81 FR 52998 - Disposition of HUD-Acquired Single Family Properties; Updating HUD's Single Family Property Disposition Regulations

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 81, Issue 155 (August 11, 2016)

Page Range		52998-53003
FR Document		2016-19132

This final rule revises HUD's property disposition regulations. Specifically, this rule consolidates and reorganizes these regulations to better reflect industry standards, and allow HUD to conduct its Single Family Property Disposition Program more efficiently and effectively so that HUD can obtain the greatest value for its real estate-owned (REO) properties in different market conditions. This final rule follows publication of the October 2, 2015, proposed rule and, after considering public comments submitted in response to the proposed rule, adopts the proposed rule with minor change.

Federal Register, Volume 81 Issue 155 (Thursday, August 11, 2016)

[Federal Register Volume 81, Number 155 (Thursday, August 11, 2016)]
[Rules and Regulations]
[Pages 52998-53003]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-19132]

[[Page 52998]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 291

[Docket No. FR-5776-F-02]
RIN 2502-AJ32

Disposition of HUD-Acquired Single Family Properties; Updating
HUD's Single Family Property Disposition Regulations

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

ACTION: Final rule.

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SUMMARY: This final rule revises HUD's property disposition
regulations. Specifically, this rule consolidates and reorganizes these
regulations to better reflect industry standards, and allow HUD to
conduct its Single Family Property Disposition Program more efficiently
and effectively so that HUD can obtain the greatest value for its real
estate-owned (REO) properties in different market conditions. This
final rule follows publication of the October 2, 2015, proposed rule
and, after considering public comments submitted in response to the
proposed rule, adopts the proposed rule with minor change.

DATES: Effective Date: September 12, 2016.

FOR FURTHER INFORMATION CONTACT: Thomas Kumi, Director, Single Family
Asset Management and Disposition Division, Office of Single Family
Housing, Department of Housing and Urban Development, 451 7th Street
SW., Room 9172, Washington, DC 20410-8000, telephone number 202-708-
1672 (this is not a toll-free number). Persons with hearing or speech
impairments may access this number through TTY by calling the Federal
Relay Service at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background

Section 204(g) of the National Housing Act (12 U.S.C. 1710g)
addresses the management and disposition of HUD-acquired single-family
properties, which includes HUD-acquired real and personal property
assets. HUD's implementing regulations are codified in 24 CFR part 291.
Under this statutory and regulatory authority, HUD is charged with
carrying out a program of sales of HUD-acquired and owned properties,
along with appropriate credit terms and standards to be used in
carrying out the program. Property owned by HUD as a result of
acquisition includes REO properties. The goals of HUD's Single Family
Property Disposition Program are to reduce the inventory of single-
family properties in a manner that minimizes losses to the Mutual
Mortgage Insurance Fund (MMIF); promote the expansion of homeownership
opportunities for American families by, among other things, selling
such properties at a discount to State and local governments and HUD-
approved nonprofit entities; and help stabilize distressed communities.
Following the economic and housing crises that began in 2008, the
Federal Housing Administration (FHA) determined that it needed to
revise, consolidate, and reorganize its property disposition
regulations so that they better reflect industry standards, provide
greater efficiency in the administration of HUD's property disposition
program, and, ultimately, provide HUD the ability to obtain the
greatest value for its REO properties in different market conditions.
As a result, on October 2, 2015 (80 FR 59690), HUD published a rule
that proposed certain changes to part 291. Specifically, HUD proposed
the following changes:
1. Ownership and Disposition Authority. HUD proposed revising the
heading of part 291 from ``Disposition of HUD-Acquired Single Family
Property'' to ``Disposition of HUD-Acquired and -Owned Single Family
Property'' to reflect that HUD not only receives REO properties, but
also holds and maintains them throughout the disposition process. For
similar reasons, HUD proposed amending Sec. 291.1(a) and Sec. 291.90
to, respectively, reference HUD's authority to acquire and possess
properties and prescribe methods of sale and disposal of properties.
2. Appraisal of HUD REO Properties. HUD proposed amending Sec.
291.100(b) to clarify that the list price for HUD REO properties may be
established utilizing one or more evaluation tools. In addition to
aligning requirements for REO appraisers with requirements for
appraisers found in 24 CFR part 200, subpart G, to ensure consistency,
the rule proposed expanding valuation methods available to include
alternative methods commonly used in the real estate industry, such as
Broker Price Opinions (BPO) \1\ and Automated Valuation Models
(AVM).\2\
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\1\ A Broker's Price Opinion (BPO) is the process a hired sales
agent utilizes to determine the selling price of a real estate
property. BPOs are popularly used in situations where lenders and
mortgage companies believe the expense and delay of an appraisal to
determine the value of properties is unnecessary. See https://www.brokerpriceopinion.com.
\2\ Automated valuation model (AVM) is the name given to a
service that can provide real estate property valuations using
mathematical modeling combined with a database. Most AVMs calculate
a property's value at a specific point in time by analyzing values
of comparable properties. Some also take into account previous
surveyor valuations, historical house price movements, and user
inputs (e.g., number of bedrooms, property improvements).
Appraisers, investment professionals, and lending institutions use
AVM technology in their analysis of residential property. It is a
technology-driven report. The product of an automated valuation
technology comes from analysis of public record data and computer
decision logic combined to provide a calculated estimate of a
probable selling price of a residential property.
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3. Escrow Amount Required for Properties Needing Repairs. HUD
proposed increasing to $10,000 the maximum amount that buyers would be
required to place into escrow for repairs in order to qualify for FHA
mortgage insurance on properties that do not meet FHA's Minimum
Property Standards. In addition, to ensure that HUD can keep this
amount updated, HUD proposed a provision that would allow HUD to
increase or decrease the repair escrow based on changes to the Consumer
Price Index \3\ by issuing a Federal Register notice for comment.
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\3\ The Consumer Price Index (CPI) is prepared by the Department
of Labor's Bureau of Labor Statistics and is a measure of the
average change over time in the prices paid by urban consumers for a
market basket of consumer goods and services. For more information,
see http://stats.bls.gov/cpi/home.htm.
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4. Listings. HUD proposed amending Sec. 291.100(h) to clarify that
HUD has the statutory authority to allow for a number of listings
options. Specifically, in addition to asset management and listing
contracts, HUD proposed providing that it may dispose of properties
using any use method that the Secretary deems appropriate. In addition,
HUD proposed revising Sec. 291.100(h)(2)(ii) to require the
purchaser's broker to submit bids through HUD's designated electronic
bid system rather than through the exclusive broker.
5. Settlement Cost Assistance Available to Owner-Occupant
Purchasers. HUD proposed removing HUD's obligation to pay the broker's
sales commission and clarifying that settlement cost assistance is only
available to owner-occupant purchasers and not investor purchasers.
6. Bidding Process for Competitive Sales. HUD's October 2, 2015,
rule proposed updating the bidding process established under the
competitive sales procedures in Sec. 291.205. Specifically, HUD
proposed revising Sec. 291.205(k) to provide for winning bids to be
made available publicly rather than making them available for
inspection at a time and place designated by the HUD local office. In
addition, the rule proposed specifying that winning bidders may be
notified by their brokers using

[[Page 52999]]

electronic mail and that an executed sales contract will be deemed
final when, after being signed by both parties, the executed contract
is sent by email rather than via postal service delivery to the
successful bidder.
7. Good Neighbor Next Door (GNND). Finally, HUD proposed revising
the GNND program to provide that law enforcement officers, similar to
teachers and firefighters, live in the areas they serve.

II. This Final Rule

This final rule follows publication of the October 2, 2015,
proposed rule and takes into consideration the public comments received
on the proposed rule. The public comment period on the proposed rule
closed on December 1, 2015, and HUD received six comments. The
commenters were from a retail home mortgage lender, an organization of
professional real property appraisers, an organization that provides
appraisals, and members of the public. This section of this preamble
presents a summary of the public comments received on the proposed
rule, and HUD's responses to the comments. After considering these
comments, HUD has decided to adopt the final rule as final with no
substantive changes.
Comment: Limiting settlement cost assistance to owner-occupied
purchasers will limit broker participation in the REO program. A
commenter states that the proposal at Sec. 291.205(b) to remove HUD's
obligation to pay the broker's sales commission would be a major shift
from the real estate industry. The commenter describes the current
process of selling HUD homes as very similar to the traditional real
estate market. According to the commenter, HUD's proposal would require
that the sales broker ask the buyer to pay commission. This would
create a significant difference between the sale and disposition of HUD
homes and traditional sales of real estate and would likely deter real
estate brokers from participating in the HUD sales process. The
commenter also states that such a change would be unique to the HUD
property disposition program and not in conformance with industry
standards. The commenter suggests an alternative to address commission
payouts; specifically, that HUD pay commissions based on the net sales
price (Net-to-HUD). According to the commenter, this is a common and
accepted practice in the real estate industry and would save hundreds
of dollars per transaction and support HUD's goals of reducing
inventory and minimizing losses.
HUD Response: The provision in the rule codifies that not all REO
property sales transactions are sold through brokers (e.g., auctions,
third-party sales at foreclosure, direct sales and, as such, HUD will
not pay a commission to brokers for sale transactions that do not
involve a real estate broker. For transactions that involve the
services of a broker, HUD will pay for services commensurate with the
services obtained. For example, for properties that involve a listing
and selling agent, HUD will continue to pay brokers a commission of up
to 6 percent to market and sell the HUD REO property. Alternately, if a
property is being sold through an auction at a pre-foreclosure sale,
then HUD will not pay a real estate broker commission. The auction
company markets the property and its fee is usually paid as part of the
insurance claim.
Comment: HUD's selection of certain agencies to sell properties and
provide appraisals does not provide HUD the greatest value for the
properties. A commenter states that the entities with which HUD
contracts for the sale of properties and for appraisals of these
properties use favoritism in selecting agencies to sell the properties
and provide the appraisals. According to the commenter, these practices
do not benefit HUD in acquiring the greatest value for properties. The
commenter recommends that HUD establish a cap that limits acquisition
opportunities with these preferred groups, such that it would allow
disposition through other agencies and a broader utility of approved
appraisers. This, according to the commenter, would provide HUD a
marked increase in return on REO properties.
HUD Response: HUD disagrees with the commenter. HUD selects its
Asset Manager contractors through a competitive bidding process. HUD
does not participate and is not privy to an Asset Manger's selection of
its subcontractors, including appraisers. In addition, for Fiscal Years
(FY) 2013, 2014, and 2015, HUD received an average of 90 percent of
appraisal value for its single-family REO properties. This is a clear
indication that the selection criteria used by HUD Asset Manager for
selecting appraisers maximizes the recovery rates on HUD single- family
REO properties.
Comment: State law may limit real estate licensees from preforming
a BPO to value the property. A commenter states that Pennsylvania
prohibits real estate licensees from performing a BPO under their
licenses if they are not separately licensed as an appraiser. According
to the commenter, all that an agent can perform in Pennsylvania is a
Competitive Market Analysis (CMA). As a result, the proposed rule would
bar HUD or HUD Asset Managers in Pennsylvania from paying a fee to a
sales agent for a BPO unless that agent was also a licensed appraiser.
The commenter also suggests that other States may have similar
prohibitions.
HUD Response: The provision in the rule codifies that HUD may
utilize one or more valuation tools to determine the list price on its
REO single-family properties. The specific services requested will be
ordered only if permitted by State law. For example, if BPOs are not
permitted to be performed by a broker, an AVM, CMA, appraisal, or BPO
performed by an appraiser may be ordered by HUD's Asset Manager to
establish the list price on an REO property.
Comment: HUD should allow servicers to participate in second chance
Claims Without Conveyance of Title program. A commenter recommends,
based on HUD's goal to reduce its REO inventory, that HUD consider
allowing servicers to participate in a second chance program for their
properties in post-sale that may not have been part of the Claims
Without Conveyance of Title (CWCOT) program at the time of the
foreclosure sale. The commenter states that its understanding is that
unless loans were part of the original CWCOT program, they cannot be
considered for second chance auction. The commenter requests that HUD
reconsider this and believes that offering this opportunity to
servicers will assist in meeting HUD's goal of reducing inventory and
minimizing losses. According to the commenter, such a change would also
reduce HUD staffing and contract expenses, and would benefit
communities and tax authorities, which would see a positive benefit as
homes would be reoccupied more quickly, properties better maintained,
and taxes and HOA and condominium fees paid. The commenter also states
that this would also reduce the servicer's labor costs and out of
pocket expenses.
HUD Response: HUD appreciates the commenter's recommendation;
however, this rule does not affect CWCOT procedures. Rather, Mortgagee
Letter 2014-24, Increasing Use of FHA's Claims Without Conveyance of
Title (CWCOT) Procedures,\4\ establishes the criteria for post-
foreclosure, second chance sales efforts. The Mortgagee Letter provides
mortgagees with

[[Page 53000]]

instructions on accessing and utilizing the Commissioner's Adjusted
Fair Market Value, which must be used for all foreclosure sales and
post-foreclosure sales efforts. The mortgagee must determine the
competitive and non-competitive Commissioner's Adjusted Fair Market
Value (CAFMV) at the same time. Essentially, in the event a property
does not sell to a third party at the foreclosure sale, mortgagees may
pursue additional sales efforts (and may utilize independent third-
party providers to conduct such sales) prior to making a final decision
to convey the property to HUD. A mortgagee's decision to pursue
additional sales efforts, subsequent to the foreclosure sale, does not
relieve the mortgagee of its responsibility to convey a property to HUD
within the required timeframe stated in Sec. 203.359, unless a sales
contract has been ratified. Where a sales contract has been ratified,
the mortgagee will be granted a 30-day extension of the deadline for
conveyance. As such, the Department encourages mortgagees to pursue
additional sales efforts concurrently with their preconveyance
processes to ensure that, in the event conveyance is necessary, the
mortgagee is able to fully comply with FHA's conveyance timeframe. In
the event a non-competitive CAFMV is used for the foreclosure sale, as
in some judicial states, the competitive CAFMV value may be utilized
for the post-foreclosure sales effort, if the requirements for
competitive post-foreclosure sales are met.
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\4\ Mortgagee Letter 2014-24 is available at http://portal.hud.gov/hudportal/documents/huddoc?id=14-24ml.pdf.
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Comment: HUD needs to adopt a direct conveyance model. A commenter
expresses support for HUD's proposed rule, stating that the changes
will equip HUD with additional tools necessary to increase the
efficiency and effectiveness of its REO sales program and that the
changes to HUD REO property appraisals and maximum escrow amounts for
properties needing repairs will bring FHA practices a step closer to
conformance with industry standards. The commenter states, however,
that until FHA adopts a direct conveyance model, both its REO sales
process and broader property preservation policy will continue to lag
behind industry standards. Specifically, the commenter states that
while creating and implementing a direct conveyance model is a
significant undertaking, such a model would expand the same benefits
HUD claims the proposed changes will confer on the market: FHA will be
able to move properties to REO more quickly, at a reduced cost, while
increasing the value of the MMIF. Ultimately, FHA will gain more
flexibility in selling properties in ``as-is'' condition. The commenter
states, however, that the changes proposed by this rule represent first
steps toward such a model.
HUD Response: HUD appreciates the commenter's support of the
changes proposed by HUD, but disagrees that HUD needs a direct
conveyance model to increase the efficiency and effectiveness of its
REO sales program. FHA does not buy, sell, or securitize FHA loans and,
as such, does not own a loan secured by an FHA mortgage on the
foreclosure sales date. A direct conveyance model does not ensure that
HUD has marketable title on a property insured by an FHA mortgage at
the foreclosure sale or the property does not have damages that should
be repaired by the lender prior to conveyance.
If a property is not sold to a third party at the foreclosure sale,
the lender obtains title. Once the lender ascertains that it has
marketable title and the property is in conveyance condition, the
lender files a claim for insurance benefits and the deed is recorded in
HUD's name. HUD's current conveyance model provides HUD with reasonable
assurance that there are no encumbrances to a conveyed property that
will prevent HUD from efficiently and effectively maintaining and
marketing an REO property until it is sold.
Comment: BPOs are unregulated and performed by individuals with
little oversight or training and HUD should require one independent
appraisal. A commenter, focusing on Sec. 291.100(b), cautions that
BPOs are largely unregulated and are performed with little oversight
and training. More specifically, the commenter states that BPO
preparers have little valuation-specific education, training, and
testing requirements, and do not adhere to generally accepted valuation
standards. The commenter also states that AVMs are essentially
statistical algorithms, reliant on public record data, which are often
outdated and/or inaccurate. According to the commenter, AVMs are also
historically weak in nonconforming markets, as individual property and
local market conditions are largely overlooked. As a result, the
commenter states that HUD should require at least one independent
appraisal. This, according to the commenter, would be generally
consistent with requirements imposed by Federal bank regulatory
agencies, which require a current appraisal or evaluation for REO
purposes.
HUD Response: HUD disagrees. Most sellers do not obtain an
appraisal to determine the list price of their properties. Generally,
the listing agent prepares a CMA. Currently, HUD orders an appraisal as
a valuation tool in determining the list price of its REO properties.
The appraisal is not always the sole basis of determining the list
price. This final rule provides HUD with the flexibility of using one
or more other valuation tools to establish the list price on its REO
single-family properties. Since the competitive market ultimately
determines the sales price for HUD REO properties in markets where the
AVM, BPOs, etc., values have historically been within a relevant range
of appraisal values HUD may determine that it is not cost beneficial
for HUD to order appraisals for establishing the list prices.
Comment: Independent appraisals are essential to protecting the
taxpayer and the MMIF. The commenter also states that the use of an
independent appraisal will protect taxpayers from distressed sales
below market value and help ensure that local communities do not have
properties dumped on the market at below market prices. According to
the commenter, quality appraisals are essential if HUD plans to reduce
the inventory of single-family properties in a manner that minimizes
losses to the MMIF. The commenter recommends that the final rule
include a basic requirement for at least one appraisal prepared for REO
purposes to protect taxpayers and local communities.
HUD Response: HUD disagrees with the commenter. As HUD states in
response to an earlier comment, most sellers do not obtain an appraisal
to determine the list price of their properties. This final rule
provides HUD with the flexibility of using one or more other valuation
tools to establish the list price on its REO single-family properties.
Since, the competitive market ultimately determines the sales price for
HUD REO properties, in markets where the AVM, BPOs, etc., values have
historically been within a relevant range of appraisal values, HUD may
determine that it is not cost beneficial for HUD to order appraisals
for establishing the list prices. Properties that are security for
mortgages to be insured by FHA are appraised to protect the insurance
funds. In neighborhoods where FHA has insured a significant number of
mortgages, there is an incidental benefit of preventing strategic
default based on inflated values. Additionally, as a by-product, HUD's
strategic goal of strengthening the nation's housing market to bolster
the economy and protect consumers is advanced.
Comment: HUD should require two value opinions in the case of a

[[Page 53001]]

disposition. The commenter also states that in the case of a
disposition, HUD would benefit from obtaining two value opinions from
real estate appraisal professionals; one for the current market value
and one for the property's liquidation value. According to the
commenter, such appraisals are common throughout the real estate sector
and can be capably prepared by residential appraisal professionals. The
commenter suggests that the Liquidation Value Addendum, published by
the Appraisal Institute, would help HUD understand the range of risk
exposure, with the liquidation value helping to illustrate the worst
case scenario. The commenter states that such services would provide
cost-effective alternatives to less credible services such as AVMs and
BPOs. The commenter also recommends that, if HUD is not utilizing them
today, it considers doing so before turning to less credible
alternatives.
HUD Response: HUD disagrees. As HUD states in response to an
earlier comment, for FY 2013, FY 2014, and FY 2015, HUD's average sales
price as a percentage of appraised value was 90 percent. HUD believes
that ordering a Liquidation Value Addendum from an appraiser as an
additional cost is not cost effective. A liquation value is often
obtained from the listing agent through a CMA as part of the listing
broker commission to support price adjustments.
BPOs, CMAs, and AVMs are widely used by various market
participants. HUD believes that when two or more of these valuation
tools are within a relevant range, the values are generally regarded as
reliable.
Currently, HUD orders an appraisal as a valuation tool in
determining the list price of its REO properties. The appraisal is not
always the sole basis of determining the list price. The rule provides
HUD with the flexibility of using one or more other valuation tools to
establish the list price on its REO single-family properties. Since,
the competitive market ultimately determines the sales price for HUD
REO properties, in markets where the AVM, BPO, etc., values have
historically been within a relevant range of appraisal values, HUD may
determine that it is not cost beneficial for HUD to order appraisals
for purposes of establishing the list prices.
Comment: HUD should expand the list of valuation services
available. Finally, the commenter recommends that, HUD should insist on
expanding the range of valuation services available to the agency, the
list be expanded to include nontraditional valuation services performed
by real estate appraisers that are commonly utilized in asset
management and disposition. That list, according to the commenter,
should include, at a minimum, opinions of market value and liquidation
or disposition value by appraisers, drive-by appraisals, and desktop
appraisals, in addition to interior inspection appraisals. According to
the commenter, this would provide HUD with the full range of valuation
services that are available in the conventional market.
HUD Response: The final rule provides examples of valuation methods
that may be used. The list is not all-inclusive and enables HUD to use
valuations tools that are currently in existence or that are developed
in the future, as appropriate.

III. Findings and Certifications

Executive Order 12866 and Executive Order 13563

Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and therefore subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the order. Executive Order
13563 (Improving Regulations and Regulatory Review) directs executive
agencies to analyze regulations that are ``outmoded, ineffective,
insufficient, or excessively burdensome, and to modify, streamline,
expand, or repeal them in accordance with what has been learned.
The majority of the changes made by this final rule streamline
HUD's property disposition program by bringing its practices into
conformance with industry standards and allowing HUD to administer its
Single Family Property Disposition Program more efficiently and more
effectively. These changes do not create additional significant burdens
for the public. As a result, this rule was determined to not be a
significant regulatory action under section 3(f) of Executive Order
12866, Regulatory Planning and Review, and therefore was not reviewed
by OMB.

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.
This final rule does not have a significant economic impact on a
substantial number of small entities. HUD defines ``small supervised
lenders'' as those depository institutions that are regulated by the
Federal Reserve, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the National Credit Union
Administration, and which have a depository asset base of less than
$500 million.\5\
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\5\ Of HUD's 1,459 supervised lenders, 598 are considered, by
HUD, to be ``small supervised lenders.''
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This rule final rule codifies changes to the administration of
HUD's property disposition and acquisition activities carried out as
part of the FHA insurance program for one-to-four family homes. These
changes include limiting the provision of settlement cost assistance to
owner-occupants, providing HUD flexibility to run the bidding process
for REO properties, changes to the direct sales process, additional
flexibility to list properties electronically, changes to the required
escrow amount for purchasers obtaining property not meeting HUD's
property standards, and clarifications in the rule governing HUD's
appraisal process. These changes streamline HUD's administration of its
Single Family Property Disposition Program and reflect industry
practice. For these reasons, HUD has determined that this final rule
does not have a significant economic impact on a substantial number of
small entities.

Paperwork Reduction Act

The information collection requirements contained in this final
rule have been approved by OMB under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0306.
In accordance with the Paperwork Reduction Act, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection displays a currently
valid OMB control number.

Environmental Impact

A Finding of No Significant Impact (FONSI) with respect to
environment has been made at the proposed rule stage in accordance with
HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of
National Environmental Policy Act (42 U.S.C. 4332(2)(C)). The FONSI
remains applicable to this final rule and is available for public
inspection between the hours of 8 a.m. and 5 p.m., weekdays, in the
Regulations Division, Office of General Counsel, Department of Housing
and Urban Development, 451 7th Street SW., Room 10276, Washington, DC
20410. Due to security

[[Page 53002]]

measures at the HUD Headquarters building, please schedule an
appointment to review the FONSI by calling the Regulations Division at
202-708-3055 (this is not a toll-free number). Individuals with speech
or hearing impairments may access this number via TTY by calling the
Federal Relay Service at 800-877-8339 (this is a toll-free number).

Executive Order 13132, Federalism

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

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
tribal governments, and on the private sector. This final rule does not
impose any Federal mandates on any State, local, or tribal governments,
or on the private sector, within the meaning of the UMRA.

List of Subjects in 24 CFR Part 291

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

Accordingly, for the reasons stated in the preamble above, HUD
amends 24 CFR part 291 as follows:

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

0
1. The authority citation for part 291 continues to read as follows:

Authority: 12 U.S.C. 1701 et seq., 42 U.S.C. 1441, 1441a, 1551a
and 3535(d)

0
2. Revise the heading of part 291 to read as set forth above.

0
3. Revise Sec. 291.1(a)(1) to read as follows:

Sec. 291.1 Purpose and general requirements.

(a) * * *
(1) This part governs the acquisition, possession, and disposition
of one-to-four family properties acquired by the Federal Housing
Administration (FHA) through foreclosure of an insured or Secretary-
held mortgage or loan under the National Housing Act, or acquired by
HUD under section 204(g) of the National Housing Act (12 U.S.C.
1710(g)). HUD will issue detailed policies and procedures that must be
followed in specific areas.
* * * * *

0
4. Amend Sec. 291.5 by removing paragraph (a) and the introductory
text of paragraph (b), adding introductory text to the section, and
adding alphabetically the definition of ``Secretary'' as follows:

Sec. 291.5 Definitions.

Terms used in this part are defined as follows:
* * * * *
Secretary is defined in 24 CFR 5.100.
* * * * *

0
5. Amend Sec. 291.90 by revising the introductory text to read as
follows:

Sec. 291.90 Sales methods.

In accordance with section 204(g) of the National Housing Act (12
U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all
methods of sale. HUD may dispose of assets using any method that the
Secretary deems appropriate, including, but not limited to the
following:
* * * * *

0
6. Amend Sec. 291.100 by revising the section heading and paragraphs
(b), (c), (d), and (h) to read as follows:

Sec. 291.100 General policy on HUD acquisition, ownership, and
disposition of real estate assets.

* * * * *
(b) List price. The list price, or ``asking price,'' assigned to
the property is based upon one or more evaluation tools (e.g.,
appraisal, Broker Price Opinion, Automated Valuation Model). An
appraisal, when used, must be conducted by an independent real estate
appraiser who meets all of the requirements of 24 CFR part 200, subpart
G, and is in good standing on the appraiser roster established under
that section. The appraiser must provide an opinion of the ``as-is''
market value using a valuation method that is commonly employed in the
industry and that is consistent with FHA appraisal requirements.
(c) Insurance. When listing properties, HUD may elect to include
information to indicate whether the property is eligible for FHA-
insured financing under section 203(B) of the National Housing Act (12
U.S.C. 1709(b)).
(d) Financing. (1) Subject to underwriting requirements, REO
properties that have not been identified as uninsurable in accordance
with paragraph (c) of this section can be purchased and financed with a
mortgage insured under section 203(b) or 203(k) of the National Housing
Act (12 U.S.C. 1709(b), 1709(k)), if supported by an FHA appraisal, in
one of the following ways:
(i) Insured. A property that meets the Minimum Property Standards
(MPS), as defined in HUD Handbook 4905.1 or any successor handbook, as
determined by the Secretary, for existing dwellings will be offered for
sale in ``as-is'' condition with FHA mortgage insurance available as
provided in part 203 of this chapter.
(ii) Insured with repair escrow. (A) A property that requires no
more than $10,000 for repairs to meet the MPS, as defined in HUD
Handbook 4905.1 or any successor handbook, as determined by the
Secretary, will be offered for sale in ``as-is'' condition with FHA
mortgage insurance available, as provided in part 203 of this chapter,
provided the mortgagor establishes a cash escrow to ensure the
completion of the required repairs.
(B) Changes in repair escrow. HUD may adjust the escrow balance
required under this paragraph based on changes to the Consumer Price
Index by publishing a Federal Register notice that provides for a
public comment period of 30 calendar days for the purpose of accepting
comments on the amount of the change. After comments have been
considered, HUD will publish a final notice announcing the revised
escrow amounts.
(iii) Insured with rehabilitation loan in accordance with section
203(k) of the National Housing Act and pursuant to Sec. 203.50 of this
chapter.
(2) REO properties that have been identified as uninsurable in
accordance with paragraph (c) of this section can be purchased and
financed with a mortgage insured under section 203(k) of the National
Housing Act (12 U.S.C. 1709(k)), subject to underwriting requirements
supported by an FHA-specified appraisal and in accordance with 24 CFR
203.50.
(3) HUD, in its sole discretion and subject to appropriations, may
take back Purchase Money Mortgages (PMMs) on property purchased by
governmental entities or private nonprofit organizations who buy
property for ultimate resale to owner-occupant purchasers with incomes
at or below 115 percent of the area median income.

[[Page 53003]]

When offered by HUD, a PMM will be available in an amount determined by
the Secretary to be appropriate, at market rate interest, for a period
not to exceed 5 years. Mortgagors must meet FHA mortgage credit
standards.
(i) For purposes of this section, the term ``purchase money
mortgage,'' or PMM means a note secured by a mortgage or trust deed
given by a buyer, as mortgagor, to the seller, as mortgagee, as part of
the purchase price of the real estate.
(ii) Except as provided in paragraph (d)(3) of this section, the
purchaser is entirely responsible for obtaining financing for
purchasing a property.
* * * * *
(h) Any real estate broker who has agreed to comply with HUD
requirements may be eligible to participate in the sales program.
Purchasers participating in the competitive sales program, except
government entities and nonprofit organizations, must submit bids
through a participating broker. In accordance with section 204(g) of
the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the
terms and conditions for all methods of listing properties. HUD may
dispose of properties using any method that the Secretary deems
appropriate, including, but not limited to the following:
(1) Open listings. Properties may be sold on an open listing basis
with participating real estate brokers.
(2) Asset management and listing contracts. (i) HUD may invite
firms experienced in property management to compete for contracts that
provide for an exclusive right to manage and list specified properties
in a given area.
(ii) In areas where a broker has an exclusive right to list
properties, a purchaser may use a broker of his or her choice. The
purchaser's broker must submit the bid through HUD's designated
electronic bid system.

0
7. Amend Sec. 291.205 by revising the introductory text and paragraphs
(b), (k)(1), (k)(2), and (l) to read as follows:

Sec. 291.205 Competitive sales of individual properties.

When HUD conducts competitive sales of individual properties to
individual buyers, it will generally sell the properties on an ``as-
is'' basis, without repairs or warranties, and it will follow the sales
procedures provided in this section.
* * * * *
(b) Net offer. (1) The net offer is calculated by subtracting from
the bid price the dollar amounts for the financing and loan closing
costs and the broker's sales commission, as described in paragraph
(b)(2) of this section.
(2) If an owner-occupant purchaser of the property requests in the
bid, HUD may pay all or a portion of the financing and loan closing
costs, not to exceed the percentage of the purchase price determined
appropriate by the Secretary for the area. In no event will the total
amount for broker's sales commission exceed 6 percent of the purchase
price, except for cash bonuses offered to brokers by HUD for the sale
of hard-to-sell properties. No assistance for financing and loan
closing costs or for the broker's sales commission will be provided to
investor purchasers.
(k) * * *
(1) The Secretary will make all winning bids available publicly.
(2) Successful bidders will be notified through their real estate
brokers by electronic mail, mail, telephone, or other means. Acceptance
of a bid is final and effective only upon HUD's execution of the sales
contract, signed by both the submitting real estate broker and the
prospective purchaser, and sending a copy of the executed contract by
electronic mail to the successful bidder or the bidder's agent.
(l) Counteroffers. HUD may present counteroffers during competitive
bid periods, as it deems appropriate to minimize losses to its
insurance fund. ``Best and Final'' offers requested by HUD are
considered counteroffers.

0
8. Revise Sec. 291.500 to read as follows:

Sec. 291.500 Purpose.

This subpart describes the policies and procedures governing the
Good Neighbor Next Door (GNND) Sales Program. The purpose of the GNND
Sales Program is to improve the quality of life in distressed urban
communities. This is to be accomplished by encouraging law enforcement
officers, teachers, and firefighters/emergency medical technicians to
purchase and live in homes that are located in the same communities
where they perform their daily responsibilities and duties.

0
9. Revise Sec. 291.505 to read as follows:

Sec. 291.505 Definitions.

For purposes of this subpart:
Locality means the community, neighborhood, or jurisdiction of the
unit of general local government, or Indian tribal government;
Unit of general local government means a county or parish, city,
town, township, or other political subdivision of a State.

0
10. Amend Sec. 291.520 by removing ``and'' from the end of paragraph
(a), removing the period and adding ``;and'' in its place at the end of
paragraph (b), and adding paragraph (c) to read as follows:

Sec. 291.520 Eligible law enforcement officers.

* * * * *
(c) The full-time employment in paragraph (a) of this section must,
in the normal course of business, directly serve the locality in which
the home is located.

0
11. Revise Sec. 291.525(b) to read as follows:

Sec. 291.525 Eligible teachers.

* * * * *
(b) The full-time employment in paragraph (a) of this section must,
in the normal course of business, serve students from the locality
where the home is located.

0
12. Revise Sec. 291.530 to read as follows:

Sec. 291.530 Eligible firefighter/emergency medical technicians.

A person qualifies as a firefighter/emergency medical technician
for the purposes of the GNND Sales Program if the person is:
(a) Employed full-time as a firefighter or emergency medical
technician by a fire department or emergency medical services responder
unit of the Federal Government, a State, unit of general local
government, or an Indian tribal government; and
(b) The full-time employment in paragraph (a) of this section must,
in the normal course of business, directly serve the locality where the
home is located.

Dated: August 5, 2016.
Edward L. Golding,
Principal Deputy, Assistant Secretary for Housing.
Approved: August 5, 2016.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-19132 Filed 8-10-16; 8:45 am]
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52998 Federal Register / Vol. 81, No. 155 / Thursday, August 11, 2016 / Rules and Regulations

DEPARTMENT OF HOUSING AND Disposition Program are to reduce the 3. Escrow Amount Required for
URBAN DEVELOPMENT inventory of single-family properties in Properties Needing Repairs. HUD
a manner that minimizes losses to the proposed increasing to $10,000 the
24 CFR Part 291 Mutual Mortgage Insurance Fund maximum amount that buyers would be
[Docket No. FR–5776–F–02] (MMIF); promote the expansion of required to place into escrow for repairs
homeownership opportunities for in order to qualify for FHA mortgage
RIN 2502–AJ32 American families by, among other insurance on properties that do not meet
things, selling such properties at a FHA’s Minimum Property Standards. In
Disposition of HUD-Acquired Single discount to State and local governments addition, to ensure that HUD can keep
Family Properties; Updating HUD’s and HUD-approved nonprofit entities; this amount updated, HUD proposed a
Single Family Property Disposition and help stabilize distressed provision that would allow HUD to
Regulations communities. increase or decrease the repair escrow
AGENCY: Office of the Assistant Following the economic and housing based on changes to the Consumer Price
Secretary for Housing-Federal Housing crises that began in 2008, the Federal Index 3 by issuing a Federal Register
Commissioner, HUD. Housing Administration (FHA) notice for comment.
ACTION: Final rule. determined that it needed to revise, 4. Listings. HUD proposed amending
consolidate, and reorganize its property § 291.100(h) to clarify that HUD has the
SUMMARY: This final rule revises HUD’s disposition regulations so that they statutory authority to allow for a
property disposition regulations. better reflect industry standards, number of listings options. Specifically,
Specifically, this rule consolidates and provide greater efficiency in the in addition to asset management and
reorganizes these regulations to better administration of HUD’s property listing contracts, HUD proposed
reflect industry standards, and allow disposition program, and, ultimately, providing that it may dispose of
HUD to conduct its Single Family provide HUD the ability to obtain the properties using any use method that
Property Disposition Program more greatest value for its REO properties in the Secretary deems appropriate. In
efficiently and effectively so that HUD different market conditions. As a result, addition, HUD proposed revising
can obtain the greatest value for its real on October 2, 2015 (80 FR 59690), HUD § 291.100(h)(2)(ii) to require the
estate-owned (REO) properties in published a rule that proposed certain purchaser’s broker to submit bids
different market conditions. This final changes to part 291. Specifically, HUD through HUD’s designated electronic
rule follows publication of the October proposed the following changes: bid system rather than through the
2, 2015, proposed rule and, after 1. Ownership and Disposition exclusive broker.
considering public comments submitted Authority. HUD proposed revising the 5. Settlement Cost Assistance
in response to the proposed rule, adopts heading of part 291 from ‘‘Disposition of Available to Owner-Occupant
the proposed rule with minor change. Purchasers. HUD proposed removing
HUD-Acquired Single Family Property’’
DATES: Effective Date: September 12,
HUD’s obligation to pay the broker’s
to ‘‘Disposition of HUD-Acquired and
2016. sales commission and clarifying that
-Owned Single Family Property’’ to
settlement cost assistance is only
FOR FURTHER INFORMATION CONTACT: reflect that HUD not only receives REO
available to owner-occupant purchasers
Thomas Kumi, Director, Single Family properties, but also holds and maintains
and not investor purchasers.
Asset Management and Disposition them throughout the disposition 6. Bidding Process for Competitive
Division, Office of Single Family process. For similar reasons, HUD Sales. HUD’s October 2, 2015, rule
Housing, Department of Housing and proposed amending § 291.1(a) and proposed updating the bidding process
Urban Development, 451 7th Street SW., § 291.90 to, respectively, reference established under the competitive sales
Room 9172, Washington, DC 20410– HUD’s authority to acquire and possess procedures in § 291.205. Specifically,
8000, telephone number 202–708–1672 properties and prescribe methods of sale HUD proposed revising § 291.205(k) to
(this is not a toll-free number). Persons and disposal of properties. provide for winning bids to be made
with hearing or speech impairments 2. Appraisal of HUD REO Properties. available publicly rather than making
may access this number through TTY by HUD proposed amending § 291.100(b) to them available for inspection at a time
calling the Federal Relay Service at 800– clarify that the list price for HUD REO and place designated by the HUD local
877–8339 (this is a toll-free number). properties may be established utilizing office. In addition, the rule proposed
SUPPLEMENTARY INFORMATION:
one or more evaluation tools. In specifying that winning bidders may be
addition to aligning requirements for notified by their brokers using
I. Background REO appraisers with requirements for
Section 204(g) of the National appraisers found in 24 CFR part 200, property valuations using mathematical modeling
Housing Act (12 U.S.C. 1710g) addresses subpart G, to ensure consistency, the combined with a database. Most AVMs calculate a
rule proposed expanding valuation property’s value at a specific point in time by
the management and disposition of analyzing values of comparable properties. Some
HUD-acquired single-family properties, methods available to include alternative also take into account previous surveyor valuations,
which includes HUD-acquired real and methods commonly used in the real historical house price movements, and user inputs
personal property assets. HUD’s estate industry, such as Broker Price (e.g., number of bedrooms, property improvements).
Opinions (BPO) 1 and Automated Appraisers, investment professionals, and lending
implementing regulations are codified institutions use AVM technology in their analysis
in 24 CFR part 291. Under this statutory Valuation Models (AVM).2 of residential property. It is a technology-driven
and regulatory authority, HUD is report. The product of an automated valuation
1 A Broker’s Price Opinion (BPO) is the process technology comes from analysis of public record
charged with carrying out a program of
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a hired sales agent utilizes to determine the selling data and computer decision logic combined to
sales of HUD-acquired and owned price of a real estate property. BPOs are popularly provide a calculated estimate of a probable selling
properties, along with appropriate credit used in situations where lenders and mortgage price of a residential property.
terms and standards to be used in companies believe the expense and delay of an 3 The Consumer Price Index (CPI) is prepared by

carrying out the program. Property appraisal to determine the value of properties is the Department of Labor’s Bureau of Labor Statistics
unnecessary. See https:// and is a measure of the average change over time
owned by HUD as a result of acquisition www.brokerpriceopinion.com. in the prices paid by urban consumers for a market
includes REO properties. The goals of 2 Automated valuation model (AVM) is the name basket of consumer goods and services. For more
HUD’s Single Family Property given to a service that can provide real estate information, see http://stats.bls.gov/cpi/home.htm.

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electronic mail and that an executed HUD Response: The provision in the agent can perform in Pennsylvania is a
sales contract will be deemed final rule codifies that not all REO property Competitive Market Analysis (CMA). As
when, after being signed by both parties, sales transactions are sold through a result, the proposed rule would bar
the executed contract is sent by email brokers (e.g., auctions, third-party sales HUD or HUD Asset Managers in
rather than via postal service delivery to at foreclosure, direct sales and, as such, Pennsylvania from paying a fee to a
the successful bidder. HUD will not pay a commission to sales agent for a BPO unless that agent
7. Good Neighbor Next Door (GNND). brokers for sale transactions that do not was also a licensed appraiser. The
Finally, HUD proposed revising the involve a real estate broker. For commenter also suggests that other
GNND program to provide that law transactions that involve the services of States may have similar prohibitions.
enforcement officers, similar to teachers a broker, HUD will pay for services HUD Response: The provision in the
and firefighters, live in the areas they commensurate with the services rule codifies that HUD may utilize one
serve. obtained. For example, for properties or more valuation tools to determine the
that involve a listing and selling agent, list price on its REO single-family
II. This Final Rule HUD will continue to pay brokers a properties. The specific services
This final rule follows publication of commission of up to 6 percent to market requested will be ordered only if
the October 2, 2015, proposed rule and and sell the HUD REO property. permitted by State law. For example, if
takes into consideration the public Alternately, if a property is being sold BPOs are not permitted to be performed
comments received on the proposed through an auction at a pre-foreclosure by a broker, an AVM, CMA, appraisal,
rule. The public comment period on the sale, then HUD will not pay a real estate or BPO performed by an appraiser may
proposed rule closed on December 1, broker commission. The auction be ordered by HUD’s Asset Manager to
2015, and HUD received six comments. company markets the property and its establish the list price on an REO
The commenters were from a retail fee is usually paid as part of the property.
home mortgage lender, an organization insurance claim. Comment: HUD should allow
of professional real property appraisers, Comment: HUD’s selection of certain servicers to participate in second
an organization that provides appraisals, agencies to sell properties and provide chance Claims Without Conveyance of
and members of the public. This section appraisals does not provide HUD the Title program. A commenter
of this preamble presents a summary of greatest value for the properties. A recommends, based on HUD’s goal to
the public comments received on the commenter states that the entities with reduce its REO inventory, that HUD
which HUD contracts for the sale of consider allowing servicers to
proposed rule, and HUD’s responses to
properties and for appraisals of these participate in a second chance program
the comments. After considering these
properties use favoritism in selecting for their properties in post-sale that may
comments, HUD has decided to adopt
agencies to sell the properties and not have been part of the Claims
the final rule as final with no
provide the appraisals. According to the Without Conveyance of Title (CWCOT)
substantive changes.
commenter, these practices do not program at the time of the foreclosure
Comment: Limiting settlement cost benefit HUD in acquiring the greatest sale. The commenter states that its
assistance to owner-occupied value for properties. The commenter understanding is that unless loans were
purchasers will limit broker recommends that HUD establish a cap part of the original CWCOT program,
participation in the REO program. A that limits acquisition opportunities they cannot be considered for second
commenter states that the proposal at with these preferred groups, such that it chance auction. The commenter
§ 291.205(b) to remove HUD’s obligation would allow disposition through other requests that HUD reconsider this and
to pay the broker’s sales commission agencies and a broader utility of believes that offering this opportunity to
would be a major shift from the real approved appraisers. This, according to servicers will assist in meeting HUD’s
estate industry. The commenter the commenter, would provide HUD a goal of reducing inventory and
describes the current process of selling marked increase in return on REO minimizing losses. According to the
HUD homes as very similar to the properties. commenter, such a change would also
traditional real estate market. According HUD Response: HUD disagrees with reduce HUD staffing and contract
to the commenter, HUD’s proposal the commenter. HUD selects its Asset expenses, and would benefit
would require that the sales broker ask Manager contractors through a communities and tax authorities, which
the buyer to pay commission. This competitive bidding process. HUD does would see a positive benefit as homes
would create a significant difference not participate and is not privy to an would be reoccupied more quickly,
between the sale and disposition of Asset Manger’s selection of its properties better maintained, and taxes
HUD homes and traditional sales of real subcontractors, including appraisers. In and HOA and condominium fees paid.
estate and would likely deter real estate addition, for Fiscal Years (FY) 2013, The commenter also states that this
brokers from participating in the HUD 2014, and 2015, HUD received an would also reduce the servicer’s labor
sales process. The commenter also states average of 90 percent of appraisal value costs and out of pocket expenses.
that such a change would be unique to for its single-family REO properties. HUD Response: HUD appreciates the
the HUD property disposition program This is a clear indication that the commenter’s recommendation;
and not in conformance with industry selection criteria used by HUD Asset however, this rule does not affect
standards. The commenter suggests an Manager for selecting appraisers CWCOT procedures. Rather, Mortgagee
alternative to address commission maximizes the recovery rates on HUD Letter 2014–24, Increasing Use of FHA’s
payouts; specifically, that HUD pay single- family REO properties. Claims Without Conveyance of Title
commissions based on the net sales Comment: State law may limit real (CWCOT) Procedures,4 establishes the
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price (Net-to-HUD). According to the estate licensees from preforming a BPO
criteria for post-foreclosure, second
commenter, this is a common and to value the property. A commenter
chance sales efforts. The Mortgagee
accepted practice in the real estate states that Pennsylvania prohibits real
Letter provides mortgagees with
industry and would save hundreds of estate licensees from performing a BPO
dollars per transaction and support under their licenses if they are not 4 Mortgagee Letter 2014–24 is available at http://
HUD’s goals of reducing inventory and separately licensed as an appraiser. portal.hud.gov/hudportal/documents/
minimizing losses. According to the commenter, all that an huddoc?id=14–24ml.pdf.

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Federal Register / Vol. 81, No. 155 / Thursday, August 11, 2016 / Rules and Regulations 53003

When offered by HUD, a PMM will be (b) Net offer. (1) The net offer is of general local government, or Indian
available in an amount determined by calculated by subtracting from the bid tribal government;
the Secretary to be appropriate, at price the dollar amounts for the Unit of general local government
market rate interest, for a period not to financing and loan closing costs and the means a county or parish, city, town,
exceed 5 years. Mortgagors must meet broker’s sales commission, as described township, or other political subdivision
FHA mortgage credit standards. in paragraph (b)(2) of this section. of a State.
(i) For purposes of this section, the (2) If an owner-occupant purchaser of
term ‘‘purchase money mortgage,’’ or ■ 10. Amend § 291.520 by removing
the property requests in the bid, HUD
PMM means a note secured by a ‘‘and’’ from the end of paragraph (a),
may pay all or a portion of the financing
mortgage or trust deed given by a buyer, removing the period and adding ‘‘;and’’
and loan closing costs, not to exceed the
as mortgagor, to the seller, as mortgagee, in its place at the end of paragraph (b),
percentage of the purchase price
as part of the purchase price of the real and adding paragraph (c) to read as
determined appropriate by the Secretary
estate. follows:
for the area. In no event will the total
(ii) Except as provided in paragraph amount for broker’s sales commission § 291.520 Eligible law enforcement
(d)(3) of this section, the purchaser is exceed 6 percent of the purchase price, officers.
entirely responsible for obtaining except for cash bonuses offered to * * * * *
financing for purchasing a property. brokers by HUD for the sale of hard-to-
(c) The full-time employment in
* * * * * sell properties. No assistance for
paragraph (a) of this section must, in the
(h) Any real estate broker who has financing and loan closing costs or for
normal course of business, directly
agreed to comply with HUD the broker’s sales commission will be
serve the locality in which the home is
requirements may be eligible to provided to investor purchasers.
located.
participate in the sales program. (k) * * *
Purchasers participating in the (1) The Secretary will make all ■ 11. Revise § 291.525(b) to read as
competitive sales program, except winning bids available publicly. follows:
government entities and nonprofit (2) Successful bidders will be notified § 291.525 Eligible teachers.
organizations, must submit bids through through their real estate brokers by
a participating broker. In accordance * * * * *
electronic mail, mail, telephone, or
with section 204(g) of the National other means. Acceptance of a bid is final (b) The full-time employment in
Housing Act (12 U.S.C. 1710(g)), HUD and effective only upon HUD’s paragraph (a) of this section must, in the
will prescribe the terms and conditions execution of the sales contract, signed normal course of business, serve
for all methods of listing properties. by both the submitting real estate broker students from the locality where the
HUD may dispose of properties using and the prospective purchaser, and home is located.
any method that the Secretary deems sending a copy of the executed contract ■ 12. Revise § 291.530 to read as
appropriate, including, but not limited by electronic mail to the successful follows:
to the following: bidder or the bidder’s agent.
(1) Open listings. Properties may be § 291.530 Eligible firefighter/emergency
(l) Counteroffers. HUD may present
sold on an open listing basis with medical technicians.
counteroffers during competitive bid
participating real estate brokers. A person qualifies as a firefighter/
periods, as it deems appropriate to
(2) Asset management and listing
minimize losses to its insurance fund. emergency medical technician for the
contracts. (i) HUD may invite firms
‘‘Best and Final’’ offers requested by purposes of the GNND Sales Program if
experienced in property management to
HUD are considered counteroffers. the person is:
compete for contracts that provide for
an exclusive right to manage and list ■ 8. Revise § 291.500 to read as follows: (a) Employed full-time as a firefighter
specified properties in a given area. or emergency medical technician by a
§ 291.500 Purpose. fire department or emergency medical
(ii) In areas where a broker has an
exclusive right to list properties, a This subpart describes the policies services responder unit of the Federal
purchaser may use a broker of his or her and procedures governing the Good Government, a State, unit of general
choice. The purchaser’s broker must Neighbor Next Door (GNND) Sales local government, or an Indian tribal
submit the bid through HUD’s Program. The purpose of the GNND government; and
designated electronic bid system. Sales Program is to improve the quality (b) The full-time employment in
■ 7. Amend § 291.205 by revising the
of life in distressed urban communities. paragraph (a) of this section must, in the
introductory text and paragraphs (b), This is to be accomplished by normal course of business, directly
(k)(1), (k)(2), and (l) to read as follows: encouraging law enforcement officers, serve the locality where the home is
teachers, and firefighters/emergency located.
§ 291.205 Competitive sales of individual medical technicians to purchase and
properties. Dated: August 5, 2016.
live in homes that are located in the
same communities where they perform Edward L. Golding,
When HUD conducts competitive
sales of individual properties to their daily responsibilities and duties. Principal Deputy, Assistant Secretary for
individual buyers, it will generally sell Housing.
■ 9. Revise § 291.505 to read as follows:
the properties on an ‘‘as-is’’ basis, Approved: August 5, 2016.
without repairs or warranties, and it § 291.505 Definitions. Nani A. Coloretti,
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will follow the sales procedures For purposes of this subpart: Deputy Secretary.
provided in this section. Locality means the community, [FR Doc. 2016–19132 Filed 8–10–16; 8:45 am]
* * * * * neighborhood, or jurisdiction of the unit BILLING CODE 4210–67–P

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Document Created: 2018-02-09 11:27:25
Document Modified: 2018-02-09 11:27:25

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		Effective Date: September 12, 2016.
Contact		Thomas Kumi, Director, Single Family Asset Management and Disposition Division, Office of Single Family Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 9172, Washington, DC 20410-8000, telephone number 202-708- 1672 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number).
FR Citation		81 FR 52998
RIN Number		2502-AJ32
CFR Associated		Community Facilities; Conflict of Interests; Homeless; Lead Poisoning; Low and Moderate Income Housing; Mortgages; Reporting and Recordkeeping Requirements and Surplus Government Property