80 FR 18095 - Federal Housing Administration (FHA): Removal of Section 235 Home Ownership Program Regulations

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 80, Issue 64 (April 3, 2015)

Through this rule, HUD removes the regulations for its Section 235 Program, which authorized HUD to provide mortgage subsidy payments to lenders to assist lower-income families who are unable to meet the credit requirements generally applicable to FHA mortgage insurance programs. Authority to provide insurance to mortgagees under this program was terminated under the Housing and Community Development Act of 1987 and HUD has not provided new mortgage subsidy payments under this program since then. Because the regulations governing this program are no longer operative, they are being removed by this final rule. To the extent that any Section 235 mortgages remain in existence, or second mortgages for the recapture of subsidy payment pursuant to HUD's regulations governing the Section 235 Program (which was reserved by regulatory streamlining in 1995), the removal of these regulations does not affect the requirements for transactions entered into when Section 235 Program regulations were in effect. Assistance made available under the Section 235 Program will continue to be governed by the regulations that existed immediately before the effective date of this final rule.

[Federal Register Volume 80, Number 64 (Friday, April 3, 2015)]
[Rules and Regulations]
[Pages 18095-18096]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07597]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 200 and 235

[Docket No. FR-5829-F-01]


Federal Housing Administration (FHA): Removal of Section 235 Home 
Ownership Program Regulations

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

ACTION: Final rule.

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SUMMARY: Through this rule, HUD removes the regulations for its Section 
235 Program, which authorized HUD to provide mortgage subsidy payments 
to lenders to assist lower-income families who are unable to meet the 
credit requirements generally applicable to FHA mortgage insurance 
programs. Authority to provide insurance to mortgagees under this 
program was terminated under the Housing and Community Development Act 
of 1987 and HUD has not provided new mortgage subsidy payments under 
this program since then. Because the regulations governing this program 
are no longer operative, they are being removed by this final rule. To 
the extent that any Section 235 mortgages remain in existence, or 
second mortgages for the recapture of subsidy payment pursuant to HUD's 
regulations governing the Section 235 Program (which was reserved by 
regulatory streamlining in 1995), the removal of these regulations does 
not affect the requirements for transactions entered into when Section 
235 Program regulations were in effect. Assistance made available under 
the Section 235 Program will continue to be governed by the regulations 
that existed immediately before the effective date of this final rule.

DATES: Effective May 4, 2015.

FOR FURTHER INFORMATION CONTACT: Camille E. Acevedo, Associate General 
Counsel for Legislation and Regulations, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410; telephone 202-708-1793 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal Relay 
Service at 800-877-8389.

SUPPLEMENTARY INFORMATION: 

I. Background

    On August 1, 1968, the Housing and Urban Development Act of 1968 
(Pub. L. 90-448) amended the National Housing Act to add a new section 
235 (12 U.S.C. 1715z) (Section 235 Program). This provision authorized 
the Secretary to provide subsidies to reduce mortgage interest rates to 
as low as 1 percent and authorized a new credit assistance 
homeownership program for lower-income families who were unable to meet 
the credit requirements generally applicable to FHA mortgage insurance 
programs. HUD promulgated regulations implementing the Section 235 
Program on January 6, 1976 (see 41 FR 1176) and codified these 
regulations in part 235 of title 24 of the Code of Federal Regulations 
(CFR). However, on February 5, 1988, the Section 235 Program was 
terminated under section 401(d) of the Housing and Community 
Development Act of 1987 (Pub. L. 100-242) and HUD ceased to make 
mortgage subsidy payments available under this program beginning 
October 1, 1989.\1\ In 1995, HUD removed much of part 235 from the CFR 
as part of HUD's effort to eliminate outdated, obsolete, or unutilized 
regulations, leaving only the parts that were necessary to regulate 
outstanding loans assisted or insured under the program. (See 60 FR 
56498.) As of the date of this publication, there are only two 
outstanding loans remaining that were assisted or insured under this 
program.
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    \1\ Although the Section 235 Program was terminated, section 
401(d) of the Housing and Community Development Act of 1987 
permitted the Secretary to continue to refinance mortgages insured 
previously under section 235(r) of the National Housing Act. 
However, no insurance or assistance for new loans has been provided 
by HUD since October 1, 1989.
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This Final Rule

    Since authority for HUD to provide assistance or insurance to low-
income borrowers under the Section 235 Homeownership Program expired on 
October 1, 1989, HUD is proceeding to remove Section 235 Program 
regulations codified in 24 CFR part 235.
    Loans issued with assistance provided under Section 235 that are 
still outstanding will continue to be governed by the regulations in 
effect on May 3, 2015. Accordingly, this rule amends Sec.  1301 
(Expiring Programs--Savings Clause) of 24 CFR 200, subpart W 
(Administrative Matters), and adds a new paragraph (g) to Sec.  
200.1301, which preserves the Section 235 Program regulations as in 
effect prior to the effective date of this final rule, and continues to 
govern any assistance provided under the Section 235 Program before May 
4, 2015.

II. Justification for Final Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
final rule for effect, in accordance with HUD's own regulations on 
rulemaking in 24 CFR part 10. However, part 10 provides for exceptions 
to the general rule if the agency finds good cause to omit advance 
notice and public participation. The good cause requirement is 
satisfied when prior public procedure is impracticable, unnecessary, or 
contrary to the public interest. (See 24 CFR 10.1.)
    HUD finds that public notice and comment are not necessary for this 
rulemaking because assistance is no longer being provided under this 
program and, therefore, the regulations are no longer operative. For 
these reasons, HUD has determined that it is unnecessary to delay the 
effectiveness of this rule in order to solicit prior public comment.

[[Page 18096]]

III. Findings and Certification

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. 
Because HUD has determined that good cause exists to issue this rule 
without prior public comment, this rule is not subject to the 
requirement to publish an initial or final regulatory flexibility 
analysis under the RFA as part of such action.

Unfunded Mandates Reform

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) \2\ 
requires that an agency prepare a budgetary impact statement before 
promulgating a rule that includes a Federal mandate that may result in 
the expenditure by state, local and tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year. If a budgetary impact statement is required, section 205 of UMRA 
also requires an agency to identify and consider a reasonable number of 
regulatory alternatives before promulgating a rule.\3\ However, the 
UMRA applies only to rules for which an agency publishes a general 
notice of proposed rulemaking pursuant to the APA.\4\ As discussed 
above, HUD has determined for good cause that the APA does not require 
general notice and public comment on this rule and, therefore, the UMRA 
does not apply to this final rule.
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    \2\ 2 U.S.C. 1532.
    \3\ 2 U.S.C. 1534.
    \4\ 2 U.S.C. 1532(a).
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Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule will 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.

Environmental Review

    This final 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 
final rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

List of Subjects

24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Home improvement, Housing standards, 
Incorporation by reference, Lead poisoning, Loan programs--housing and 
community development, Minimum property standards, Mortgage insurance, 
Organization and functions (Government agencies), Penalties, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

24 CFR Part 235

    Condominiums, Cooperatives, Grant programs--housing and community 
development, Low and moderate income housing, Mortgage insurance, 
Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, and under the authority 
of 42 U.S.C. 3535(d), HUD amends 24 CFR parts 200 and 235 as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

0
1. The authority citation for part 200 continues to read as follows:

    Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).


0
2. Add Sec.  200.1301(g) to read as follows:


Sec.  200.1301  Expiring programs--Savings clause.

* * * * *
    (g) Any existing loan assistance (including recapture of loan 
assistance), ongoing participation, or insured loans under the program 
listed in this paragraph will continue to be governed by the 
regulations in effect as they existed immediately before May 4, 2015 
(24 CFR part 235, 2014 Edition):
    (1) Part 235, Mortgage Insurance and Assistance Payments for Home 
Ownership and Project Rehabilitation (12 U.S.C. 1715z).
    (2) [Reserved]

PART 235--[Removed]

0
3. Remove part 235.

    Dated: March 27, 2015.
Biniam Gebre,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2015-07597 Filed 4-2-15; 8:45 am]
 BILLING CODE 4210-67-P