Federal Housing Administration (FHA): Single Family Sale Program, 57798-57810 [2024-15024]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 89, Number 136 (Tuesday, July 16, 2024)]
[Proposed Rules]
[Pages 57798-57810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15024]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 203, 206, and 291

[Docket No. FR-6051-P-02]


Federal Housing Administration (FHA): Single Family Sale Program

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, Department of Housing and Urban Development (HUD).

ACTION: Proposed rule.

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SUMMARY: In a Single Family Sale (the ``Program''), eligible single 
family mortgage loans insured by the Federal Housing Administration 
(FHA) are assigned to the Secretary of the Department of Housing and 
Urban Development (HUD) in exchange for claim payments, and mortgage 
notes are then sold, without FHA insurance, to qualified purchasers in 
a manner that seeks to maximize recoveries and strengthen HUD's Mutual 
Mortgage Insurance Fund (MMIF), and to achieve HUD's operational goals 
for the MMIF. The Program has operated as a demonstration since 2002. 
This proposed rule would transition the Program from a demonstration to 
a permanent Program by revising HUD's Single Family Mortgage Insurance, 
Home Equity Conversion Mortgages, and Disposition of HUD-Acquired and -
Owned Single Family Property regulations to provide for the sale of 
HUD-held single family forward mortgages and Home Equity Conversion 
Mortgages (HECMs), through Competitive Sale of Single Family Loans and 
Direct Sale of Single Family Loans. This proposed rule would also 
remove existing regulations on Disposition of HUD-Acquired and -Owned 
Single Family Property regulations which provided for a retired program 
that handled the sale of HUD-held single family mortgage loans.

DATES: Comment due date: September 16, 2024.

ADDRESSES: Interested persons are invited to submit comments regarding 
this document. Comments should refer to the above docket number and 
title. There are two methods for submitting comment.
    1. Submission of comments by mail: Comments may be submitted by 
mail to the HUD Regulations Division, Office of Housing, Department of 
Housing and Urban Development, 451 7th Street SW, Washington, DC 20410-
8000; telephone: (202) 708-2625 (this is not a toll-free number) or 
toll free (800) 481-9895. HUD welcomes and is prepared to receive calls 
from individuals who are deaf or hard of hearing, as well as 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
    2. Electronic submission of comments: Comments may be submitted 
electronically through the Federal e-Rulemaking 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 the comments immediately 
available to the public. Comments submitted electronically through the 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow instructions 
provided on this 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 
this document.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    3. 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) 402-
5731 (this is not a toll-free number). HUD welcomes and is prepared to 
receive calls from individuals who are deaf or hard of hearing, as well 
as individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. 
Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: John Lucey, Director, FHA Office of 
Asset Sales, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW, Washington, DC 20410-8000; telephone: 
(202) 708-2625 (this is not a toll-free number), or toll-free: (800) 
481-9895. HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as from 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    Under section 204 of the National Housing Act,\1\ HUD has general 
authority to pay insurance claims and dispose of mortgages and 
properties acquired under the FHA single family mortgage insurance 
programs. Section 204(g) specifically grants HUD broad discretion to 
implement a range of disposition alternatives. The National Housing Act 
also requires HUD ensure the mutual mortgage insurance fund (MMIF) 
remains financially sound. HUD must effectively manage HUD's defaulted 
assets and minimize losses to the MMIF to carry out its fiduciary 
responsibility to ensure the financial soundness of the MMIF.
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    \1\ See 12 U.S.C. 1710 (2010), as amended by section 601 of the 
Fiscal Year 1999 Departments of Veterans Affairs and Housing and 
Urban Development and Independent Agencies Appropriations Act (Pub. 
L. 105-276, approved October 21, 1998) (``FY 1999 Appropriations 
Act'').
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    Since 2002, HUD has operated a demonstration program \2\ to 
implement its broad disposition authority with respect to mortgages and 
properties acquired under the FHA single family mortgage insurance 
programs. By notice published in the Federal Register on February 5, 
2002, HUD announced the establishment of the Accelerated Claim and 
Asset Disposition (ACD)

[[Page 57799]]

Demonstration to ``address any programmatic concerns'' and ``assess its 
success and determine whether to implement the ACD process on a 
permanent basis, throughout the country.'' \3\ On October 29, 2002, HUD 
responded to public comments and conducted its first sale of defaulted 
mortgages through the ACD Demonstration.\4\ HUD has continuously 
operated the ACD demonstration for the purpose of paying insurance 
claims and disposing of mortgages and related properties acquired under 
the FHA single family mortgage insurance programs.
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    \2\ HUD has used various names to refer to the demonstration 
program, including the Accelerated Claim and Asset Disposition (ACD) 
Demonstration, the Single Family Loan Sales (``SFLS'') Program, and 
the Distressed Asset Stabilization Program (``DASP'').
    \3\ See Notice of FHA Accelerated Claim Disposition 
Demonstration, 67 FR 5418 (February 5, 2002).
    \4\ See Notice of FHA Accelerated Claim Disposition 
Demonstration, 67 FR 66038 (October 29, 2002).
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    Absent the Program, if a borrower is unable to resume their 
mortgage payments after loss mitigation, the mortgagee in most cases 
would be required to foreclose the defaulted loan to perfect an 
insurance claim. If the property cannot be sold to a third party at 
foreclosure or a second-chance auction, the mortgagee may file a 
conveyance claim, which gives the property to HUD in exchange for 
receiving the FHA mortgage insurance claim payment. Prior to filing the 
conveyance claim, the mortgagee will incur legal and holding costs for 
which the mortgagee may seek reimbursement from HUD through claim 
payment. A property conveyed to HUD increases HUD's Real Estate Owned 
(REO) inventory, posing an additional financial burden on the MMIF for 
asset management costs. As an alternative to filing a conveyance claim, 
for a forward loan that has been foreclosed, HUD will pay a claim 
without conveyance of title claim from the MMIF to the mortgagee if the 
borrower defaults and the mortgagee loses money after selling the house 
in a foreclosure or post-foreclosure sale. Disposing of delinquent 
forward mortgage loans shortens the period between default and claim 
payment, reducing the financial exposure to these insurance funds for 
costs incurred after default.
    For a HECM that has been foreclosed, the mortgagee cannot file a 
conveyance claim but can sell the foreclosed property to a third party 
and receive claim payment if the mortgagee is owed more than it 
receives from such sale. For HECMs endorsed before 2009, HUD pays 
claims from the General Insurance (GI) Fund. For HECMs endorsed in 2009 
or after, HUD pays claims from the MMIF.
    HUD's sale of defaulted loans is generally intended to yield a 
recovery to the MMIF that meets or exceeds the recovery obtained as a 
result of a foreclosure-based claim.
    When a borrower passes away after assignment of a HECM, HUD incurs 
costs associated with real property when it is vacant or abandoned. 
HUD's servicing tenure and attempts to foreclose can be delayed by 
title or jurisdictional issues and backlogs resulting from high volume. 
These issues result in higher servicing costs along with additional 
inspection and property preservation costs while the HECMs remain in 
HUD's portfolio. After foreclosure, HECMs that converted to REO are 
added to HUD's inventories, increasing asset management costs to 
protect and dispose of the properties. Disposition of eligible assigned 
HECMs, such as HECMs secured by vacant and abandoned properties, can 
result in significant cost savings to the MMIF and GI Fund, as 
applicable, and enable better and more timely resolution of these 
assets.
    On June 5, 2006, HUD issued an advance notice of proposed 
rulemaking (``ANPR'') soliciting public comment on HUD's ACD 
program.\5\ The ANPR solicited public comments to make ``possible 
improvements to the program,'' including the most efficient way to 
``maximize the return to the FHA insurance fund'' by ``minimiz[ing] the 
time an asset is held.'' \6\
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    \5\ See Accelerated Claim and Asset Disposition (ACD) Program; 
Advanced Notice of Proposed Rulemaking, 71 FR 32392 (June 5, 2006).
    \6\ Id.
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    On April 30, 2007, HUD published a regulatory agenda providing 
public notice that FHA had withdrawn the ANPR effective March 1, 
2007.\7\ After this action, HUD adopted additional modifications to the 
demonstration, including changing the disposition method from joint 
venture to whole loan sales.
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    \7\ See HUD Semiannual Regulatory Agenda, 72 FR 22694 (April 30, 
2007).
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II. Advance Notice of Proposed Rulemaking (ANPR)

    On May 6, 2019, HUD published another ANPR for the Single Family 
Loan Sale Program.\8\ The ANPR presented questions to commenters on 
asset eligibility, the assignment claims process, loan delivery, sale 
structure, purchaser requirements, and enforcement mechanisms. 
Commenters provided responses addressing the Program's positive and 
negative effect on the community; obstacles during post-sale servicing; 
the loan pooling and scoring process; and participating servicer 
agreements.
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    \8\ See Federal Housing Administration (FHA): Single Family Loan 
Sale Program; Advance Notice of Proposed Rulemaking and Request for 
Public Comment, 84 FR 19784 (May 6, 2019).
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    Commenters expressed different perspectives on whether the current 
program benefits the community. Commenters stated the loan sale program 
stabilizes communities and provides borrowers, for whom all FHA-
prescribed loss mitigation efforts have failed, a second chance to save 
their homes and avoid foreclosure, while producing a better financial 
outcome for taxpayers. Other commenters stated the current program 
inadequately protects homeowners, damages communities, and creates 
neighborhood instability. Many commenters stated the program increases 
single family rental housing and decreases homeownership because it 
primarily facilitates sales to single family rental property owners. 
Commenters noted these purchasers include private equity funds, real 
estate investment trusts (REITs), and other large investors, which can 
cause neighborhood instability. Commenters also referenced allegations 
the program has a disparate impact on communities of color. To remedy 
the adverse effects of the current program, commenters suggested HUD 
strike an appropriate balance between protecting the MMIF, the 
interests of communities, and the need to ensure fair treatment of 
borrowers.
    Commenters also identified additional obstacles of the Single 
Family Loan Sale Program that limit participation in the program and 
the sale of loans. These obstacles included irregularly scheduled sales 
with short response timeframes, which leads to administrative and cost 
burdens as well as difficulty pursuing foreclosure or helping borrowers 
with loss mitigation efforts. Other commenters stated HUD's program 
requires participating servicers to spend significant resources in 
lengthy and expensive conflict resolution over contractual 
representations and warranties. Commenters argued FHA should apply 
outcome requirements to all loan sale pools, not just Neighborhood 
Stabilization Outcome (NSO) pools. Commenters also stated the post-sale 
servicing failed to require a reasonable modification program for 
borrowers whose loans have been sold, and HUD has not required loan 
sale purchasers to consider specific options for borrowers in default.
    Many commenters offered suggestions on how HUD should structure 
loan pooling. Commenters recommended HUD set aside pools of loan sales 
for nonprofits as well as arrange loan sales

[[Page 57800]]

in small, manageable numbers in limited geographic areas. Commenters 
also discussed nonprofit and for-profit partnerships, both encouraging 
these arrangements but also noting the importance of clearly defining 
the roles and decision-making authority of each partner. Other 
commenters preferred larger pool sizes to minimize the negative impact 
of fixed transaction costs on bids. Commenters also recommended a 
``last look'' option for nonprofit corporations that compete at the 
national level to match the highest bidder purchase offer. Similarly, 
commenters stated HUD should establish and publish limits on the 
disposition of properties acquired through the program to other 
entities besides owner-occupants, nonprofit community organizations, 
purchasers who will commit to providing affordable rentals, or land 
banks.
    Commenters also offered suggestions to improve the Participating 
Servicer Agreement (PSA) to include: clearly defining the requirements 
and timeframes, such as a clear deadline for the delivery of collateral 
files to the purchaser and the endorsed Note; providing a deadline for 
the submission of trailing expenses by the prior servicer for 
reimbursement; providing transfer instructions with time limitations 
for submitting documentation; and clarifying violations that would 
trigger repurchase or re-conveyance. Commenters also recommended the 
PSA provide updated documentation for the interim servicing period to 
include servicing notes and loss mitigation actions since the date of 
transfer. Commenters stated the PSA should establish a servicing fee 
for awarded loans based on current market costs for the interim 
servicing period.
    For additional information, all public comments can be viewed at 
www.regulations.gov, under docket number HUD-2019-0039. (See https://www.regulations.gov/docket/HUD-2019-0039)

III. Proposed Rule Changes

    This proposed rule seeks to combine what HUD has previously called 
the Single Family Loan Sale Program for forward loans (SFLS) and the 
HUD-held Vacant Loan Sales Program for HECMs (HVLS) into one permanent 
program that will be referred to as the Single Family Sale Program (the 
``Program''). The proposed rule would combine SFLS and HVLS into the 
Program, although HUD anticipates it will continue to sell forward 
loans and reverse loans in distinct pools or sales. The proposed rule 
would also give FHA flexibility to maximize returns to the MMIF in 
cases when a loan sale would help minimize losses from the disposition 
of each asset. The proposed rule also seeks to provide flexibility for 
the management of defaulted loans and more efficiently accept 
assignment and dispose of assigned mortgages through loan sales. The 
proposed rule would specify certain claim requirements related to loss 
mitigation loan eligibility for a Single Family Sale and provide for 
HUD to withdraw or require repurchase of a Single Family Loan that does 
not satisfy those requirements. The proposed rule would require 
Participating Servicers comply with any loan sale notification 
requirement to borrowers (Loan Sale Notification) as prescribed by the 
Secretary through notice, such as a Sale Notice or Mortgagee Letter. 
The proposed rule would contain post-sale requirements which include a 
first-look sale requirement for Purchaser-held real estate owned 
property resulting from foreclosure or deed-in-lieu of foreclosure of a 
Single Family Loan.
    A new subpart G proposes to codify the demonstration structure and 
process, which includes improvements identified and tested over the 
course of the demonstration, as a permanent program. HUD is also 
proposing to remove subpart D of 24 CFR part 291 in its entirety 
because the policies and procedures established under subpart D do not 
govern active sales of HUD-held single family loans. Lastly, HUD 
proposes related changes to the FHA single family mortgage assignment 
claim requirements by adding a section to 24 CFR parts 203 and 206 to 
reflect payments made when a loan is assigned as part of the new loan 
sale process.

Section 203.413--Amount of Payment--Forward Loan Sale Assignments

    Section 203.413 provides that when a forward mortgage loan is 
assigned because of a Sale Notice, pursuant to new subpart G, the 
Commissioner shall pay to the mortgagee the unpaid principal balance of 
the loan at the time of assignment in accordance with the PSA executed 
by the Secretary and the mortgagee. This section also describes the 
process and procedures for a mortgagee's claim for insurance, including 
the Commissioner's manner of calculating the assignment claim payment 
based on the regulation and the Conveyance, Assignment and Assumption 
Agreement (CAA), which includes what the Commissioner will consider as 
allowable reimbursable expenses in the claim, and when the mortgagee 
fails to meet certain claim submission requirements. Also, this section 
requires the mortgagee determine and certify the mortgage satisfies the 
Commissioner's acceptability criteria, which includes satisfaction of 
the Single Family loss mitigation eligibility requirements and a 
prohibition on inclusion of low-value mortgages secured by vacant 
properties, for the Single Family Sale. This section provides for claim 
payment reductions where the Participating Servicer fails to take 
required actions as specified in the PSA, such as curing breaches in a 
timely manner. Section 203.413 also sets forth HUD's grounds for 
curtailing debenture interest and rejecting a claim when claims are 
filed or in a suspended status after claim submission deadlines are 
missed.

Section 206.130--Amount of Payment--HECM Sale Assignments

    Section 206.130 mirrors Sec.  203.413 and provides the same process 
for paying HECM mortgages when a HECM mortgage is assigned because of a 
Sale Notice. Pursuant to new subpart G, the Commissioner shall pay to 
the mortgagee the unpaid principal balance of the loan at the time of 
assignment and an amount calculated in accordance with the PSA executed 
by the Secretary and the mortgagee. Section 206.130 also describes the 
process and procedures for a mortgagee's claim for insurance, including 
the Commissioner's manner of calculating the assignment claim payment 
based on the regulation and the PSA, which includes what the 
Commissioner will consider as allowable reimbursable expenses in the 
claim, and when the mortgagee fails to meet certain claim submission 
requirements. This section also requires the mortgagee to determine and 
certify the mortgage satisfies the Commissioner's acceptability 
criteria, which includes satisfaction of the Single Family loss 
mitigation eligibility requirements, for the Single Family Sale. This 
section provides for claim payment reductions where the Participating 
Servicer fails to take required actions as noted in the PSA, such as 
curing breaches in a timely manner. Section 206.130 also sets forth 
HUD's grounds for curtailing debenture interest and rejecting a claim 
when claims are filed or in a suspended status after claim submission 
deadlines are missed.

Section 291.601 Definitions

    Section 291.601 provides definitions for the following terms, which 
were routinely used in past Single Family Loan Sales (SFLS) and HUD-
held Vacant Loan Sales (HVLS). FHA-approved mortgagees that have 
contributed eligible loans for sales, and bidders in the SFLS and HVLS 
programs

[[Page 57801]]

are familiar with these terms, as they are defined in the materials, 
such as the Participating Servicing Agreement (PSA); Desk Guide; 
Conveyance, Assignment and Assumption Agreement (CAA); and Bidder 
Information Package (BIP) provided by HUD for each sale. The following 
terms pertain to the HUD FHA Single Family Loans sold and to the entire 
loan sale process, including the opening of HUD's Aggregate Loan 
Database, bidder requirements, FHA-approved mortgagee assignment claim 
requirements and contracts, servicing of the loans after sale and 
before settlement, purchaser sale contracts, and post-sale 
requirements. The proposed rule will define the following terms: 
Aggregate Loan Database (ALD); Bidder Information Package (BIP); Bidder 
Qualification Statement; Claim Date; Competitive Sale of Single Family 
Loans; Confidentiality Agreement; Conveyance, Assignment and Assumption 
Agreements (CAAs); Cut-off Date or Claim Submission Cut-off Date; Desk 
Guide; Direct Sale of Single Family Loans; Home Equity Conversion 
Mortgage (HECM); Interim Servicing Agreement (ISA); Interim Servicing 
Period; Low-value; Nonprofit Organization; Participating Servicer (or 
P-Servicer); Participating Servicer Agreement (PSA); Purchaser; 
Qualified Participant; Sale Notice; Servicing Transfer Date; Single 
Family Sale or the Program; Single Family Loan; and Vacant.

Section 291.603 Purpose and General Policy of Single Family Sales

    This section sets forth the general purpose and policy for HUD's 
Single Family Sale Program. The section makes clear that all Single 
Family Sales will be made without recourse to HUD and without FHA 
insurance. This section also clarifies that HUD has discretion on how 
to package loans included in the sale as well as identify entities to 
participate in the sale. More generally, this section clarifies that 
the new subpart G governs all Single Family Sales unless otherwise 
specified.

Section 291.605 Participating Servicers

    This proposed section provides the requirements a Participating 
Servicer must meet to participate in the Single Family Sale Program. 
The Participating Servicer is the FHA-approved mortgagee contributing 
eligible Single Family Loans into the Sale. The Participating Servicer 
must identify the eligible Single Family Loans and assign them to HUD 
in exchange for claim payment in accordance with the terms of the 
Participating Servicer Agreement (PSA) with HUD. The Participating 
Servicer will continue to service the assigned Single Family Loans for 
an interim period after the Single Family Sale in accordance with the 
terms of an Interim Servicing Agreement (ISA) with the Purchaser. The 
Participating Servicer must execute the PSA and ISA to participate in 
the Single Family Sale. The PSA will include, but is not limited to, 
the processes for preparation of the mortgage loan list, submission of 
due diligence materials, ordering valuations, preparing claim 
submission files, submission of claim, transfer of documents to 
Purchasers, sending letters to borrowers, preparing assignments and 
endorsements, conducting interim servicing, and processing repurchases. 
The Desk Guide is also a part of the PSA and is provided to the P-
Servicer by the Secretary for a Single Family Sale.
    Proposed paragraph (b) provides that for each Single Family Sale in 
which the Participating Servicer participates, the Participating 
Servicer must identify mortgages that meet the eligibility criteria in 
accordance with terms of the PSA, conduct all sale activities in 
accordance with the PSA and ISA they executed, and comply with any Loan 
Sale Notification requirements and Single Family Sale notice (the 
``Sale Notice'') requirements. A Loan Sale Notification would describe 
the sale process and describe Participating Servicer's obligations 
before and after the sale. It would also provide contact information as 
required by the Secretary, such as the Participating Servicer for 
notification in the event the borrower wants to inquire about the loss 
mitigation evaluation, or the loss mitigation option was not completed 
in accordance with FHA requirements or HUD's National Servicing Center 
for inquiry or complaint alleging non-compliance. The Loan Sale 
Notification requirements will be announced to Participating Servicers 
via notice, such as a Sale Notice or a Mortgagee Letter. The 
Participating Servicer would be responsible for ensuring a Loan Sale 
Notification is provided to each borrower and any other parties as 
required by the Secretary, and the Loan Sale Notification complies with 
all applicable law.
    The sale-specific Sale Notice announces the sale of Single Family 
Loans and will include the schedule of dates and any additional sale, 
participant qualification and loan eligibility requirements including 
requirements related to exhausting loss mitigation; representations; 
post-sale servicing, outcome, and reporting requirements; and 
repurchase criteria applicable to the Participating Servicers 
activities for the individual Single Family Sale.
    Paragraph (c) proposes the Participating Servicer comply with the 
claims payments requirements in accordance with the PSA and claims will 
be paid out in accordance with Sec.  203.413 for forward Single Family 
Loans and Sec.  206.130 for any HECMs assigned in connection with a 
Single Family Sale. The proposed paragraph (d) provides that the 
Participating Servicer continue to service the purchased Single Family 
Loans during the Interim Servicing Period in accordance with the ISA 
that the Participating Servicer executed. Lastly, this section provides 
in paragraph (e) that the Participating Servicer conduct the servicing 
transfer for the Single Family Loans in accordance with both the 
executed PSA and ISA and comply with the applicable state and federal 
law requirements for servicing, including the applicable Consumer 
Finance Protection Bureau (CFPB) requirements.

Section 291.607 Qualified Participants

    This proposed section provides the requirements for being a 
Qualified Participant in the Single Family Sale. This proposed section 
requires individuals or entities to become a Qualified Participant 
before they may bid or purchase Single Family Loans in a Single Family 
Sale. Specifically, paragraph (a) proposes that an individual or entity 
must sign a Confidentiality Agreement and complete and sign a Bidder 
Qualification Statement to be considered a Qualified Participant. The 
Bidder Qualification Statement is a statement of qualifications 
prepared by and containing statements as prescribed by the Secretary 
and executed by an individual or entity seeking to purchase Single 
Family Loans through the Single Family Sale Program. The statement of 
qualifications sets forth the basic qualifications required for 
participation in any of the Single Family Sale Program activities, 
which may include but are not limited to accessing due diligence files, 
bidding on, and purchasing Single Family Loans. The Secretary will 
specify which Bidder Qualification Statement form(s) are applicable to 
a particular Single Family Sale and any additional sale specific 
qualification criteria through notice. HUD will only provide access to 
sensitive Single Family Sale materials to a Qualified Participant. In 
addition, this proposed section provides the individual or entity must 
execute the applicable Bidder Qualification Statement for the specific 
Single Family

[[Page 57802]]

Sale they wish to bid on, as discussed in Sec.  291.609.
    Proposed paragraph (b) provides the process for determining a 
Qualified Participant. HUD will qualify any individual or entity 
seeking to participate in a Single Family Sale if they have met the 
qualification requirements and executed the applicable Bidder 
Qualification statement for the Single Family Sale. Where permitted by 
the Bidder Qualification Statement, the individual or entity may submit 
information that may render its failure to certify certain statements 
immaterial for purposes of qualifying for the Single Family Sale. The 
Secretary, in his or her sole discretion, may accept such information 
and determine the failure to certify as immaterial for qualifying the 
entity or individual due to the entity or individual's minor or 
technical reason preventing certification or experience that differs 
from the certification standard, but that HUD determines to be 
equivalent to the standard. HUD notes the Sale Notice may have 
additional sale-specific qualification requirements the individual or 
entity must also meet, as more fully described below.

Section 291.609 Bidding Process

    This proposed section provides the process for Qualified 
Participants to respond to a Sale Notice HUD publishes, and any 
additional sale requirements as defined in the BIP. Paragraph (a) 
proposes for each Single Family Sale, HUD will publish the PSA, which 
includes the Desk Guide, and the schedule of dates and any sale-
specific loan eligibility, representations, and repurchase criteria 
published by the Secretary in the Sale Notice. HUD will also publish 
the ISA (if applicable), CAA, and Sale Notices, on HUD's public 
website.
    Paragraph (b) proposes all Qualified Participants that intend to 
bid must do so in accordance with the Sale Notice and the BIP, which 
provides details for each sale. Paragraph (b) also provides that when a 
Qualified Participant submits a bid, it will be considered an offer and 
acceptance of the terms and conditions set forth in the BIP. Paragraph 
(b) also notes that along with the bid, the Qualified Participant must 
also execute a copy of the CAA and ISA, as applicable.
    Paragraph (c) proposes a Qualified Participant may use a broker or 
agent. In such case, the bid must be in the name of the Qualified 
Participant and signed by the broker or agent as the attorney-in-fact 
for the Qualified Participant, and the bid must include a power of 
attorney satisfactory to HUD as to form and content. Paragraph (d) 
would require the Qualified Participant also submit to HUD an earnest 
money deposit in the amount set forth in the Sale Notice in paragraph 
(a). The earnest money deposit is nonrefundable to the Qualified 
Participant whose bid is selected for award and will be credited toward 
the purchase price. In the case the Qualified Participant's bid is not 
selected, their earnest money will be returned.
    Paragraph (e) proposes a Qualified Participant may withdraw a 
submitted bid in accordance with the instructions in the BIP for a 
sale, but a bid may not be withdrawn once the bidding has closed.
    Paragraph (f) proposes that HUD maintains the right to terminate a 
Single Family Sale in whole or in part at any time before the bid date. 
In addition, paragraph (g) sets forth the option for HUD to withdraw 
Single Family Loans from a Single Family Sale prior to the settlement 
date or after the bid date in accordance with the BIP and CAA. Lastly, 
paragraph (h) would provide the option for HUD to reject bids when the 
bid does not conform with the instructions in the BIP or when HUD 
determines such action would be in its best interests because it would 
not further HUD's fiduciary responsibility to the MMIF or any stated 
mission objectives in the Sale Notice. Paragraph (h) would also provide 
HUD issue a conditional rejection for bids that are nonconforming, to 
include but not limited to, a missing answer, item, or component which 
would render the bid incomplete. At HUD's discretion, the bidder would 
have the opportunity to amend the nonconforming bid and be considered 
for acceptance upon fulfillment of HUD's requests.

Section 291.611 Post-Bid Process and HUD's Execution of the CAA

    This proposed selection discusses the post-bid selection process 
and proposes HUD would notify the Qualified Participants regarding any 
adjustments to bids in accordance with the BIP. HUD will select bids 
for award and provide notice of award in accordance with the BIP. The 
proposed rule provides that post-selection, HUD will complete the 
execution of the CAA.

Section 291.613 Settlement Requirements

    This proposed section sets forth the settlement requirements 
applicable to a Single Family Sale. Specifically, paragraph (a) would 
provide that the Purchaser must pay to HUD the settlement payment, 
consisting of the balance of the amount due on the bid price, as 
adjusted in accordance with the BIP and CAA. In addition, proposed 
paragraph (b) would provide that when the Purchaser delivers the 
settlement payment, HUD will execute and deliver to the Purchaser a 
settlement statement and an updated loan schedule for the CAA to 
document the Single Family Loans sold to the Purchaser in the Single 
Family Sale. Proposed paragraph (c) provides for HUD to grant a 
temporary Limited Power of Attorney to the Purchaser to facilitate 
endorsement and assignment of the Single Family Loans to the Purchaser. 
Proposed paragraph (d) permits the Purchaser to endorse and assign 
Single Family Loans from HUD to its special purpose entity acquisition 
vehicle that meets CAA requirements.

Section 291.615 Purchaser Servicing Requirements

    This proposed section provides the requirements for Purchasers. The 
rule proposes to require Purchasers to adhere to and ensure their 
servicer, or any subsequent servicer adheres to, the servicing 
requirements as specified in this section and in the CAA for each 
Single Family Sale. Paragraph (a) proposes to include the existing 
requirement that the Purchaser and its servicer comply with the terms 
of the CAA. The CAA terms will include, but are not limited to, 
servicing, resale, post-sale outcome, and reporting requirements for 
the purchased loans. In addition, the Sale Notice published in 
accordance with Sec.  291.609(a) may impose additional post-sale loss 
mitigation and outcome requirements, such as alternatives to 
foreclosure that further FHA's mission of meeting the housing needs of 
low- to moderate-income homeowners, a first look requirement for sales 
of real estate owned properties to provide an exclusive listing period 
for owner occupant, nonprofit organization, government, and other 
prospective buyers as permitted by HUD, that will be incorporated into 
the CAA. The CAA will incorporate by reference the Sale Notice for each 
Single Family Sale, enabling HUD to establish and adjust post-sale 
requirements meeting HUD's mission based on economic and other market 
conditions.
    Paragraph (b) would require the Purchaser report on post-sale 
servicing actions and outcomes for each purchased loan. Paragraph (b) 
also provides that HUD will prescribe the reporting time frame after 
the settlement of the sale in the CAA, which generally continues for a 
four-year period after the settlement date. HUD will periodically 
publish reports to the public on loan

[[Page 57803]]

and property outcomes and will include a breakdown of outcomes in 
different geographies. Paragraph (c) proposes HUD may pursue 
appropriate remedies for a Purchaser's failure to comply with Single 
Family Sale requirements, including obligations set forth under the 
CAA. Such remedies may include the inability to participate in the 
Program for one or more Single Family Sales or for a set-period of 
time, see Sec.  291.621.

Section 291.617 General Policy--Direct Sales of Single Family Loans

    As discussed in Sec.  291.603, HUD has the discretion regarding how 
to package loans included in a Single Family Sale and may pursue a 
Direct Sale of Single Family Loans to individuals or entities that the 
Secretary determines to be qualified, in lieu of a bidding process. The 
Direct Sale of Single Family Loans will follow the requirements in 
subpart G, excluding 24 CFR 291.609 and 291.611. HUD in its Sale Notice 
for the Direct Sale of Single Family Loans will set forth specific 
eligibility requirements and post-sale servicing, outcome, and 
reporting requirements.

Section 291.619 Direct Sale of Single Family Loans Process

    This section sets forth the second method for which HUD could 
decide to conduct a Single Family Sale through the Direct Sale of 
Single Family Loan process. Under paragraph (a), HUD proposes that HUD 
may issue a Sale Notice seeking participation in a Direct Sale of 
Single Family Loans. The Sale Notice would include any qualification 
requirements not already detailed in the Qualification Statement, such 
as targeting Nonprofit Organizations in particular geographic areas or 
with experience acquiring and rehabilitating Vacant properties or Low-
value mortgages, and other sale requirements, including loan 
eligibility criteria, post-sale servicing requirements, post-sale 
outcomes to achieve mission objectives, such as promoting affordable 
housing, and reporting requirements.
    Paragraph (b) provides that in all stages of the Direct Sale of 
Single Family Loans process, HUD may determine whether to continue 
proceeding with the mortgage loan sale. HUD's determination will be 
based on whether the Direct Sale of Single Family Loans is feasible and 
in HUD's interest as it relates to HUD's fiduciary responsibility to 
the MMIF and any stated mission objectives.
    Paragraph (c) provides that in response to the Sale Notice, an 
individual or entity that meets the requirements for the Direct Sale of 
Single Family Loans and is interested in purchasing a Single Family 
Loan, must submit a letter of interest to HUD that includes, at a 
minimum: a description of the participant and statement about how it 
would be able to satisfy the qualification requirements and other sale 
requirements including post-sale outcomes to achieve mission 
objectives, if any; the geographic area of interest where the 
individual or entity wishes to purchase the loans; the individual or 
entity's post-sale goals and how this purchase would assist in 
achieving them through post-sale outcomes; the timeframe for the 
purchase; the number of loans or, alternatively, the gross sale amount; 
and the organizational documents for the entity.
    Paragraph (d) proposes a Direct Sale of Single Family Loans process 
for HUD to determine whether to proceed with the Direct Sale of Single 
Family Loans and provides that HUD would make this determination in 
writing. In some situations, HUD may request additional information, 
which would include supplemental organizational documents and program 
marketing material from the individual or entity, as needed for its 
determination.
    Paragraph (e) proposes the next step in finalizing a Direct Sale of 
Single Family Loans. Specifically, paragraph (e) would provide that the 
individual or entity must submit to HUD, within 30 business days, a 
business plan proposal that details its ability to meet any stated 
mission objectives from the Sale Notice, along with its goals and how 
they will be achieved with post-sale outcomes. Upon receipt and review 
of business plan proposal, HUD would either reject the business plan 
proposal, issue a conditional rejection that would provide the 
opportunity for a proposal to be amended and resubmitted, or approve 
the business plan proposal. If HUD approves the individual or entity's 
submission, the proposed rule provides that HUD and the submitter will 
execute a Confidentiality Agreement and Bidder Qualification Statement. 
HUD will execute a PSA with each Participating Servicer submitting 
Single Family Loans. After execution of such agreements, the parties 
will review available Single Family Loans from Participating 
Servicer(s) selected based on HUD's eligibility criteria for the Direct 
Sale of Single Family Loans. HUD and the individual or entity will 
agree on the Single Family Loan List that makes up the Direct Sale of 
Single Family Loans.
    Paragraph (f) proposes that after agreement on the Single Family 
Loan List, HUD will complete a valuation of the Single Family Loans and 
issue a final price determination in accordance with Office of 
Management and Budget (OMB) Circular A-11 (``Preparation, Submission, 
and Execution of the Budget'') and a CAA with an estimated settlement 
date to the individual or entity for review and approval. The paragraph 
also provides that once the final price is approved by the individual 
or entity, HUD and the entity will come up with a final settlement 
date. Lastly, paragraph (g) proposes that parties will execute the PSA, 
and the remaining settlement and transfer requirements would be 
conducted consistent with Sec.  291.613.

Section 291.621 Disqualifications

    Paragraph (a) proposes HUD has the authority to deny or revoke 
approval of any party from participating in the Single Family Sale if 
it determines there is any false, misleading, or fraudulent information 
on any certification or required document.
    Paragraph (b) proposes that an individual or entity is not 
qualified to participate in a Single Family Sale if, at or around the 
time of the Single Family Sale or any time thereafter, that individual 
or entity is debarred or suspended from doing business with HUD.
    Paragraph (c) proposes HUD may disqualify Purchasers that made any 
misrepresentation in the qualification process or failed to meet their 
contractual obligations under CAAs, including meeting any post-sale 
requirements, for previous Single Family Sales.

IV. Request for Public Comment

    HUD seeks public feedback on all elements of this proposed rule. In 
particular, HUD seeks information and recommendations on the following 
issues:
    1. HUD seeks information and recommendations on whether there are 
any additional actions HUD can take to provide greater bidding 
opportunities for nonprofit organizations and governmental entities. 
Please provide the rationale for your opinion, as well as available 
examples and data which support it.
    2. Should a Competitive Sale of Single Family Loans disallow Low-
value Mortgages and properties that are Vacant? Please provide details 
on the impacts and examples (including data).
    3. A first look program has not been incorporated into the forward 
loan sale program (SFLS). It has only been in effect for reverse loan 
sales (HVLS). Should all Single Family Sales require a first look 
program for loans that convert to real estate owned property? Please 
provide the rationale for your

[[Page 57804]]

opinion, as well as available examples and data which support it.
    4. Should Single Family Sales post-sale servicing requirements 
include that a Purchaser offer loss mitigation options that are as or 
more generous than the FHA loss mitigation options for insured mortgage 
loans? If so, should all terms of a Purchaser's loss mitigation option 
meet or be more generous than what FHA provides, or should there be a 
different standard for evaluating compliance with this requirement? 
Should HUD require a specific and separate waterfall of loss mitigation 
options for all Single Family Sales? What loss mitigation options have 
been successful for defaulted borrowers whose loans were sold through 
previous HUD single family mortgage loan sales? Please provide the 
rationale for your opinion, as well as available examples and data 
which support it.
    5. Currently, in the sale of Home Equity Conversion Mortgages (HVLS 
loan sales), HUD allows nonprofit organizations and governmental 
entities to qualify for priority bidding status that allows them to be 
awarded up to 50% of loans in the sale. Should HUD allow nonprofit 
organizations and governmental entities to qualify for a priority 
bidding status in Single Family Sales and if so, what percentage of the 
loans should be awarded to these bidders? Please provide the rationale 
for your opinion, as well as available examples and data which support 
it.
    6. Has HUD proposed a workable and efficient process for Direct 
Sales of Single Family Loans? Please provide the rationale for your 
opinion, as well as available examples and data which support it.
    7. Should all Single Family Sales of forward mortgage loans require 
a P-Servicer to send a Loan Sale Notifications to borrowers? What 
information should HUD include in this notification? How should the P-
servicer or HUD respond if a borrower believes the loss mitigation 
evaluation or option was not completed in accordance with HUD 
requirements? Please provide the rationale for your opinion, as well as 
available examples and data which support it.
    8. What information should HUD include in its periodic reports on 
Single Family Sales loan and property outcomes? Please provide the 
rationale for your opinion, as well as available examples and data 
which support it.
    9. The eligibility criteria of forward mortgage loans is not 
defined in the proposed rule. This was done to allow the Secretary 
flexibility in determining the sale population based on mission and 
economic needs. Should the HUD eligibility criteria for a Single Family 
Sale of forward mortgage loans include satisfaction of HUD's loss 
mitigation requirements for insured mortgage loans? How can P-servicers 
demonstrate compliance with HUD's loss mitigation requirements? Please 
provide the rationale for your opinion, as well as available examples 
and data which support it.
    10. Subject to appropriations, should HUD consider offering 
favorable sale terms, which will be presented in the Notice of Sale 
(e.g., a lower reserve price), to governmental or nonprofit entities? 
Please provide the rationale for your opinion, as well as available 
examples and data which support it.

V. Findings and Certifications

Regulatory Review--Executive Orders 12866, 13563, and 14094

    Pursuant to Executive Order 12866 (Regulatory Planning and Review), 
a determination must be made whether a regulatory action is 
significant, and therefore, subject to review by 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.'' Executive Order 13563 
also directs, where relevant, feasible, and consistent with regulatory 
objectives, and to the extent permitted by law, agencies to identify 
and consider regulatory approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public. Executive Order 
14094, entitled ``Modernizing Regulatory Review'' (hereinafter referred 
to as the ``Modernizing E.O.''), amends section 3(f) of Executive Order 
12866 (Regulatory Planning and Review), among other things.
    This proposed rule was determined to be a ``significant regulatory 
action'' as defined in section 3(f) of the Executive order, but not 
significant specifically under section 3(f)(1) of Executive Order 
12866. The proposed rule would provide flexibility for the management 
of defaulted loans, more efficiently accept assignment, and dispose of 
assigned mortgages through loan sales and reduce the overall financial 
exposure of the MMIF.
    The docket file is available for public inspection in the 
Regulations Division, Office of General Counsel, Room 10276, 451 7th 
Street SW, Washington, DC 20410-0500. Due to security measures at the 
HUD Headquarters building, please schedule an appointment to review the 
docket file by calling the Regulations Division at 202-402-3055 (this 
is not a toll-free number). HUD welcomes and is prepared to receive 
calls from individuals who are deaf or hard of hearing, as well as 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (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 the rule will not have a significant economic impact 
on a substantial number of small entities. Small entities include small 
businesses, small not-for-profit organizations, and small governmental 
jurisdictions.
    As discussed in this preamble, this proposed rule would make the 
Single Family Sales permanent and make changes to HUD's regulations to 
implement parts 203 and 206, respectively referring to Single Family 
Forward loans and HECM, and part 291 to efficiently manage HUD's 
defaulted single family assets and minimize losses to the MMIF. While 
small entities such as mortgage service providers may be affected by 
this Program, these entities would not incur a significant economic 
impact because the Program would provide servicers with the chance to 
assign burdensome and problematic loans to HUD. Therefore, the 
undersigned certifies this proposed rule will not have a significant 
economic impact on a substantial number of small entities.
    Notwithstanding HUD's determination this proposed rule will not 
have a significant economic effect on a substantial number of small 
entities, HUD specifically invites comments regarding any less 
burdensome alternatives to this proposed rule that will meet HUD's 
objectives as described in this preamble.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. 3501-3520), 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 Office of Management and Budget 
(OMB) control number.

[[Page 57805]]

    The following documents have existing OMB approved burden that will 
not be changed by this proposed rule: FHA Single Family Loan Sales 
Qualification Statement (OMB Control Number 2502-0576), which includes 
approval for FHA Single Family Loan Sales Qualification Statement 
Addendum for Nonprofit and Government Pools and Sub-pools (form no. 
HUD-9612) and SF application for insurance benefits (OMB Control Number 
2502-0429). HUD will seek new PRA approval for the following burden 
requirements as part of this proposed rule: Confidentiality Agreement; 
Participating Servicer Agreement (PSA) and its exhibits; Conveyance, 
Assignment and Assumption Agreement (CAA) and its exhibits including 
the Post-sale report; Certification of compliance; and the Final 
settlement statement, as well as the Loan Sale Notification, and Single 
Family application for insurance benefits.
---------------------------------------------------------------------------

    \9\ The Participating Servicer Agreement contains exhibits of 
the following: Instructions Regarding Participating Servicer's 
Preparation of Assignments and Lost Note Affidavits and Related 
Forms, Desk Guide, Interim Servicing Agreement (ISA), Delivery 
Report, SFS Claim Submission Report, SFS Claim Submission Report-
Self Certification Form, Maximum Missed Payments and Minimum Loan to 
Value Ration, and HUD Breach Notice Rebuttal Guidelines and 
Template. The chart above contains the combined burden hours for 
Participating Servicer Agreement (PSA) inclusive of each of these 
exhibits. The figures presented are based on the estimate of 5000 
forward mortgages sold annually.
    \10\ The Conveyance Assignment Assumption Agreement contains 
exhibits of the following: Form of Assignment of Mortgage, Post Sale 
Reporting Requirements, Self-Certification Form Servicer Eligibility 
Provision, Self-Certification Form, Mortgage Loan Schedule 
Information, Breach and Repurchase Guidelines and Template, Form of 
Settlement Statement (Settlement Date), Interim Servicing Agreement, 
Form of Consent to Assignment and Assignment and Assumption 
Agreement, Form of Limited Power of Attorney, Pricing Exhibit, Form 
of Mortgage Loan Schedule and Instructions (Included in Exhibit C) 
and, if applicable, Supplemental Servicer-Related Rider with 
exhibits. The chart above contains the combined burden hours for the 
Conveyance Assignment and Assumption Agreement (CAA) inclusive of 
each of these exhibits. The figures presented are based on the 
estimate of 5000 forward mortgage loans and 2000 HECM mortgage loans 
sold annually.
    \11\ These forms are contained in the OMB Control Number: 2502-
0576 (Forms HUD-9611 & HUD-9612) and OMB Control Number: 2502-0429 
(Form HUD-27011) and the chart above.
---------------------------------------------------------------------------

    The overall reporting and recordkeeping burden are estimated as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                                 Total
    Description of information        Number of        Responses per year       annual     Hours per     Total
            collection                responses                                responses   response      hours
----------------------------------------------------------------------------------------------------------------
FHA Single Family Loan Sales                   90  Bi-annual (2)............         180        0.25       45.00
 Qualification Statement and
 Addendum for Nonprofit and
 Government Pools and Sub-pools
 (HUD-9611 & HUD-9612) *.
Confidentiality Agreement........              90  Bi-annual (2)............         180         .25       45.00
Participating Servicer Agreement               20  Bi-annual (2)............          40        1.60       64.00
 (PSA) \9\.
Conveyance Assignment Assumption               90  Bi-annual (2)............         180       77.25   13,905.00
 Agreement (CAA) \10\.
Loan Sale Notification...........           2,500  Bi-annual (2)............       5,000        0.25    1,250.00
SF application for insurance                  500  Bi-annual (2)............       1,000        1.33     1330.00
 benefits (HUD-27011) \11\ **.
                                  ------------------------------------------------------------------------------
    Total........................           3,290  .........................       6,580       80.93   16,639.00
----------------------------------------------------------------------------------------------------------------
* These forms are contained in the OMB Control Number: 2502-0576 (Forms HUD-9611 & HUD-9612) and the chart above
  indicates there will be no increase in responses or burdens associated with these forms because of this
  proposed rulemaking.
** This form contained in the OMB Control Number: 2502-0429 (Form HUD-27011) and the chart above indicates only
  the additional responses or burdens associated with the form because of this proposed rulemaking.

    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 proposed 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. This time 
frame does not affect the deadline for comments to the agency on the 
proposed rule, however. Comments must refer to the proposed rule by 
name and docket number (FR-6051-P-02) 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 Rulemaking 
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 website can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on this site to submit comments 
electronically.
    Forms approved by OMB will be available on regsinfo.gov. You can 
use the control number to access the document (click on information 
collection review and then hit search

[[Page 57806]]

using the control number). Additionally, HUD will maintain the approved 
forms on the collection point, HUD Clips Forms Resource, currently 
available through https://www.hud.gov/program_offices/administration/hudclips/forms, or at a successor resource designated by HUD.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (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 does not impose any Federal mandates on any State, local, or 
tribal government, or on the private sector, within the meaning of the 
UMRA.

Environmental Impact

    This proposed rule does not direct, provide for assistance or loan 
and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
proposed rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321, et 
seq.).

List of Subjects

24 CFR Part 203

    Hawaiian natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and 
recordkeeping requirements, Solar energy.

24 CFR Part 206

    Aged, Condominiums, Loan programs--housing and community 
development, Mortgage insurance, Reporting and recordkeeping 
requirements.

24 CFR Part 291

    Community facilities, Conflicts of interest, Homeless, Lead 
poisoning, Low- and moderate-income housing, Mortgages, Reporting and 
recordkeeping requirements, Surplus government property.

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR parts 203, 206, and 291 as follows:

PART 203--SINGLE FAMILY MORTGAGE INSURANCE

0
1. The authority citation for part 203 continues to read as follows:

    Authority: 12 U.S.C. 1707, 1709, 1710, 1715b, 1715z-16, 1715u, 
and 1715z-21; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).

0
2. Add Sec.  203.413 to read as follows:


Sec.  203.413  Amount of payment--Single Family Sale assignments.

    (a) Time of payment. Upon an assignment of a mortgage insured under 
this part that is acceptable to the Commissioner, made pursuant to a 
Single Family Sale and in accordance with Sec.  291.609 or Sec.  
291.619 of this chapter, the Commissioner shall pay to the mortgagee 
the unpaid principal balance of the loan at the time of assignment and 
an amount calculated in accordance with the Participating Servicer 
Agreement (PSA), as defined in Sec.  291.601 of this chapter.
    (b) Acceptability criteria. For assignment, the mortgagee must 
determine and certify the mortgage satisfies the Commissioner's 
acceptability criteria for the Single Family Sale. Acceptability 
criteria includes satisfaction of the Single Family Sale loss 
mitigation eligibility requirements and exclusion of low-value 
mortgages secured by vacant properties.
    (c) Reduction in claim. The mortgagee's claim for insurance will be 
reduced for failure to take the required actions within the specified 
schedule of dates for the Single Family Sale, as specified in the PSA.
    (d) Curtailment of Debenture Interest. HUD will curtail Debenture 
Interest at the thirtieth (30th) day following the earliest anticipated 
claim submission date, as identified on the schedule of dates in the 
PSA, if:
    (1) The mortgagee's claim for insurance is not submitted to HUD; or
    (2) The claim for insurance is in a suspended status.
    (e) Debenture Interest. For purposes of this section, Debenture 
Interest means interest at the debenture rate as computed by HUD in 
accordance with its rules and requirements for such calculations, on 
the unpaid principal balance as of the claim payment date, plus the 
approved reimbursable expenses identified in the PSA, minus any amount 
of such interest or expenses that would have been curtailed or for 
which the Participating Servicer would have been denied reimbursement 
pursuant to HUD's requirements for servicing defaulted notes and 
processing claims, including Sec.  203.402(k)(1)(i) and (ii), had the 
Participating Servicer conveyed title to the property securing the 
Single Family Loan to the Secretary rather than assigned the Single 
Family Loan in connection with an insurance claim.
    (f) Rejection of claim. HUD may reject the mortgagee's claim for 
insurance and exclude the related mortgage from settlement if within 
the thirty (30)-day period prior to the claim's submission cut-off 
date, as identified on the schedule of dates in the PSA:
    (1) Any insurance claim is not submitted; or
    (2) Any suspended insurance claim is not resolved.

PART 206--HOME EQUITY CONVERSION MORTGAGE INSURANCE

0
3. The authority citation for part 206 continues to read as follows:

    Authority: 12 U.S.C. 1715b, 1715z-20; 42 U.S.C. 3535(d).

0
4. Add Sec.  206.130, under the undesignated center heading ``Claim 
Procedure,'' to read as follows:


Sec.  206.130  Amount of payment--HECM Single Family Sale assignments.

    (a) Time of payment. Upon an assignment of a mortgage insured under 
this part that is acceptable to the Commissioner, made pursuant to a 
HECM Single Family Sale and in accordance with Sec.  291.609 or Sec.  
291.619 of this chapter, the Commissioner shall pay to the mortgagee 
the unpaid principal balance of the loan at the time of assignment and 
an amount calculated in accordance with the Participating Servicer 
Agreement (PSA), as defined in Sec.  291.601 of this chapter.
    (b) Acceptability criteria. For assignment, the mortgagee must 
determine and certify the mortgage satisfies the Commissioner's 
acceptability criteria for the Single Family Sale.
    (c) Reduction in claim. The mortgagee's claim for insurance will be 
reduced for failure to take the required actions within the specified 
schedule of dates for the Single Family Sale, as specified in the PSA.
    (d) Curtailment of debenture interest. HUD will curtail debenture 
interest at the thirtieth (30th) day following the earliest anticipated 
claim submission date, as identified on the schedule of dates in the 
PSA, if:
    (1) The mortgagee's claim for insurance is not submitted to HUD; or
    (2) The claim for insurance is in a suspended status.
    (e) Debenture Interest. For purposes of this section, Debenture 
Interest means interest at the debenture rate as

[[Page 57807]]

computed by HUD in accordance with its rules and requirements for such 
calculations, on the unpaid principal balance as of the claim payment 
date, plus the approved reimbursable expenses identified in the PSA, 
minus any amount of such interest or expenses that would have been 
curtailed or for which the Participating Servicer would have been 
denied reimbursement pursuant to HUD's requirements for servicing due 
and payable notes and processing claims, including Sec.  
206.129(d)(3)(x), had the Participating Servicer foreclosed or the 
borrower sold the property in connection with an insurance claim.
    (f) Rejection of the claim. HUD may reject the mortgagee's claim 
for insurance and exclude the related mortgage from settlement if, 
within the thirty (30)-day period prior to the claim's submission cut-
off date, as identified on the schedule of dates in the PSA:
    (1) An insurance claim is not submitted; or
    (2) Any suspended insurance claim is not yet resolved.

PART 291--DISPOSITION OF HUD-ACQUIRED AND -OWNED SINGLE FAMILY 
PROPERTY

0
5. 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).

Subpart D--[Removed and Reserved]

0
6. Remove and reserve subpart D, consisting of Sec. Sec.  291.301 
through 291.307.
0
7. Add subpart G, consisting of Sec. Sec.  291.601 through 291.621, to 
read as follows:
Subpart G--Sale of HUD-Held Single Family Mortgage Loans
Sec.
291.601 Definitions.
291.603 Purpose, scope, and applicability.
291.605 Participating Servicers.
291.607 Qualified participants.
291.609 Bidding process.
291.611 Post-bid process and HUD's execution of the CAA.
291.613 Settlement requirements.
291.615 Purchaser servicing requirements.
291.617 General policy--Direct Sales of Single Family Loans.
291.619 Direct Sale of Single Family Loans process.
291.621 Disqualifications.


Sec.  291.601  Definitions.

    For purposes of this subpart, the following definitions apply:
    Aggregate Loan Database (ALD) means the electronic data file 
containing Single Family Loan information available for Qualified 
Participants to review before a Single Family Sale.
    Bidder Information Package (BIP) means the documents prepared for 
participants in a Single Family Sale, which may include, but are not 
limited to, the following: an executive summary of the Programs; the 
Single Family Sale post-sale servicing and reporting requirements 
published by HUD; due diligence information and reports; Single Family 
Loan information; the Conveyance, Assignment and Assumption Agreement 
(CAA); bidding and settlement information; and necessary information 
and requirements as determined by the Secretary.
    Bidder Qualification Statement means HUD Forms 9611 and 9612, or 
any form approved for similar purpose in the future as prescribed by 
the Secretary. (OMB number 2502-0576)
    Claim Date means, with respect to each Single Family Loan, the date 
on which the Single Family Sale assignment claim is paid by HUD to the 
P-Servicer.
    Competitive Sale of Single Family Loans means a sale of an 
individual or group of Single Family Loans to Qualified Participants 
through a bid process prescribed by the Secretary in competition with 
other Qualified Participants in accordance with Sec.  291.609.
    Confidentiality Agreement means a nondisclosure agreement under 
which the individual or entity seeking to participate in Single Family 
Sales agrees that Single Family Loan data and documentation shared with 
the individual or entity as due diligence will remain confidential in 
accordance with the terms of the agreement as determined by the 
Secretary.
    Conveyance, Assignment and Assumption Agreement (CAA) means the 
contract between HUD and a Purchaser, along with all applicable 
exhibits and riders, that governs the terms of the Single Family Sale 
as prescribed by the Secretary. The CAA will include any sale-specific 
post-sale servicing and outcome requirements, representations, 
repurchase requirements, schedule of dates, and reporting requirements 
published by the Secretary for the Single Family Sale through a Sale 
Notice.
    Cut-off date or claim submission cut-off date means the last date 
specified by the Secretary on which the P-Servicer is permitted to 
submit to HUD a Single Family Sale insurance claim for payment under 24 
CFR 203.413 and 206.130.
    Desk Guide means the technical manual included in the PSA detailing 
the P-Servicer's steps for submitting Single Family Loans related to a 
Single Family Sale, including but not limited to the process for 
identifying eligible Single Family Loans, uploading due diligence 
files, and submitting insurance claims.
    Direct Sale of Single Family Loans means a sale of an individual or 
group of Single Family Loans to a Qualified Participant through the 
process described in Sec.  291.619.
    Home Equity Conversion Mortgage (HECM) means reverse mortgages 
insured in accordance with 24 CFR part 206 under the FHA Home Equity 
Conversion Mortgage insurance program.
    Interim Servicing Agreement (ISA) means the agreement between a 
Purchaser and P-Servicer that governs the servicing and administration 
of the purchased loans, including but not limited to transfer of 
mortgage information and loss mitigation evaluations, during the 
Interim Servicing Period in accordance with the terms prescribed by the 
Secretary.
    Interim Servicing Period means the period commencing with Claim 
Date and ending with the Servicing Transfer Date.
    Low-value means, in reference to a Mortgage, the value minimum 
stated in the Participating Servicer Agreement (PSA).
    Nonprofit organization means an entity that is tax-exempt under 
section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C.A. 
501(c)(3)) and meets the qualification requirements prescribed by the 
Secretary for participation in a Single Family Sale.
    Participating Servicer (P-Servicer) means a mortgagee that complies 
with Sec.  291.605 and submits Single Family Loans for a Single Family 
Sale.
    Participating Servicer Agreement (PSA) means the agreement between 
HUD and a P-Servicer that governs the P-Servicers submission of Single 
Family Loans to be sold in a Single Family Sale on terms as prescribed 
by the Secretary.
    Purchaser means a Qualified Participant to which HUD has awarded 
one or more Single Family Loans through a Single Family Sale, as of the 
date of notification of the award.
    Qualified Participant means an individual or entity that satisfies 
the requirements in Sec.  291.607 for participation in Single Family 
Sales.
    Sale Notice means an announcement published by HUD for an upcoming 
Single Family Sale and includes any stated mission objectives and 
additional sale, participant qualification, and loan eligibility 
requirements; representations; post-sale servicing, outcomes, and 
reporting requirements; and repurchase

[[Page 57808]]

requirements for inclusion in the Qualification Statement, PSA, ISA, 
and CAA as applicable.
    Servicing Transfer Date means, with respect to any Single Family 
Loan, the date on which the actual servicing duties for such Single 
Family Loan has been or will be transferred from the P-Servicer to the 
Purchaser's servicer. The latest Servicing Transfer Date will be set 
forth in a schedule of dates prescribed by the Secretary and included 
in the PSA, ISA, and CAA.
    Single Family Loan means any HUD-selected eligible forward mortgage 
loan insured under section 203 of the National Housing Act (12 U.S.C. 
1709) that has or will be assigned to HUD and any HUD-selected eligible 
HECM insured under section 255 of the National Housing Act (12 U.S.C. 
1715z-20) that has or will be assigned to HUD, or any other eligible 
single family mortgage loans owned by the Secretary that will be sold 
in a Single Family Sale.
    Single Family Sale means a Competitive Sale of Single Family Loans 
or Direct Sale of Single Family Loans conducted by HUD in accordance 
with this subpart.
    Vacant means a mortgaged property is determined to be vacant or 
abandoned in accordance with the requirements of 24 CFR part 203 and 
FHA policy.


Sec.  291.603  Purpose, scope, and applicability.

    The sale of Single Family Loans is at the discretion of the 
Secretary. All Single Family Loans will be sold without recourse to HUD 
and without FHA insurance. HUD may sell individual Single Family Loans 
or groups of Single Family Loans to Qualified Participants as a 
Competitive Sale of Single Family Loans, Sec.  291.609, or as a Direct 
Sale of Single Family Loans, Sec.  291.619. Nothing in this section 
shall be construed to prevent HUD from grouping Single Family Loans 
with other types of HUD assets for sale, including grouping any 
associated HUD-held mortgages subordinate to the respective assets. The 
procedures set out in this subpart, including any cross-referenced 
regulations, documentation, and published notices detailed in this 
subpart, govern the Single Family Sales.


Sec.  291.605  Participating Servicers.

    (a) Participation. To participate in a Single Family Sale, a 
Participating Servicer must:
    (1) Be an FHA-approved Mortgagee contributing eligible Single 
Family Loans and assigning loans to HUD; and
    (2) Execute a PSA and agree to execute an ISA, as needed.
    (b) Sale. For each Single Family Sale, the Participating Servicer 
must:
    (1) Identify mortgages that meet the eligibility criteria in 
accordance with terms of the PSA;
    (2) Conduct all sale activities in accordance with the PSA and ISA;
    (3) Comply with any Single Family Sale and Loan Sale Notification 
requirements as prescribed by the Secretary through notice; and
    (4) Comply with the terms of the Sale Notice.
    (5) Ensure the Loan Sale Notification is provided to each borrower 
and any other parties as required by the Secretary and the Loan Sale 
Notification complies with all applicable law. Loan Sale Notification 
requirements will be announced to the Participating Servicer through 
notice.
    (c) Claim payment requirements. The Participating Servicer must 
comply with the claim payment process and requirements for Single 
Family Sales in accordance with the PSA and processes outlined in 24 
CFR 203.413 and 206.130, as applicable.
    (d) Interim servicing. During the Interim Servicing Period, the 
Participating Servicer must service the purchased Single Family Loans 
on behalf of the Purchaser in accordance with the ISA.
    (e) Transfer documents and servicing. The Participating Servicer 
must conduct the servicing transfer of the Single Family Loans in 
accordance with the requirements of the PSA and ISA and must service 
the purchased Single Family Loans in accordance with all applicable 
state and Federal law requirements, including applicable Consumer 
Finance Protection Bureau (CFPB) requirements.


Sec.  291.607  Qualified participants.

    (a) Confidentiality Agreement and Bidder Qualification Statement. 
Individuals or entities must become a Qualified Participant before they 
may bid or purchase Single Family Loans in a Single Family Sale. An 
individual or entity seeking to participate in a Single Family Sale 
must sign a Confidentiality Agreement and complete a Bidder 
Qualification Statement. The Secretary will specify which Bidder 
Qualification Statement form(s) are applicable to a particular Single 
Family Sale and any additional sale specific qualification criteria 
through notice. HUD will only provide access to sensitive Single Family 
Sale materials to Qualified Participants.
    (b) Process for determining Qualified Participant. HUD will qualify 
any individual or entity seeking to participate in a Single Family Sale 
if they have met the qualification requirements and executed the 
applicable Bidder Qualification Statement for the Single Family Sale.


Sec.  291.609  Bidding process.

    (a) Sale notice. The Secretary will prescribe requirements for a 
Single Family Sale through the Sale Notice. For each Single Family 
Sale, HUD will publish the PSA Addendum, Desk Guide, ISA Addendum, CAA 
Addendum, and Sale Notices on HUD's public website.
    (b) Submission of bids. All bids by a Qualified Participant must be 
submitted to HUD in accordance with the Sale Notice and the 
instructions in the BIP. By submitting a bid, the Qualified Participant 
is considered to have made an offer to purchase Single Family Loans as 
presented in the BIP. Submission of a bid constitutes acceptance of the 
terms and conditions set forth in the BIP. Along with the bid, the 
Qualified Participant must submit an executed copy of the CAA and ISA, 
as applicable.
    (c) Bids by brokers or agents. Any bid submitted by a broker or 
agent for a Qualified Participant must be made in the name of the 
Qualified Participant and signed by the broker or agent as the 
attorney-in-fact for the Qualified Participant. All such bid documents 
must bind the Qualified Participant. Each bid must also include a power 
of attorney satisfactory to HUD as to form and content.
    (d) Earnest money deposits. The Qualified Participant must submit 
to HUD, along with its bid, an earnest money deposit, as required in 
the CAA or Sale Notice. The earnest money deposit is nonrefundable for 
a Qualified Participant whose bid is selected for award and will be 
credited toward the purchase price. If a Qualified Participant's bid is 
not selected for any award, their earnest money will be returned.
    (e) Timing for withdrawal of bids. A Qualified Participant may 
withdraw a submitted bid in accordance with the instructions in the BIP 
for a Single Family Sale. However, a previously submitted bid may not 
be withdrawn once the bidding has closed.
    (f) Termination of Single Family Sale. HUD reserves the right to 
terminate a Single Family Sale in whole or in part at any time before 
the bid date.
    (g) Withdrawal of Single Family Loans. HUD reserves the right to 
withdraw Single Family Loans from a Single Family Sale prior to the 
settlement date. Any earnest money deposits made by a Purchaser 
relating to withdrawn Single Family Loans will be retained by the 
Secretary and credited toward the total purchase price of the

[[Page 57809]]

remaining Single Family Loans in the pool, in accordance with the CAA 
and BIP. After the bid date, HUD can withdraw Single Family Loans or 
not deliver all the Single Family Loans for settlement for any reason, 
including those set forth in the BIP and CAA.
    (h) Rejection of bids. At HUD's discretion, any bid may be rejected 
under the following circumstances:
    (1) The bid does not conform with the instructions in the BIP;
    (2) HUD determines that an award based on the bid would not be in 
the best interests of the Secretary because the award would not further 
HUD's fiduciary responsibility to the mutual mortgage insurance fund 
(MMIF) or any stated mission objectives in the Sale Notice; or
    (3) HUD can also issue a conditional rejection that would provide 
the opportunity for the bid to be amended and resubmitted for 
acceptance upon fulfillment of HUD's requests.


Sec.  291.611  Post-bid process and HUD's execution of the CAA.

    After HUD evaluates conforming bids, HUD may request an adjustment 
to a bid in accordance with the BIP. After any bid adjustments, HUD 
will select bids for award and provide notice of award in a manner set 
forth in the BIP. After selection of a Purchaser, HUD will execute the 
CAA.


Sec.  291.613  Settlement requirements.

    (a) Settlement payment. On the settlement date of a Single Family 
Sale, the Purchaser must pay to HUD the settlement payment, consisting 
of the balance of the amount due on the bid price, as adjusted in 
accordance with the CAA.
    (b) Settlement statement. When the Purchaser delivers to HUD the 
documents required at settlement and the settlement payment in 
paragraph (a) of this section, HUD will execute and deliver to the 
Purchaser a settlement statement and updated Single Family Loan 
schedule for the CAA to document the Single Family Loans sold to the 
Purchaser in the Single Family Sale.
    (c) Endorsement and assignment. HUD may grant a temporary Limited 
Power of Attorney to the Purchaser to effect endorsement and assignment 
of the Single Family Loans to the Purchaser.
    (d) Purchaser's special purpose entity. HUD may allow a Purchaser 
to endorse and assign Single Family Loans from HUD to Purchaser's 
special purpose entity acquisition vehicle on terms permitted in the 
CAA.


Sec.  291.615  Purchaser servicing requirements.

    (a) Purchaser post-sale servicing. The Purchaser and its servicer, 
and any subsequent transferee of or servicer for the Single Family 
Loan, must comply with the terms of the CAA and the Sale Notice post-
sale loss mitigation and outcome requirements. Post-sale requirements 
will include a requirement that any Single Family Loan that converts to 
real estate owned property via foreclosure or deed-in-lieu of 
foreclosure be offered for sale through a first look program, providing 
an exclusive listing period for owner occupant, nonprofit organization, 
governmental entities, and other prospective buyers as permitted by 
HUD. Post-sale requirements will also include requirements that 
Purchasers offer borrowers loss mitigation options that are as or more 
generous than the FHA loss mitigation options, a prohibition on 
reselling real estate owned property through a contract for deed or 
similar financing mechanism, a requirement that the Purchaser obtain 
prior approval from HUD before entering into a lease-purchase agreement 
with a prospective purchaser, and a prohibition on releasing liens on 
particular categories of properties, including vacant properties. 
Purchasers must take all lawful steps to service the Single Family 
Loans and collect amounts due in accordance with requirements as set 
forth by the CAA and all state and Federal law requirements, including 
applicable CFPB requirements.
    (b) Purchaser reporting requirements. Purchasers must report on the 
post-sale servicing actions and outcomes obtained for each Single 
Family Loan purchased as prescribed by the CAA. HUD will publish 
reports for the public on loan and property outcomes and will include a 
breakdown of outcomes in different geographies. HUD will prescribe the 
reporting period as a specified period after settlement in the CAA.
    (c) Remedy for performance failures. HUD may pursue appropriate 
remedies, including, but not limited to, the ability to deny future 
participation in loan sales, for a Purchaser's failure to comply with 
Single Family Sale requirements, including CAA obligations.


Sec.  291.617  General policy--Direct Sale of Single Family Loans.

    The Secretary may pursue a Direct Sale of Single Family Loans to 
individuals or entity type the Secretary determines may be eligible to 
qualify as set forth in the Sale Notice. The Direct Sale of Single 
Family Loans will be subject to the requirements of this subpart, 
excluding Sec. Sec.  291.609 and 291.611. The Secretary will publish in 
the Sale Notice, sale specific Single Family Loan eligibility criteria.


Sec.  291.619  Direct Sale of Single Family Loans process.

    (a) Sale Notice. The Secretary will prescribe requirements for a 
Direct Sale of Single Family Loans through a Sale Notice.
    (b) Sale feasibility. In all stages of the Direct Sale of Single 
Family Loans process, HUD may determine whether continuation with the 
Direct Sale of Single Family Loans is feasible and in HUD's interest, 
consistent with HUD's fiduciary responsibility to the MMIF and any 
stated mission objectives.
    (c) Direct Sale of Single Family Loans process. An individual or 
entity interested in purchasing Single Family Loans through a Direct 
Sale of Single Family Loans must:
    (1) Meet the Secretary's prescribed requirements for the Direct 
Sale of Single Family Loans in the Sale Notice; and
    (2) Submit a letter of interest to the Secretary that includes, at 
a minimum:
    (i) The description of the individual or entity and a statement 
about how it would be able to satisfy the participant eligibility 
requirements and mission objectives, if any;
    (ii) The geographic area of interest where the party wishes to 
purchase the loans;
    (iii) The individual or entity's goals and how this purchase would 
assist in achieving these goals through post-sale outcomes;
    (iv) The approximate timeframe for the purchase;
    (v) The approximate number of loans or, alternatively, the 
approximate gross sale amount desired; and
    (vi) The organizational documents for an entity including, but not 
limited to organizational documents, any required authorizing 
resolutions, and disclosure of all nonprofit organization or private 
entity partnership interests in the Direct Sale of Single Family Loans 
transaction.
    (d) HUD determination. Upon receipt of a letter in paragraph (c)(2) 
of this section, HUD will respond in writing to the submitter to 
confirm receipt of the letter and, if necessary, request additional 
information needed for a final determination.
    (e) Secretary's determination to proceed. (1) If the Secretary 
makes a final determination to proceed, the Secretary will request from 
the individual or entity, a business plan proposal from the individual 
or entity that details its ability to meet any stated mission 
objectives in the Sale Notice

[[Page 57810]]

along with its goals and how these goals will be achieved with post-
sale outcomes. Business plans must be received by HUD within 30 
business days of request.
    (2) Upon receipt and review of business plan proposal, HUD will:
    (i) Reject the business plan proposal;
    (ii) Issue a conditional rejection that would provide the 
opportunity for a business plan proposal to be amended and resubmitted 
for approval upon fulfillment of HUD's request; or
    (iii) Approve the business plan proposal.
    (3) Upon approval of such business plan proposal, HUD and the 
individual or entity will begin the Direct Sale of Single Family Loans 
process that includes:
    (i) An executed Confidentiality Agreement;
    (ii) An executed Bidder Qualification Statement;
    (iii) A P-Servicer executed PSA; and
    (iv) Review of Single Family Loans from P-Servicer(s) or HUD.
    (4) HUD and the individual or entity reviews the ALD and will agree 
on the Single Family Loan Sale List for the Direct Sale of Single 
Family Loans.
    (f) Direct Sale of Single Family Loans. After satisfaction of the 
requirements in paragraph (d) of this section, HUD will conduct its 
valuation review, and issue a final price determination and a CAA, 
containing an estimated settlement date, to the individual or entity. 
If accepted, a final Settlement date is scheduled, and the Single 
Family Loan List is appended to the CAA.
    (g) Settlement. HUD and the Purchaser will execute the CAA for 
settlement. The remaining settlement and transfer requirements will 
follow those in Sec.  291.613.


Sec.  291.621  Disqualifications.

    (a) Fraudulent information. If HUD determines there is any 
information indicating any certification or required document provided 
by any party participating in a Single Family Sale, including but not 
limited to P-Servicer, Purchaser, Qualified Participant, or a 
Purchaser's servicer, is false, misleading, or constitutes fraud or 
misrepresentation, HUD will not approve that party's participation in 
the Single Family Sale and will revoke any prior approval. The 
submission of false information or misrepresentation by an approved 
lender or mortgagee may result in the referral of the mortgagee to the 
Mortgagee Review Board.
    (b) Participant ineligibility. An individual or entity is 
ineligible to participate in a Single Family Sale if, at the time of 
the Single Family Sale, that individual or entity is suspended, 
debarred, under a limited denial of participation (LDP), or otherwise 
restricted under 2 CFR part 180 or 2424, 24 CFR part 25, 48 CFR part 9, 
subpart 9.4, or under similar procedures of any other Federal agency.
    (c) Future participation. Purchasers that made misrepresentations 
in the qualification process or failed to meet their contractual 
obligations under CAAs, including failing to meet post-sale 
requirements, for previous Single Family Sales in which they 
participated may be disqualified from participation in one or more 
future Single Family Sales or for a set period of time at the 
discretion of the Secretary.

Julia Gordon,
Assistant Secretary for the Office of Housing--Federal Housing 
Commissioner.
[FR Doc. 2024-15024 Filed 7-15-24; 8:45 am]
BILLING CODE 4210-67-P