|HUD Rules and Regulations|
Most regulations are published in the Federal Register in proposed form where the public has an opportunity to submit comments. The Department/Agency takes these comments into consideration before publishing the regulation in final form. Once the regulations are final they govern how the particular federal programs will operate.
Appraiser Qualifications for Placement on FHA Single Family Appraiser Roster
In Nov., 2001 HUD published a proposed regulation that would require that the state licensed or certified appraiser have professional credentials based on the minimum licensing/certification standards issued by the Appraiser Qualifications Board (AQB) of the Appraisal Foundation. Also, the proposed rule clarifies that an appraiser may be removed from the Appraiser Roster if the appraiser loses their license or certification in any state due to disciplinary action, even if the appraiser continues to be licensed or certified in another state. Comment deadline was January 29, 2002. In its comments, NAR applauded the Department overall for issuing these proposed regulations because they represent an appropriate step in reassuring the integrity of the FHA appraisal process. NAR believes that high competency standards for appraisers on HUD’s Appraisal Roster are essential to protecting the FHA Mutual Mortgage Insurance Fund.
NAR comments >>
Accelerated Claims Disposition Demonstration Program
In Feb., 2002 HUD published a notice of a program, which is intended to identify defaulted FHA loans early in the delinquency. The defaulted mortgages will be assigned to FHA, which in turn will reassign the mortgage to a private sector joint venture partnership, and if the loan cannot be restructured then this partnership could proceed with foreclosure and property sale. These properties would not be assigned to one of HUD's management and marketing contractors but the contractors could offer their services to the joint venture partnership. However, the contractors will continue to provide services for properties not associated the ACD program. Comment deadline was April 8, 2002. The demonstration program will be operational in October 2002 and will run for around six months. NAR stated in its comments that we believe that those entities, which are selected to dispose of the properties, should have a proven track record with property disposition or resale. We strongly encouraged HUD to continue to use REALTORS® as an integral component of any disposition process.
NAR comments >>
FHA Appraiser Watch Initiative
In July, 2002 HUD issued a notice of proposed rule making detailing the creation of a new "Appraiser Watch" program. The proposed Appraiser Watch system is similar to the Credit Watch system for FHA lenders. Appraiser Watch would rate appraisers on the performance of loans secured by properties they appraised and those appraisers who are associated with excessive default and claim rates would be subject to notification of proposed removal from the FHA Appraiser Roster. Comment deadline was Sept. 23, 2002. In NAR’s comments to HUD, we agreed with the suggestion to use a performance-based rating system to evaluate the appraisers on the roster. However, the basis of the performance criteria proposed by HUD, defaults and claims was a major point of disagreement.
NAR comments >>
Retention of Section 236 Excess Income
In August, 2002 HUD published a proposed rule that establishes the terms and procedures for owners of projects receiving section 236 rental assistance to participate in retaining some or all of their excess rental charges (excess income) for project use; to retain excess income charges for non-project use after a determination by HUD that the project is well-
maintained the owner has not engaged in material adverse financial or managerial actions or omissions; and to request a return of the excess income that they had already remitted to HUD. Comment deadline was Oct. 11, 2002.
NAR comments >>
Amendments to the Section 203 (k) Rehabilitation Loan Insurance Program
In August, 2002 HUD published a proposed rule that would amend the current regulations for the Section 203 (k) Rehabilitation program, which is used for the rehab and repair of single-family properties. First, the proposed rule would restrict the program to one-unit structures and secondly would establish a cap on the total cost of the rehabilitation. Currently the 203 (k) program can be used for the rehab of one to four unit structures that are used primarily for residential purposes. HUD wants to restrict the program to one-unit structures. HUD wants to cap the total cost of rehabilitation to 20% of the FHA single-family mortgage limit it will prevent the program from being used for overly expensive and complicated work. Comment deadline was Oct. 21, 2002.
Loss Mitigation Default Counseling Demonstration Program
In Sept., 2002 HUD issued a notice announcing it’s intent to conduct a limited demonstration program to gauge the demand for and the usefulness of including in the loss mitigation actions the reimbursement to mortgagees for default counseling provided to borrowers by HUD approved Housing Counseling Agencies (HCAs). Such counseling may be of particular assistance to borrowers in certain targeted areas where default rates exceed national averages and/or predatory lending practices have been identified by the Department. This demonstration will also further the concept of mitigating insurance claim losses to the Department by increasing mortgagors' access to counseling. Comment deadline is Nov. 25, 2002.
Rules Awaiting Final Publication in 2002
Single Family Insurance Program, Property Flipping Prohibition
In September 2001, HUD published a proposed rule aimed at preventing fraudulent property flipping in the FHA single-family program. The intended purpose of the proposal is to protect FHA borrowers from being victims of property flipping. "Flipping" is a major example of predatory lending whereby recently acquired property is resold for a considerable profit with an artificially inflated value. The proposed rule would provide that any property sold within 6 months after acquisition by the seller would not be eligible for FHA financing. HUD has indicated that it may grant exceptions to the 6-month holding period on a case-by-case basis. The 6-month holding period does not apply to the sale of HUD REO properties. NAR stated in it’s comments that while we understood the Department's desire to proactively address the reported instances of abusive property flipping that has occurred in certain markets, we also had major concerns regarding the rule. We stated that the proposed rule could discourage investors from participating in a property rehabilitation/marketing process utilizing FHA mortgage insurance.
NAR comments >>
Final Rules Published in 2002
Nonprofit Organization Participation in Certain FHA Single Family
This final rule establishes regulatory placement and removal procedures for HUD's Nonprofit Organization Roster. The Roster lists nonprofit organizations that HUD has determined are qualified to participate in certain specified Federal Housing Administration (FHA) single-family activities. These activities may include acting as a mortgagor; purchasing HUD's Real Estate Owned (REO) Properties (HUD Homes) at a discount; providing secondary financing; and imposing legal restrictions on conveyance as part of affordable housing programs. Effective Date: July 8, 2002.
HOME Investment Partnerships Program
This final rule makes several streamlining and clarifying amendments to the regulations for the HOME Investment Partnerships Program (HOME Program). The final rule incorporates a number of statutory changes to the HOME Program. Effective Date: October 31, 2002.
Section 8 Homeownership Program; Downpayment Assistance Grants and Streamlining Amendments
In June, 2001 HUD published a proposed rule to allow Section 8 voucher participants to receive homeownership assistance in the form of a single payment, equal to one year's worth of voucher payments, to be used as a downpayment for a home. In addition to implementation of section 301, this proposed rule also would clarify and streamline several regulatory requirements applicable to both downpayment grants and monthly homeownership assistance payments provided under the homeownership option. In NAR’s comments we stated that many individuals who are able to make monthly mortgage payments are still unable to purchase a home because they cannot accrue the money needed for a downpayment. We believe the new program will successfully allow even more Section 8 participants to fulfill the dream of homeownership.
NAR comments (PDF File)>>
Appraiser Qualifications for Placement on FHA Single Family Appraiser Roster Proposed Rule
Accelerated Claims Disposition Demonstration Program Notice
FHA Appraiser Watch Initiative Advanced Notice
Retention of Section 236 Excess Income Proposed Rule
Ammendments to the Section 203 (k) Rehabilitation Loan Insurance Program Proposed Rule
Loss Mitigation Default Counseling Demonstration Program Advanced Notice
Section 8 Homeownership Program Proposed Regulation
Single Family Insurance Program, Property Flipping Prohibition Proposed Regulation
Nonprofit Organization Participation in Certain FHA Single Family Homes
Home Partnerships Program