Electronic Submission of Required Data by Multifamily Mortgagees To Report Mortgage Delinquencies, Defaults, Reinstatements, Assignment Elections, and Withdrawals of Assignment Elections

SUMMARY: This rule requires mortgagees that hold or service multifamily

mortgages insured by HUD to submit certain data electronically to HUD

in a HUD prescribed format. Electronic submission is necessary because

the manual submission of HUD forms has become a burden to servicing

mortgagees, as well as to HUD. This rule applies to all multifamily

mortgagees in their responsibility to report mortgage delinquencies,

mortgage defaults, mortgage reinstatements, elections to assign

mortgages to HUD, and withdrawal of assignment elections.

EFFECTIVE DATE: March 1, 1999.

FOR FURTHER INFORMATION CONTACT: Willie Spearmon, Director, Office of

Business Products, Room 6134, Department of Housing and Urban

Development, 451 Seventh Street, SW, Washington, DC 20410, telephone

(202) 708-3000 (this is not a toll-free number). Individuals with

hearing or speech impairments may access this number via TTY by calling

the Federal Information Relay Service at (800) 877-8339 (this is a

toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background

HUD obtains data regarding the status of delinquent insured

mortgage loans on multifamily projects by using Form HUD-92426,

Multifamily Default Status Report. HUD needs the information submitted

on the form in order to monitor mortgage loans for which the mortgagees

are experiencing payment or other difficulties. In accordance with the

requirements of 24 CFR part 207, the mortgagee must prepare and sign

this form under the specified circumstances and mail it to HUD. When

HUD receives the form, it must sign it and return it to the mortgagee

to acknowledge receipt of the form.

To replace this burdensome paperwork process, HUD has developed a

method for mortgagees to submit the data currently collected on Form

HUD-92426, as well as to report the date of the mortgagees' last

physical inspection of the project, using the Internet. According to

this new method, the mortgagee will electronically submit the data to

HUD, after which an electronic receipt will automatically be returned.

HUD will provide, at no cost to mortgagees, ``stand alone'' software

and technical support for that software, which is designed to run on

IBM-compatible personal computers (PCs). Mortgagees will, however, need

to provide their own PCs and Internet connections. Mortgagees that do

not choose to initiate Internet access for themselves may contract with

another entity or individual to act on their behalf to report the data

electronically. HUD believes that this is not likely to be necessary in

most cases.

One of HUD's primary concerns is the costs mortgagees may incur in

establishing Internet access if they have not already done so. For this

reason, HUD has decided to allow for a staggered implementation of this

rulemaking, under which smaller mortgagees will have more time to

comply with the new electronic reporting requirements. HUD believes,

however, that electronic tracking of the default and reinstatement data

generally will reduce costs for mortgagees. HUD has field-tested

electronic submission of this data on a voluntary pilot basis with a

number of mortgagees, and has received generally favorable responses.

While HUD hopes to begin implementing the electronic reporting

requirements in this rule right away (in accordance with the staggered

implementation schedule in Sec. 200.121 of this rule), HUD encourages

mortgagees to comply with these requirements voluntarily to the extent

possible, in order for the mortgagees and HUD to realize an early

advantage of cost savings.

II. May 13, 1998 Proposed Rule

HUD published a proposed rule on May 13, 1998 (63 FR 26702) to

solicit public comments on the electronic submission of required data

by multifamily mortgagees, as described above. The deadline for public

comments was July 13, 1998. HUD received no public comments in response

to the proposed rule. This final rule adopts, therefore, the provisions

of the proposed rule without change.

III. Regulatory Amendments

This document amends the regulations in 24 CFR parts 200 and 207

related to multifamily housing mortgage insurance, in order to require

mortgagees with insured multifamily mortgage loans to submit

information reporting mortgage delinquencies, defaults, reinstatements,

assignment elections, and withdrawals of assignment elections

electronically, rather than in writing on Form HUD-92426. Specifically,

this rule amends the regulations as follows:

(1) This rule adds a new subpart B to part 200, entitled

``Electronic Submission of Required Data for Mortgage Defaults and

Mortgage Insurance Claims for Insured Multifamily Mortgages.'' The

provision in this new subpart B requires multifamily mortgagees to

submit the data electronically, and it provides the staggered schedule

of effectiveness. As mentioned above, HUD will allow smaller mortgagees

(i.e., those with fewer insured mortgage loans) more time to comply

with the electronic submission requirements. This new subpart also

provides for an exception to the electronic submission requirements,

subject to HUD approval, for very small mortgagees for which compliance

would represent a financial hardship.

(2) This document also makes several conforming changes to the

current requirements in part 207. In Sec. 207.256, which requires

mortgagees to notify HUD of defaults, this document requires mortgagees

to notify HUD in the manner prescribed in the new subpart B of part

200, rather than in writing. This document similarly amends

Sec. 207.256a, which requires mortgagees to notify HUD if a mortgage

loan is reinstated, and Sec. 207.258, which requires mortgagees to

notify HUD if they elect to assign a mortgage to HUD or to acquire a

property and convey title to HUD.

IV. Other Matters

Paperwork Burden

The information collection requirements contained in this rule have

been approved by the Office of Management and Budget (OMB) in

accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-

3520), and assigned OMB control number 2502-0041. 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 valid

control number.

Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)), has reviewed this rule before publication and by

approving it certifies

[[Page 4769]]

that this rule will not have a significant economic impact on a

substantial number of small entities. The electronic submission

requirements in this rule should reduce burden and costs for all

mortgagees. As stated above, HUD will also reduce the burden on

mortgagees by providing the software and technical support necessary to

facilitate the electronic submission requirements. HUD has determined,

therefore, that this rule will not have a significant economic impact

on a substantial number of small entities.

Environmental Impact

This rule is categorically excluded from environmental review under

the National Environmental Policy Act (42 U.S.C. 4321). The addition to

part 200 of the new subpart B falls within the exclusion provided by 24

CFR 50.19(c)(1), in that it 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. The amendments to part 207 are categorically

excluded under 24 CFR 50.19(c)(2), because they amend an existing

document, and the existing document as a whole does not fall within the

exclusion in 24 CFR 50.19(c)(1), but the amendments by themselves do

so.

Executive Order 12612, Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this rule will not have substantial direct effects on

States or their political subdivisions, on the relationship between the

Federal Government and the States, or on the distribution of power and

responsibilities among the various levels of government. This rule

relates only to the manner in which mortgagees submit required

information to HUD, and it does not affect the federalism concerns

addressed in the Order. As a result, this rule is not subject to review

under the Order.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance number is 14.155.

List of Subjects

24 CFR Part 200

Administrative practice and procedure, Claims, Equal employment

opportunity, Fair housing, Home improvement, Housing standards, 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 207

Manufactured homes, Mortgage insurance, Reporting and recordkeeping

requirements, Solar energy.

Accordingly, 24 CFR Chapter II is amended as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

1. The authority citation for 24 CFR part 200 continues to read as

follows:

Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).

2. In part 200, a new subpart B, consisting of Secs. 200.120

through 200.121, is added to read as follows:

Subpart B--Electronic Submission of Required Data for Mortgage Defaults

and Mortgage Insurance Claims for Insured Multifamily Mortgages

Sec.

200.120 Purpose and applicability.

200.121 Requirements and effectiveness.

Sec. 200.120 Purpose and applicability.

(a) Purpose. The purpose of this subpart B is to require mortgagees

of all multifamily projects whose mortgages are insured or coinsured by

HUD to submit electronically information regarding mortgage

delinquencies, defaults, reinstatements, elections to assign, and

withdrawals of assignment elections, and related information, as that

information is required by 24 CFR part 207 and Form HUD-92426 (which is

available at the Department of Housing and Urban Development, HUD

Customer Service Center, 451 7th Street, SW, Room B-100, Washington, DC

20410; telephone (800) 767-7468).

(b) Applicability. This subpart applies to all HUD multifamily

mortgage insurance and coinsurance programs.

Sec. 200.121 Requirements and effectiveness.

(a) Multifamily mortgagees, which are required by 24 CFR part 207

to report mortgage delinquencies, defaults, reinstatements, assignment

elections, withdrawals of assignment elections, and related

information, must submit this information electronically, over the

Internet, in accordance with the following schedule of effectiveness:

(1) Mortgagees having 70 or more insured mortgage loans must comply

with this section by no later than March 1, 1999;

(2) Mortgagees having from 26 to 69 insured mortgage loans must

comply with this section by no later than January 1, 2000;

(3) Mortgagees having from 11 to 25 insured mortgage loans must

comply with this section by no later than January 1, 2001;

(4) Mortgagees having 10 or fewer insured mortgage loans must

comply with this section by no later than January 1, 2002.

(b) Exception. On or after January 1, 2002, mortgagees that hold or

service fewer than 10 multifamily mortgages may continue to report

mortgage delinquencies, defaults, reinstatements, assignment elections,

withdrawals of assignment elections, and related information in writing

on Form HUD-92426 only with specific HUD approval. HUD will grant such

approval, upon application by the mortgagee, for reasons of hardship

due to insufficient financial resources to purchase the required

hardware and Internet access.

(c) HUD will not accept reports of information regarding defaults,

reinstatements, assignment elections, and related information in a

manner that is not in accordance with this section. Failure on the part

of mortgagees to report this information as required by 24 CFR part 207

and this section may result in HUD's application of the sanctions and

surcharges specified in 24 CFR part 207.

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

3. The authority citation for 24 CFR part 207 continues to read as

follows:

Authority: 12 U.S.C. 1701z-11(e), 1713, and 1715b; 42 U.S.C.

3535(d).

4. Section 207.256 is revised to read as follows:

Sec. 207.256 Notice.

(a) If the default as defined in Sec. 207.255 is not cured within

the 30 days grace period, the mortgagee must, within 30 days

thereafter, notify the Commissioner of such default, in the manner

prescribed in 24 CFR part 200, subpart B.

(b) Notwithstanding Sec. 207.255(a)(2), the mortgagee must give

notice to the Commissioner, in the manner prescribed in 24 CFR part

200, subpart B, of the failure of the mortgagor to comply with such

covenant, regardless of the fact the mortgagee may not have elected to

accelerate the debt.

5. Section 207.256a is revised to read as follows:

[[Page 4770]]

Sec. 207.256a Reinstatement of defaulted mortgage.

If, after default and prior to the completion of foreclosure

proceedings, the mortgagor cures the default, the insurance shall

continue as if a default had not occurred, provided the mortgagee gives

notice of reinstatement to the Commissioner, in the manner prescribed

in 24 CFR part 200, subpart B.

6. Section 207.258 is amended by revising paragraphs (a) and

(b)(1), to read as follows:

Sec. 207.258 Insurance claim requirements.

(a) Alternative election by mortgagee. When the mortgagee becomes

eligible to receive mortgage insurance benefits pursuant to

Sec. 207.255(c), it must, within 45 days thereafter, give the

Commissioner notice, in the manner prescribed in 24 CFR part 200,

subpart B, of its intention to file an insurance claim and of its

election either to assign the mortgage to the Commissioner, as provided

in paragraph (b) of this section, or to acquire and convey title to the

Commissioner, as provided in paragraph (c) of this section.

(b) * * *

(1) Notice of assignment. On the date the assignment of the

mortgage is filed for record, the mortgagee must notify the

Commissioner, in the manner prescribed in 24 CFR part 200, subpart B,

of such assignment, and must also notify the FHA Comptroller by

telegram of such recordation.

* * * * *

Dated: January 22, 1999.

William C. Apgar,

Assistant Secretary for Housing--Federal Housing Commissioner

[FR Doc. 99-2182 Filed 1-28-99; 8:45 am]

BILLING CODE 4210-27-P