to EPA without
going through www.regulations.gov,
your email address will be
automatically captured and included as
part of the comment that is placed in the
public docket and made available on the
Internet. If you submit an electronic
comment, EPA recommends that you
include your name and other contact
information in the body of your
comment and with any disk or CD–ROM
you submit. If EPA cannot read your
comment due to technical difficulties
and cannot contact you for clarification,
EPA may not be able to consider your
comment. Electronic files should avoid
the use of special characters, any form
E:\FR\FM\02OCP1.SGM
02OCP1
]]>Agencies
- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT`
[Federal Register Volume 80, Number 191 (Friday, October 2, 2015)]
[Proposed Rules]
[Pages 59690-59695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24837]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT`
24 CFR Part 291
[Docket No. FR-5776-P-01]
RIN 2502-AJ32
Disposition of HUD-Acquired Single Family Properties; Updating
HUD's Single Family Property Disposition Regulations
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would revise HUD's regulations that address
property disposition. This rule proposes to consolidate and reorganize
HUD's property disposition regulations so that they better reflect
industry standards and allow HUD to conduct its Single Family Property
Disposition Program more efficiently and more effectively so that HUD
can obtain the greatest value for its real estate-owned (REO)
properties in different market conditions.
DATES: Comment Due Date: December 1, 2015.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule 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 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
rule.
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: Thomas Kumi, Director, Single Family
Asset Management and Disposition Division, Office of Single Family
Housing, Department of Housing and Urban Development, 451 7th Street
SW., Room 9172, Washington, DC 20410-8000, telephone number 202-708-
1672. Persons with hearing or speech impairments may access this number
through TTY by calling the toll-free Federal Relay Service at 800-877-
8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 204(g) of the National Housing Act (12 U.S.C. 1710g)
addresses the management and disposition of HUD-acquired single family
property, which includes HUD-acquired real and personal property
assets. HUD's implementing regulations are codified in 24 CFR part 291
(currently entitled, ``Disposition of HUD-Acquired Single Family
Property''). Under these statutory and regulatory authorities, HUD is
charged with carrying out a program of sales of HUD-acquired and owned
properties along with appropriate credit terms and standards to be used
in carrying out the program. Property owned by HUD as a result of
acquisition includes REO. The goals of HUD's Single Family Property
Disposition program are to reduce the inventory of single family
properties in a manner that minimizes losses to the Mutual Mortgage
Insurance Fund, promote the expansion of homeownership opportunities
for American families by, among other things, selling such properties
at a discount to state and local governments and HUD-approved nonprofit
entities, and help stabilize distressed communities.
As a result of recent changes in the housing market, specifically
the economic and housing crisis that commenced in 2008, HUD acquired an
unprecedented number of REO properties--98,342, 90,943, 103,215 and
111,416 in FY 2010, FY 2011, FY 2012, and FY 2013 respectively. This
increase caused FHA to reexamine its disposition strategy for HUD-
acquired single family properties and determine that it needed to
revise, consolidate and reorganize its property disposition regulations
to facilitate the expeditious sale of REO properties acquired and
provide greater efficiency in the administration of HUD's property
disposition program. While part 291 addresses both HUD-acquired real
and personal property assets, the focus of this proposed rule is on
HUD's disposition of REO properties. FHA's intent is to bring its
practices into
[[Page 59691]]
conformance with industry standards and allow HUD to conduct its Single
Family Property Disposition Program more efficiently and more
effectively so that it can obtain the greatest value for REO properties
in different market conditions.
II. This Proposed Rule
The proposed amendments to part 291 would make several changes to
the administration of HUD's single-family property disposition program
with respect to the disposition of REO properties. These changes seek
to provide greater efficiency in the administration of HUD's property
disposition program for REO properties, align FHA's regulatory
authority with its business practices, and provide flexibility in
anticipation of future changes to the property disposition program for
REO properties. The following section of this preamble describes the
changes to the property disposition process proposed by this rule.
1. Ownership and Disposition Authority. HUD proposes to revise the
heading of part 291 from ``Disposition of HUD-Acquired Single Family
Property'' to ``Disposition of HUD-Acquired and Owned Single Family
Property'' to better reflect the fact that HUD not only receives REO
properties, but also holds and maintains them throughout the
disposition process. For similar reasons, the heading of Sec. 291.100,
which states HUD's general policy on disposition, would be changed from
``General policy'' to ``General policy on HUD acquisition, ownership,
and disposition of real estate assets''. Under section 204(g) of the
National Housing Act (12 U.S.C. 1710(g)), HUD is authorized to carry on
activity necessary for receiving, owning, holding and maintaining
property before selling it. Section 291.1(a), which states the purpose
of part 291, would be amended to reference HUD's authority to acquire
and possess properties. This authority would also be cited in Sec.
291.90 governing sales methods to reiterate HUD's authority to
prescribe methods of sale and dispose of properties.
2. Appraisal of HUD REO Properties. Section 291.100(b) of the
proposed rule would be revised to clarify that the list price for HUD
REO properties may be established utilizing one or more evaluation
tools. When an appraisal is ordered as part of the process of
establishing list price, the value must be established by an appraiser
who meets the requirements in 24 CFR part 200, subpart G (Appraiser
Roster), and who is in good standing on the appraiser roster
established under that section. All methods used by appraisers must be
consistent with FHA appraisal requirements at the time the appraisal is
made. This change will align requirements for REO appraisers with
requirements for appraisers found in part 200, subpart G, to ensure
consistency. The proposed rule would expand the valuation methods
available to include alternative methods commonly used in the real
estate industry, such as Broker Price Opinions \1\ and Automated
Valuation Models.\2\
---------------------------------------------------------------------------
\1\ A Broker's Price Opinion (BPO) is the process a hired sales
agent utilizes to determine the selling price of a real estate
property. BPOs are popularly used in situations where lenders and
mortgage companies believe the expense and delay of an appraisal to
determine the value of properties is unnecessary. See https://www.brokerpriceopinion.com.
\2\ Automated valuation model (AVM) is the name given to a
service that can provide real estate property valuations using
mathematical modeling combined with a database. Most AVMs calculate
a property's value at a specific point in time by analyzing values
of comparable properties. Some also take into account previous
surveyor valuations, historical house price movements and user
inputs (e.g. number of bedrooms, property improvements). Appraisers,
investment professionals and lending institutions use AVM technology
in their analysis of residential property. It is a technology-driven
report. The product of an automated valuation technology comes from
analysis of public record data and computer decision logic combined
to provide a calculated estimate of a probable selling price of a
residential property.
---------------------------------------------------------------------------
3. Escrow Amount Required for Properties Needing Repairs.
Currently, buyers of HUD-acquired properties can qualify for FHA
mortgage insurance even if the property does not meet FHA's minimum
property standards, provided that they put money into escrow to make
necessary repairs to bring the property up to standard. As currently
codified in Sec. 291.100(c)(2), a property that requires no more than
$5,000 for repairs may be offered for sale in an ``as-is'' condition if
the purchaser establishes a cash escrow in the amount of $5,000. This
amount has not been increased since 1994. Based on present value
calculations with an escalation of 3.5 percent, HUD estimates that
repairs costing $5,000 in 1994 would cost $10,000 in 2015. Therefore,
the proposed rule would increase the maximum repair amount that would
allow a purchaser to acquire property under Sec. 291.100(d)(1)(ii) to
$10,000. In addition, in order to ensure that HUD can keep this amount
updated, this rule proposes to add a provision at Sec.
291.100(d)(1)(ii)(B) that would allow HUD to increase or decrease this
amount based on changes to the Consumer Price Index \3\ by issuing a
Federal Register notice for comment. After consideration of public
comments received on the notice, HUD would then publish the revised
escrow amounts in a Federal Register notice. Finally, the rule would
revise Sec. Sec. 291.100(c) and (d) to better reflect the distinction
between FHA's role in the property disposition process and FHA's role
as an insurer of qualified properties when they are sold.
---------------------------------------------------------------------------
\3\ The Consumer Price Index (CPI) is prepared by the Department
of Labor's Bureau of Labor Statistics and is a measure of the
average change over time in the prices paid by urban consumers for a
market basket of consumer goods and services. For more information,
see https://stats.bls.gov/cpi/home.htm.
---------------------------------------------------------------------------
4. Listings. The proposed rule would clarify that HUD has the
statutory authority to allow for a number of listings options in Sec.
291.100(h) that real estate brokers may use to list REO properties. In
addition to asset management and listing contracts, this rule would
provide that HUD may use other methods deemed to be appropriate. This
will provide HUD with additional flexibility to expedite the sales
process, thereby ensuring that properties are disposed of efficiently
and at minimum cost to HUD. In addition, the proposed rule would revise
Sec. 291.100(h)(2)(ii) to require the purchaser's broker to submit
bids through HUD's designated electronic bid system rather than through
the exclusive broker.
5. Settlement Cost Assistance Available to Owner-Occupant
Purchasers. Section 291.205(b) currently provides that, in the case of
competitive sales, HUD, upon request by the purchaser, may elect to pay
all or a portion of the financing and loan closing costs as well as the
broker's sales commission, not to exceed the percentage of the purchase
price determined appropriate by the Secretary for the area. The
proposed rule would remove HUD's obligation to pay the broker's sales
commission and specify that settlement cost assistance is only
available to owner-occupant purchasers and not available to investor
purchasers. Both ``owner-occupant purchaser'' and ``investor
purchaser'' are defined in Sec. 291.5.
6. Bidding Process for Competitive Sales: The proposed rule would
update the bidding process established under the competitive sales
procedures in Sec. 291.205. Section 291.205(k) would be revised to
provide for winning bids to be made available publicly rather than
making them available for inspection at a time and place designated by
the HUD local office. Losing bids would no longer be made available
either through electronic posting or through the HUD local office. In
addition, the rule would specify that winning bidders may be notified
by their brokers using
[[Page 59692]]
electronic mail and that an executed sales contract will be deemed
final when, after being signed by both parties, the executed contract
is sent by email rather than via postal service delivery to the
successful bidder.
7. Good Neighbor Next Door (GNND). The objective of the GNND
program is to improve the quality of life in distressed urban
communities by encouraging law enforcement officers, teachers, and
firefighters/emergency medical technicians, whose daily
responsibilities reflect a high level of public service commitment and
represent a nexus to the needs of the community, to purchase and live
in homes in these communities, as the preamble to that final rule made
clear. (See 71 FR 64422, November 1, 2006.) As to law enforcement
officers specifically, one of the purposes of the GNND Sales Program is
to revitalize distressed communities by deterring the commission of
crimes with the presence of law enforcement officers in these areas.
(See 71 FR 64424.) However, the currently codified rule, while it
requires teachers and firefighters in the GNND program to live in the
areas they serve, does not do so with respect to police officers.
Therefore, this rule would add this requirement for police officers in
accordance with the purpose of the rule.
This proposed rule further clarifies that similar requirements
apply to all of the GNND participants by making a parallel change to
Sec. Sec. 291.500, 291.525 and 291.530, which are the sections on
purpose and purchaser qualifications, in general. This rule also adds a
definition of ``locality'' to Sec. 291.505, and uses that term in this
proposed rule rather than ``area,'' which is the current terminology,
to avoid repetitive language and confusion with the concept of a
``revitalization area'' used in codified Sec. 291.510.
Technical Changes
This proposed rule would revise the structure of Sec. 291.5 to
consolidate the definition for ``Secretary'' with the other definitions
in this section.
III. Findings and Certifications
Executive Order 12866 and Executive Order 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and therefore, subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the order. Executive Order
13563 (Improving Regulations and Regulatory Review) directs 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. The
majority of the proposed changes to part 291 described above would
streamline HUD's property disposition program by bringing its practices
into conformance with industry standards and allowing HUD to administer
its Single Family Property Disposition Program more efficiently and
more effectively. These changes would not create additional significant
burdens for the public. As a result, this rule was determined to not be
a significant regulatory action under section 3(f) of Executive Order
12866, Regulatory Planning and Review, and therefore was not reviewed
by the Office of Management and Budget.
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.
HUD defines ``small supervised lenders'' as those depository
institutions that are regulated by the Federal Reserve, the Office of
the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or the National Credit Union Administration, and which
have a depository asset base of less than $500 million.\4\ This rule
proposes to make changes to the administration of HUD's property
disposition and acquisition activities carried out as part of the FHA
insurance program for one-to-four family homes. These changes include
limiting the provision of settlement cost assistance to owner-
occupants, providing HUD flexibility to run the bidding process for REO
properties, changes to the direct sales process, the additional
flexibility to list properties electronically, changes to the required
escrow amount for purchasers obtaining property not meeting HUD's
property standards, and clarifications in the rule governing HUD's
appraisal process. These changes would streamline HUD's administration
of its Single Family Property Disposition Program and adopt measures
that reflect industry practice. For these reasons, HUD has determined
that this rule would not have a significant economic impact on a
substantial number of small entities.
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\4\ Of HUD's 1,459 supervised lenders, 598 are considered, by
HUD, to be ``small supervised lenders.''
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Notwithstanding HUD's determination that this rule will not have a
significant effect on a substantial number of small entities, HUD
specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.
Paperwork Reduction Act
The information collection requirements contained in this proposed
rule have been submitted to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). 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. The burden of information collection in this proposed
rule is estimated as follows:
Information Collection Under Proposed Process
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Frequency of Total annual Burden hours Total annual Total annual
Information collection respondents response responses per response burden hours Hourly cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2502-0306--Acquisition/Disposition of 65,000 1 65,000 .08 5200 $63.67 $331,084
Mortgaged Single Family Properties
(Sec. 291.100).......................
2502-0189--Repair Completion Escrow 35,000 1 35,000 .02 700 63.67 44,569
Requirement (Sec. 291.100)...........
[[Page 59693]]
2502-0570--HUD-Owned Real Estate--Good 65,000 1 65,000 .02 1300 63.67 82,771
Neighbor Next Door Program (Sec.
291.500)...............................
---------------------------------------------------------------------------------------------------------------
Totals.............................. 165,000 3 165,000 1.2 7200 .............. 458,424
--------------------------------------------------------------------------------------------------------------------------------------------------------
In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning the
information collection requirements in the proposed rule regarding:
(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) Whether the proposed collection of information enhances the
quality, utility, and clarity of the information to be collected; and
(4) Whether the proposed information collection minimizes 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).
Interested persons are invited to submit comments regarding the
information collection requirements in this rule. Under the provisions
of 5 CFR part 1320, OMB is required to make a decision concerning this
collection of information between 30 and 60 days after the publication
date. Therefore, a comment on the information collection requirements
is best assured of having its full effect if OMB receives the comment
within 30 days of the publication date. This time frame does not affect
the deadline for comments to the agency on the proposed rule, however.
Comments must refer to the proposal by name and docket number (FR-5776-
P-01) and must be sent to: HUD Desk Officer, Office of Management and
Budget, New Executive Office Building, Washington, DC 20503, Fax
number: (202) 395-6947, and Colette Pollard, HUD Reports Liaison
Officer, Department of Housing and Urban Development, 451 7th Street
SW., Room 2204, Washington, DC 20410.
Interested persons may submit comments regarding the information
collection requirements electronically through the Federal eRulemaking
Portal at https://www.regulations.gov. HUD strongly encourages
commenters to submit comments electronically. Electronic submission of
comments allows the commenter maximum time to prepare 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 https://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.
Environmental Impact
A Finding of No Significant Impact (FONSI) with respect to
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of National Environmental
Policy Act (42 U.S.C. 4332(2)(C)). The Finding of No Significant Impact
is available for public inspection between the hours of 8 a.m. and 5
p.m. weekdays in the Regulations Division, Office of General Counsel,
Department of Housing and Urban Development, 451 7th Street SW., Room
10276, Washington, DC 20410. Due to security measures at the HUD
Headquarters building, please schedule an appointment to review the
FONSI 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 toll-free Federal Relay
Service at 800-877-8339.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either (i) imposes substantial direct compliance costs on state and
local governments and is not required by statute, or (ii) preempts
state law, unless the agency meets the consultation and funding
requirements of section 6 of the Executive order. This proposed rule
would not have federalism implications and would 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 proposed rule would
not impose any Federal mandates on any state, local, or tribal
governments, or on the private sector, within the meaning of the UMRA.
List of Subjects in 24 CFR Part 291
Community facilities, Conflict of interests, Homeless, Lead
poisoning, Low and moderate income housing, Mortgages, Reporting and
recordkeeping requirements, Surplus government property.
Accordingly, for the reasons stated in the preamble above, HUD
proposes to amend 24 CFR part 291 as follows:
PART 291--DISPOSITION OF HUD-ACQUIRED AND OWNED SINGLE FAMILY
PROPERTY
0
1. The authority citation for part 291 continues to read as follows:
Authority: 12 U.S.C. 1701 et seq., 42 U.S.C. 1441, 1441a, 1551a
and 3535(d).
0
2. Revise the heading of part 291 to read as set forth above.
0
3. Revise Sec. 291.1(a)(1) to read as follows:
Sec. 291.1 Purpose and general requirements.
(a) * * *
(1) This part governs the acquisition, possession and disposition
of one-to-four family properties acquired by the Federal Housing
Administration (FHA) through foreclosure of an insured or Secretary-
held mortgage or loan under the National Housing Act, or acquired by
HUD under section 204(g) of the National Housing Act (12 U.S.C.
1710(g)). HUD will issue detailed policies and procedures that must be
followed in specific areas.
* * * * *
0
4. Amend Sec. 291.5 by removing paragraphs (a) and (b), adding
[[Page 59694]]
introductory text, and revising the definition of ``Secretary.''
The addition and revision to read as follows:
Sec. 291.5 Definitions.
Terms used in this part are defined as follows:
* * * * *
Secretary is defined in 24 CFR 5.100.
* * * * *
0
5. Amend Sec. 291.90 by revising the introductory paragraph to read as
follows:
Sec. 291.90 Sales methods.
In accordance with section 204(g) of the National Housing Act (12
U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all
methods of sale. HUD may dispose of assets using any method that the
Secretary deems appropriate, including, but not limited to the
following:
* * * * *
0
6. Amend Sec. 291.100 by revising the section heading and paragraphs
(b), (c), (d), and (h) to read as follows:
Sec. 291.100 General policy on HUD acquisition, ownership and
disposition of real estate assets.
(a) * * *
(b) List price. The list price, or ``asking price,'' assigned to
the property is based upon one or more evaluation tools (e.g.
appraisal, Broker Price Opinion, Automated Valuation Model). An
appraisal, when used, must be conducted by an independent real estate
appraiser who meets all of the requirements of 24 CFR part 200, subpart
G, and is in good standing on the appraiser roster established under
that section. The appraiser must provide an opinion of the ``as-is''
market value using a valuation method that is commonly employed in the
industry and that is consistent with FHA appraisal requirements.
(c) Insurance. When listing properties, HUD may elect to only
identify property not eligible for mortgage insurance under section
203(b) of the National Housing Act (12 U.S.C. 1709(b)).
(d) Financing. (1) Subject to underwriting requirements, REO
properties that have not been identified as uninsurable in accordance
with paragraph (c) of this section can be purchased and financed with a
mortgage insured under section 203(b) or 203(k) of the National Housing
Act (12 U.S.C. 1709(b), 1709(k)), if supported by an FHA appraisal, in
one of the following ways:
(i) Insured. A property that meets the Minimum Property Standards
(MPS) as defined in HUD Handbook 4905.1 or any successor handbook, as
determined by the Secretary, for existing dwellings will be offered for
sale in ``as-is'' condition with FHA mortgage insurance available as
provided in part 203 of this chapter.
(ii) Insured with repair escrow. (A) A property that requires no
more than $10,000 for repairs to meet the MPS as defined in HUD
Handbook 4905.1 or any successor handbook or, as determined by the
Secretary, will be offered for sale in ``as-is'' condition with FHA
mortgage insurance available, as provided in part 203 of this chapter,
provided the mortgagor establishes a cash escrow to ensure the
completion of the required repairs.
(B) Changes in repair escrow. HUD may adjust the escrow balance
required under this paragraph based on changes to the Consumer Price
Index by publishing a Federal Register notice that provides for a
public comment period of 30 calendar days for the purpose of accepting
comments on the amount of the change. After comments have been
considered, HUD will publish a final notice announcing the revised
escrow amounts.
(iii) Insured with rehabilitation loan in accordance with 203(k) of
the National Housing Act and pursuant to Sec. 203.50 of this chapter.
(2) REO properties that have been identified as uninsurable in
accordance with paragraph (c) of this section can be purchased and
financed with a mortgage insured under section 203(k) of the National
Housing Act (12 U.S.C. 1709(k)), subject to underwriting requirements
supported by an FHA-specified appraisal and in accordance with 24 CFR
203.50.
(3) HUD, in its sole discretion, may take back purchase money
mortgages (PMMs) on property purchased by governmental entities or
private nonprofit organizations who buy property for ultimate resale to
owner-occupant purchasers with incomes at or below 115 percent of the
area median income. When offered by HUD, a PMM will be available in an
amount determined by the Secretary to be appropriate, at market rate
interest, for a period not to exceed 5 years. Mortgagors must meet FHA
mortgage credit standards.
(i) For purposes of this section, the term ``purchase money
mortgage,'' or PMM means a note secured by a mortgage or trust deed
given by a buyer, as mortgagor, to the seller, as mortgagee, as part of
the purchase price of the real estate.
(ii) Except as provided in paragraph (d)(3) of this section, the
purchaser is entirely responsible for obtaining financing for
purchasing a property.
(e) * * *
(h) Any real estate broker who has agreed to comply with HUD
requirements may be eligible to participate in the sales program.
Purchasers participating in the competitive sales program, except
government entities and nonprofit organizations, must submit bids
through a participating broker. In accordance with section 204(g) of
the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the
terms and conditions for all methods of listing properties. HUD may
dispose of properties using any method that the Secretary deems
appropriate, including, but not limited to the following:
(1) Open listings. Properties may be sold on an open listing basis
with participating real estate brokers.
(2) Asset management and listing contracts. (i) HUD may invite
firms experienced in property management to compete for contracts that
provide for an exclusive right to manage and list specified properties
in a given area.
(ii) In areas where a broker has an exclusive right to list
properties, a purchaser may use a broker of his or her choice. The
purchaser's broker must submit the bid through HUD's designated
electronic bid system.
* * * * *
0
7. Amend Sec. 291.205 by revising the introductory text and paragraphs
(b), (k)(1), (k)(2), and (l) to read as follows:
Sec. 291.205 Competitive sales of individual properties.
When HUD conducts competitive sales of individual properties to
individual buyers, it will generally sell the properties on an ``as-
is'' basis, without repairs or warranties, and it will follow the sales
procedures provided in this section.
* * * * *
(b) * * *
(1) The net offer is calculated by subtracting from the bid price
the dollar amounts for the financing and loan closing costs and the
broker's sales commission, as described in paragraph (b)(2) of this
section.
(2) If an owner-occupant purchaser of the property requests in the
bid, HUD may pay all or a portion of the financing and loan closing
costs, not to exceed the percentage of the purchase price determined
appropriate by the Secretary for the area. In no event will the total
amount for broker's sales commission exceed 6 percent of the purchase
price, except for cash bonuses offered to brokers by HUD for the sale
of hard-to-sell properties. No assistance for
[[Page 59695]]
financing and loan closing costs or for the broker's sales commission
will be provided to investor purchasers.
* * * * *
(k) * * *
(1) The Secretary will make all winning bids available publicly.
(2) Successful bidders will be notified through their real estate
brokers by electronic mail, mail, telephone, or other means. Acceptance
of a bid is final and effective only upon HUD's execution of the sales
contract, signed by both the submitting real estate broker and the
prospective purchaser, and sending a copy of the executed contract by
electronic mail to the successful bidder or the bidder's agent.
(l) Counteroffers. HUD may present counteroffers during competitive
bid periods as it deems appropriate to minimize losses to its insurance
fund. ``Best and Final'' offers requested by HUD are considered
counteroffers.
Subpart F--Good Neighbor Next Door Sales Program
0
8. Revise Sec. 291.500 to read as follows:
Sec. 291.500 Purpose.
This subpart describes the policies and procedures governing the
Good Neighbor Next Door (GNND) Sales Program. The purpose of the GNND
Sales Program is to improve the quality of life in distressed urban
communities. This is to be accomplished by encouraging law enforcement
officers, teachers, and firefighters/emergency medical technicians to
purchase and live in homes that are located in the same communities
where they perform their daily responsibilities and duties.
0
9. Revise Sec. 291.505 to read as follows:
Sec. 291.505 Definitions.
For purposes of this subpart:
Locality means the community, neighborhood, or jurisdiction of the
unit of general local government, or Indian tribal government;
Unit of general local government means a county or parish, city,
town, township, or other political subdivision of a state.
0
10. In Sec. 291.520, remove ``and'' from the end of paragraph (a), add
the word ``and'' at the end of paragraph (b), and add paragraph (c).
The addition reads as follows:
Sec. 291.520 Eligible law enforcement officers.
* * * * *
(c) The full time employment in paragraph (a) of this section must,
in the normal course of business, directly serve the locality in which
the home is located.
0
11. Revise Sec. 291.525(b) to read as follows:
Sec. 291.525 Eligible teachers.
* * * * *
(b) The full time employment in paragraph (a) of this section must,
in the normal course of business, serve students from the locality
where the home is located.
0
12. Revise Sec. 291.530 to read as follows:
Sec. 291.530 Eligible firefighter/emergency medical technicians.
A person qualifies as a firefighter/emergency medical technician
for the purposes of the GNND Sales Program if the person is:
(a) Employed full-time as a firefighter or emergency medical
technician by a fire department or emergency medical services responder
unit of the federal government, a state, unit of general local
government, or an Indian tribal government; and
(b) The full time employment in paragraph (a) of this section must,
in the normal course of business, directly serve the locality where the
home is located.
Dated: August 13, 2015.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2015-24837 Filed 10-1-15; 8:45 am]
BILLING CODE 4210-67-P
