Reverse Mortgages in a Nutshell: Introduction to a HECM

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Reverse Mortgages

in a Nutshell:

Introduction to a

HECM

Presented by:

Michael J. Wallace, Esq.

Upstate Capital Inc.

(877) 287-7828

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I:

History of the HECM/Reverse Mortgage Industry/ Major Changes to

HECM:

1. Section 255 of the National Housing Act

2. Housing and Economic Recovery Act of 2008 (“HERA”)

a.

Elimination of Non-approved brokers from originating the HECM;

b.

Limited payment for counseling;

c.

HECM for purchase;

d.

Reducing the Origination fee to max of 6K from a maximum of $

8,340.00;

e.

Imposing a prohibition of cross selling of financial products,

f.

Study for additional protections;

g.

Increased guidelines for HECM counseling;

II:

Requirements of Originating Companies;

1. Net worth of a $ 63,000.00 with additional amounts of net worth of $

25,000.00 for each licensed branch;

2. Audited financial statements initially and then annually;

3. Quality control plan;

4. Establishment of quality review; (Our company outsources this and

has 10% of all funded loans audited by an outside provider and we pay

$ 100.00 for each file. The outside service company provides a list of

deficiencies and we must correct);

5. Various experience level with the principals;

III:

The Product Characteristics;

1. There is absolutely No personal guarantee by the Borrower, this is a

non-recourse loan;

2. FHA insures the loan and protects both the borrower by allowing for the

non-recourse nature as well as the lender; however this insurance operates vastly

differently from a forward mortgage.

3. All Borrower(s) must be at least 62 years of age.

4. House must be owner occupied 1 -4 family

5. Manufactured homes and Condominiums are allowed with certain

requirements;

6. There are no credit; FICO; income; or asset requirements;

7. The amount the borrower can access is based upon the age of the

youngest borrower; the value of the house and the interest rate.

8. Prior to obtaining an application the Borrower must complete mandatory

Counseling;

(3)

c.

By phone or in person;

d.

Payment by borrower of 0 to max of $ 125.00;

e.

Nothing charged by Lender until after certificate issued;

9. The standard HECM is a re-finance mortgage and therefore the 3 day

right of rescission applies;

10. HECM for Purchase:

11. Payment Options/Interest Rates: The HECM has very few options. As

Henry Ford used to say, you can get any color you want as long as it is

black. This is similar to the HECM.

A. Fixed Rate: All up-front; if the borrower wants the rate fixed, there is

no option, currently, other than to take all of the approved money

up-front; there is no line of credit with a fixed rate HECM;

B. Line of Credit; Adjustable rate, there is no current option to have a

fixed rate. These are all adjustable rates.

C. Term/Tenure;

There are few variations.

12. Origination Fee: The minimum amount is $ 2,500.00 with the maximum of $

6,000.00.

13. Servicing Fee Set Aside: 25, 30 or 35 dollars monthly, up front.

14. Real Estate Taxes/Insurance: There is no escrow for taxes or insurance.

IV:

Comparison to “Forward” mortgages

1. No Escrow for Taxes and Insurance;

2. No monthly payments, therefore Servicing Fee Set aside;

3. Determination of Origination Fee, no points;

4. No buy down or up the interest rate; as I said about Henry Ford,

5. All the money has to come out for the fixed no option;

6. Not Assumable: Never, the loan is specific to the borrower;

7. Broker: Must be FHA licensed to originate HECMS,;

8. No Mortgage Tax in New York;

9. Title insurance amount is larger than the amount of the mortgage indicated on the

HUD-1;

10. The application form is a 1009 and not a 1003;

11. The loan disclosure is a TALC and not a TIL; These have different disclosure

items and as such it makes the reverse appear to be more expensive. More on this

later.

12. There are two mortgages recorded, one to the Lender and the other to Department

of HUD;

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14. The loan is due when no borrower is longer living in the house permanently, as

opposed to a term of years;

15. The origination fee paid to the Broker is established by Federal Law. The

minimum amount is $ 2,500.00 with the maximum of $ 6,000.00. This is

calculated as a percentage of the value of the house or the FHA loan limits

whichever is less. It is 2% up to 200K; then 1% above 400k to the cap of $

6,000.00. The current FHA loan limit is $ 625,000.00 for HECM loans.

Therefore, assume the house is appraised at $ 300,000.00. The origination fee is

2% of the first 200 or $ 4,000.00 and then 1% of the 100K or $ 1,000.00 so the

origination fee would be $ 5,000.00. The origination fee for the forward world is

based upon the mortgage amount. This is vastly different.

16. There are no LTV, DTI or any other ratios for the HECM, The determination of

how much a borrower can obtain with a Forward is based upon: The value of the

house to the ratio of the loan, LTV; the FICO score, or credit risk; the amount of

income as a percentage of debt; DTI. None of these ratios are applicable to the

HECM.

V:

Common Myths

1. The Bank Owns My Home

2. Reverse mortgages are prohibitively expensive/they are the new sub-prime;

3. My Heirs Will Owe the Bank

4. Income From a Reverse Mortgage is Taxable

5. I Must Have Good Income and Credit to Qualify

6. Reverse Mortgages are just for the cash poor

7. My Home Must Be Owned Free & Clear to Get a Reverse Mortgage

VI:

Future of the HECM/Reverse Mortgage Industry

1. The population is aging:

•

In 2004, there were 36.3 million Seniors living in the United States (Statistics on

the Aging Population, Administration on Aging, 4/18/06)

•

In 2006, the baby boom generation begins to retire. That means, over the next 20

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•

Every day this year, another 7,918 people turn 60, or 330 every hour. (Ibid.)

•

By 2030, the United States will be home to 71.5 million people age 65 or older,

representing 20 percent of the population. In 2000, just 12.4 percent of the

population was at least 65 years old. (“A Profile of Older Americans: 2004,”

Department of Health and Human Services Administration on Aging, 4/18/06)

•

The average American is living to be almost 78 years old. (National Center for

Health Statistics, Life Expectancy Hits Record High, Feb. 28, 2005)

•

The average life expectancy of the modern Senior is 83 years. (“A Profile of

Older Americans: 2004,” 4/18/06)

•

The number of people living to be at least 85 years old is expected to double,

from 4.7 million in 2003 to 9.6 million in 2030. (“A Profile of Older Americans:

2004,” 4/18/06)

2. There has been a reduction of defined pension plans, and there is a need to find

other sources of money to help fund the elderly;

3. People really want to age in place and do not want to move;

4. There is a huge amount, even with the reduction of housing prices, of equity with

the seniors;

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Section 255 of the National Housing Act

(the enabling legislation for HECMs)

Section 1715z-20. Insurance of home equity conversion mortgages for elderly

homeowners

(a) Purpose

The purpose of this section is to authorize the Secretary to carry out a program of

mortgage insurance designed -

(1) to meet the special needs of elderly homeowners by reducing the effect of the

economic hardship caused by the increasing costs of meeting health, housing, and

subsistence needs at a time of reduced income, through the insurance of home equity

conversion mortgages to permit the conversion of a portion of accumulated home equity

into liquid assets; and

(2) to encourage and increase the involvement of mortgagees and participants in the

mortgage markets in the making and servicing of home equity conversion mortgages for

elderly homeowners.

(b) Definitions

For purposes of this section:

(1) The terms ''elderly homeowner'' and ''homeowner'' mean any homeowner who is, or

whose spouse is, at least 62 years of age or such higher age as the Secretary may

prescribe.

(2) The terms ''mortgagee'', ''mortgagor'', and ''State'' have the meanings given such terms

in section 1707 of this title.

(3) The term ''home equity conversion mortgage'' means a first mortgage which provides

for future payments to the homeowner based on accumulated equity and which a housing

creditor (as defined in section 3802(2) of this title) is authorized to make

(A) under any law of the United States (other than section 3803 of this title) or applicable

agency regulations thereunder; (B) in accordance with section

3803 of this title, notwithstanding any State constitution, law, or regulation; or (C) under

any State constitution, law, or regulation.

(4) Mortgage. - The term ''mortgage'' means a first mortgage or first lien on real estate, in

fee simple, on all stock allocated to a dwelling in a residential cooperative housing

corporation, or on a leasehold -

(A) under a lease for not less than 99 years that is renewable; or

(B) under a lease having a period of not less than 10 years to run beyond the maturity

date of the mortgage.

(5) First mortgage. - The term ''first mortgage'' means such classes of first liens as are

commonly given to secure advances on, or the unpaid purchase price of, real estate or all

stock allocated to a dwelling unit in a residential cooperative housing corporation, under

the laws of the State in which the real estate or dwelling unit is located, together with the

credit instruments, if any, secured thereby.

(7)

The Secretary may, upon application by a mortgagee, insure any home equity conversion

mortgage eligible for insurance under this section and, upon such terms and conditions as

the Secretary may prescribe, make commitments for the insurance of such mortgages

prior to the date of their execution or disbursement to the extent that the Secretary

determines such mortgages -

(1) have promise for improving the financial situation or otherwise meeting the special

needs of elderly homeowners;

(2) will include appropriate safeguards for mortgagors to offset the special risks of such

mortgages; and

(3) have a potential for acceptance in the mortgage market.

(d) Eligibility requirements

To be eligible for insurance under this section, a mortgage shall

-

(1) have been made to a mortgagee approved by the Secretary as responsible and able to

service the mortgage properly;

(2) have been executed by a mortgagor who -

(A) qualifies as an elderly homeowner;

(B) has received adequate counseling by a third party (other than the lender) as provided

in subsection (f) of this section;

(C) has received full disclosure, as prescribed by the Secretary, of all costs charged to the

mortgagor, including costs of estate planning, financial advice, and other services that are

related to the mortgage but are not required to obtain the mortgage, which disclosure

shall clearly state which charges are required to obtain the mortgage and which are not

required to obtain the mortgage; and

(D) meets any additional requirements prescribed by the Secretary;

(3) be secured by a dwelling that is designed principally for a 1- to 4-family residence in

which the mortgagor occupies 1 of the units;

(4) provide that prepayment, in whole or in part, may be made without penalty at any

time during the period of the mortgage;

(5) provide for a fixed or variable interest rate or future sharing between the mortgagor

and the mortgagee of the appreciation in the value of the property, as agreed upon by the

mortgagor and the mortgagee;

(6) contain provisions for satisfaction of the obligation satisfactory to the Secretary;

(7) provide that the homeowner shall not be liable for any difference between the net

amount of the remaining indebtedness of the homeowner under the mortgage and the

amount recovered by the mortgagee from -

(A) the net sales proceeds from the dwelling that are subject to the mortgage (based upon

the amount of the accumulated equity selected by the mortgagor to be subject to the

mortgage, as agreed upon by the mortgagor and mortgagee); or

(8)

anticipation of maturity, additional and secondary liens, and other matters as the

Secretary may prescribe;

(9) provide for future payments to the mortgagor based on accumulated equity (minus

any applicable fees and charges), according to the method that the mortgagor shall select

from among the methods under this paragraph, by payment of the amount -

(A) based upon a line of credit;

(B) on a monthly basis over a term specified by the mortgagor;

(C) on a monthly basis over a term specified by the mortgagor and based upon a line of

credit;

(D) on a monthly basis over the tenure of the mortgagor;

(E) on a monthly basis over the tenure of the mortgagor and based upon a line of credit;

or

(F) on any other basis that the Secretary considers appropriate;

(10) provide that the mortgagor may convert the method of payment under paragraph (9)

to any other method during the term of the mortgage, except that in the case of a fixed

rate mortgage, the Secretary may, by regulation, limit such convertibility; and

(11) have been made with such restrictions as the Secretary determines to be appropriate

to ensure that the mortgagor does not fund any unnecessary or excessive costs for

obtaining the mortgage, including any costs of estate planning, financial advice, or other

related services.

(e) Disclosures by mortgagee

The Secretary shall require each mortgagee of a mortgage insured under this section to

make available to the homeowner -

(1) at the time of the loan application, a written list of the names and addresses of third

party information sources who are approved by the Secretary as responsible and able to

provide the information required by subsection (f) of this section;

(2) at least 10 days prior to loan closing, a statement informing the homeowner that the

liability of the homeowner under the mortgage is limited and explaining the homeowner's

rights, obligations, and remedies with respect to temporary absences from the home, late

payments, and payment default by the lender, all conditions requiring satisfaction of the

loan obligation, and any other information that the Secretary may require;

(3) on an annual basis (but not later than January 31 of each year), a statement

summarizing the total principal amount paid to the homeowner under the loan secured by

the mortgage, the total amount of deferred interest added to the principal, and the

outstanding loan balance at the end of the preceding year; and

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(A) the cost for a short-term mortgage; and

(B) the cost for a loan term equaling the actuarial life expectancy of the mortgagor.

(f) Information services for mortgagors

The Secretary shall provide or cause to be provided by entities other than the lender the

information required in subsection (d)(2)(B) of this section. Such information shall be

discussed with the mortgagor and shall include -

(1) options other than a home equity conversion mortgage that are available to the

homeowner, including other housing, social service, health, and financial options;

(2) other home equity conversion options that are or may become available to the

homeowner, such as sale-leaseback financing, deferred payment loans, and property tax

deferral;

(3) the financial implications of entering into a home equity conversion mortgage;

(4) a disclosure that a home equity conversion mortgage may have tax consequences,

affect eligibility for assistance under Federal and State programs, and have an impact on

the estate and heirs of the homeowner; and

(5) any other information that the Secretary may require.

The Secretary shall consult with consumer groups, industry representatives,

representatives of counseling organizations, and other interested parties to identify

alternative approaches to providing consumer information required by this subsection that

may be feasible and desirable for home equity conversion mortgages insured under this

section and other types of reverse mortgages.

The Secretary may, in lieu of providing the consumer education required by this

subsection, adopt alternative approaches to consumer education that may be developed as

a result of such consultations, but only if the alternative approaches provide all of the

information specified in this subsection.

(g) Limitation on insurance authority

The aggregate number of mortgages insured under this section may not exceed 250,000.

In no case may the benefits of insurance under this section exceed the maximum dollar

amount established under section 1709(b)(2) of this title for 1-family residences in the

area in which the dwelling subject to the mortgage under this section is located.

(h) Administrative authority

The Secretary may -

(1) enter into such contracts and agreements with Federal, State, and local agencies,

public and private entities, and such other persons as the Secretary determines to be

necessary or desirable to carry out the purposes of this section; and

(2) make such investigations and studies of data, and publish and distribute such reports,

as the Secretary determines to be appropriate.

(i) Protection of homeowner and lender

(10)

(A) to provide any mortgagor under this section with funds to which the mortgagor is

entitled under the insured mortgage or ancillary contracts but that the mortgagor has not

received because of the default of the party responsible for payment;

(B) to obtain repayment of disbursements provided under subparagraph (A) from any

source; and

(C) to provide any mortgagee under this section with funds not to exceed the limitations

in subsection (g) of this section to which the mortgagee is entitled under the terms of the

insured mortgage or ancillary contracts authorized in this section.

(2) Actions under paragraph (1) may include -

(A) disbursing funds to the mortgagor or mortgagee from the General Insurance Fund;

(B) accepting an assignment of the insured mortgage notwithstanding that the mortgagor

is not in default under its terms, and calculating the amount and making the payment of

the insurance claim on such assigned mortgage;

(C) requiring a subordinate mortgage from the mortgagor at any time in order to secure

repayments of any funds advanced or to be advanced to the mortgagor;

(D) requiring a subrogation to the Secretary of the rights of any parties to the transaction

against any defaulting parties; and

(E) imposing premium charges.

(j) Safeguard to prevent displacement of homeowner

The Secretary may not insure a home equity conversion mortgage under this section

unless such mortgage provides that the homeowner's obligation to satisfy the loan

obligation is deferred until the homeowner's death, the sale of the home, or the

occurrence of other events specified in regulations of the Secretary. For purposes of this

subsection, the term ''homeowner'' includes the spouse of a homeowner. Section 1647(b)

of title 15) and any implementing regulations issued by the Board of Governors of the

Federal Reserve System shall not apply to a mortgage insured under this section.

(k) Insurance authority for refinancings

(1) In general:

The Secretary may, upon application by a mortgagee, insure under this subsection any

mortgage given to refinance an existing home equity conversion mortgage insured under

this section.

(2) Anti-churning disclosure

The Secretary shall, by regulation, require that the mortgagee of a mortgage insured

under this subsection, provide to the mortgagor, within an appropriate time period and in

a manner established in such regulations, a good faith estimate of: (A) the total cost of the

refinancing; and (B) the increase in the mortgagor's principal limit as measured by the

estimated initial principal limit on the mortgage to be insured under this subsection less

the current principal limit on the home equity conversion mortgage that is being

(11)

The mortgagor under a mortgage insured under this subsection may waive the

applicability, with respect to such mortgage, of the requirements under subsection

(d)(2)(B) of this section (relating to third party counseling), but only if -

(A) the mortgagor has received the disclosure required under paragraph (2);

(B) the increase in the principal limit described in paragraph (2) exceeds the amount of

the total cost of refinancing (as described in such paragraph) by an amount to be

determined by the Secretary; and

(C) the time between the closing of the original home equity conversion mortgage that is

refinanced through the mortgage insured under this subsection and the application for a

refinancing mortgage insured under this subsection does not exceed 5 years.

(4) Credit for premiums paid

Notwithstanding section 1709(c)(2)(A) of this title, the Secretary may reduce the amount

of the single premium payment otherwise collected under such section at the time of the

insurance of a mortgage refinanced and insured under this subsection. The amount of the

single premium for mortgages refinanced under this subsection shall be determined by

the Secretary based on the actuarial study required under paragraph (5).

(5) Actuarial study

Not later than 180 days after December 27, 2000, the Secretary shall conduct an actuarial

analysis to determine the adequacy of the insurance premiums collected under the

program under this subsection with respect to -

(A) a reduction in the single premium payment collected at the time of the insurance of a

mortgage refinanced and insured under this subsection;

(B) the establishment of a single national limit on the benefits of insurance under

subsection (g) of this section (relating to limitation on insurance authority); and

(C) the combined effect of reduced insurance premiums and a single national limitation

on insurance authority.

(6) Fees

The Secretary may establish a limit on the origination fee that may be charged to a

mortgagor under a mortgage insured under this subsection, except that such limitation

shall provide that the origination fee may be fully financed with the mortgage and shall

include any fees paid to correspondent mortgagees approved by the Secretary.

(l) Waiver of up-front premiums for mortgages to fund long-term care insurance

(1) In general

In the case of any mortgage insured under this section under which the total amount

(except as provided in paragraph (2)) of all future payments described in subsection

(b)(3) of this section will be used only for costs of a qualified long-term care insurance

contract that covers the mortgagor or members of the household residing in the property

that is subject to the mortgage, notwithstanding section 1709(c)(2) of this title, the

Secretary shall not charge or collect the single premium payment otherwise required

under subparagraph (A) of such section to be paid at the time of insurance.

(12)

A mortgage described in paragraph (1) may provide financing of amounts that are used to

satisfy outstanding mortgage obligations (in accordance with such limitations as the

Secretary shall prescribe) and any amounts used for initial service charges, appraisal,

inspection, and other fees (as approved by the Secretary) in connection with such

mortgage, and the amount of future payments described in subsection (b)(3) of this

section under the mortgage shall be reduced accordingly.

(3) Definition

For purposes of this subsection, the term ''qualified long-term care insurance contract''

has the meaning given such term in section 7702B of title 26, except that such contract

shall also meet the requirements of -

(A) sections 9 (relating to disclosure), 24 (relating to suitability), and 26 (relating to

contingent nonforfeiture) of the long-term care insurance model regulation promulgated

by the National Association of Insurance Commissioners (as adopted as of September

2000); and

(B) section 8 (relating to contingent nonforfeiture) of the long-term care insurance model

Act promulgated by the National Association of Insurance Commissioners (as adopted as

of September 2000).

(m) Funding for counseling and consumer education and outreach

Of any amounts made available for any of fiscal years 2000 through 2003 for housing

counseling under section 1701x of this title, up to a total of $1,000,000 shall be available

to the Secretary in each such fiscal year, in such amounts as the Secretary determines

appropriate, for the following purposes in connection with home equity conversion

mortgages insured under this section:

(1) Counseling

For housing counseling authorized by section 1701x of this title.

(2) Consumer education

For transfer to the departmental salaries and expenses account for consumer education

and outreach activities

Useful Internet Sites:

HUD Clips: (For HUD information, Mortgagee Letters, and copies of all Statutes.)

http://www.hud.gov/offices/hsg/sfh/hecm/hecmml.cfm

National Housing Counseling Association: (Represents counseling agencies regarding

HECM counseling)

http://www.housingcounselingassociation.org

Reverse Mortgage Insight: (The research company for the reverse mortgage industry)

www.rminsight.net

The Nationwide Mortgage Licensing System: (This is the registry established by the

SAFE Act.)

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Michael J. Wallace, Esq.

6522 Basile Rowe East Syracuse, New York 13057

Office: (315) 432-5270 Fax: (315) 410-5462

[email protected]

PRESIDENT/CEO/DIRECTOR: (April 2007 – Present).

Upstate Capital, Inc.

6522 Basile Rowe, East Syracuse, New York 13057.

BRANCH MANAGER: (March 2005 – April 2007).

LOAN OFFICER: (February 2004 – April 2007).

Upstate Capital, Inc.

6565 Kinne Road, Dewitt, New York 13214.

MICHAEL J. WALLACE, ESQ.: (February 1986 – February 2004).

110 Woodberry Lane, Fayetteville, New York 13066.

Specialized in mortgage banking/brokering.

Closed mortgage loans for many mortgage lenders/brokers.

RELEVANT TEACHING EXPERIENCE:

Business Law I and II, Bryant and Stratton College; (1986-1987)

Continuing Education Course, presented to Town/Village Justices; (1997)

Training Courses presented to Loan Officers for Title Insurance issues; (1989-1997)

Town of Dewitt Town Justice (1999).

LICENSES:

Admitted to Fourth Depart NY State – 2/ 7/86 – In Good Standing.

Licensed Mortgage Broker – Florida; Pennsylvania and Connecticut

Licensed Title Agent – Florida; Pennsylvania

EDUCATION:

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Home Equity Conversion Mortgage (HECM)

Year

Endorsements

Forecast

1989

2 Loans Insured by Year, Through August 2009

140,000

1989

2 1990

234 1991

456 1992

1,237

1993

2,123

1994

3 797

100,000 120,000

1994

3,797

1995

4,007

1996

3,674

1997

5,803

1998

7,856

1999

8 181

60,000 80,000 Forecast A t l

1999

8,181

2000

6,647

2001

8,120

2002

14,159

2003

21,619

2004

40 094

_{20 000} 40,000 60,000 _Actual

2004

40,094

2005

48,351

2006

85,511

2007

108,230

2008

115,157

2009

77 604

0 20,000 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2009

77,604

Prepared by Reverse Market Insight, Inc.

www rminsight net

October 1 2009

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45311

Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Rules and Regulations

(4) A turbine entry gas temperature equal to the maximum steady state temperature approved for use during periods longer than 20 seconds when operating at conditions not associated with 30-second or 2 minutes OEI ratings. The requirement to run the test at the maximum approved steady state temperature may be waived by the FAA if the applicant can demonstrate that other testing provides substantiation of the temperature effects when considered in combination with the other

parameters identified in paragraphs (b)(1), (b)(2) and (b)(3) of this section.

■6. Amend § 33.87 by revising paragraph (a)(8) to read as follows:

§ 33.87 Endurance test.

(a) * * *

(8) If the number of occurrences of either transient rotor shaft overspeed, transient gas overtemperature or transient engine overtorque is limited, that number of the accelerations

required by paragraphs (b) through (g) of this section must be made at the

limiting overspeed, overtemperature or overtorque. If the number of occurrences is not limited, half the required

accelerations must be made at the limiting overspeed, overtemperature or overtorque.

* * * * *

Issued in Washington, DC, on August 21, 2009.

J. Randolph Babbitt, Administrator.

[FR Doc. E9–20960 Filed 9–1–09; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39

[Docket No. FAA–2009–0432; Directorate Identifier 2008–NM–168–AD; Amendment 39–15982; AD 2009–15–19]

RIN 2120–AA64

Airworthiness Directives; BAE Systems (Operations) Limited Model BAe 146–100A and 146–200A Series Airplanes

AGENCY: Federal Aviation

Administration (FAA), Department of Transportation (DOT).

ACTION: Final rule; correction.

SUMMARY: The FAA is correcting a typographical error in an existing airworthiness directive (AD) that was published in the Federal Register on July 29, 2009. The error resulted in an incorrect AD number appearing in one

location of the document. This AD applies to certain BAE Systems (Operations) Limited Model BAe 146– 100A and 146–200A series airplanes. This AD requires inspecting for damage of the horizontal stabilizer lower skin and joint plates, and doing related investigative and corrective actions.

DATES: Effective September 2, 2009.

ADDRESSES: You may examine the AD docket on the Internet at http://

www.regulations.gov; or in person at the

Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800–647–5527) is the Document Management Facility, U.S. Department of Transportation, Docket Operations, M–30, West

Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE.,

Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Todd Thompson, Aerospace Engineer, International Branch, ANM–116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057–3356; telephone (425) 227–1175; fax (425) 227–1149.

SUPPLEMENTARY INFORMATION: On July 13, 2009, the FAA issued AD 2009–15– 19, amendment 39–15982 (74 FR 37528, July 29, 2009), for certain BAE Systems (Operations) Limited Model BAe 146– 100A and 146–200A series airplanes. This AD requires inspecting for damage of the horizontal stabilizer lower skin and joint plates, and doing related investigative and corrective actions.

As published, the final rule

incorrectly specified the AD number in a single location in the AD as ‘‘2008– 15–19’’ instead of ‘‘2009–15–19.’’

No other part of the regulatory information has been changed; therefore, the final rule is not republished in the Federal Register.

The effective date of this AD remains September 2, 2009.

§ 39.13 [Corrected]

■In the Federal Register of July 29, 2009, on page 37529, in the first column, paragraph 2. of PART 39— AIRWORTHINESS DIRECTIVES is corrected to read as follows: * * * * *

2009–15–19 BAE Systems (Operations) Limited (Formerly British Aerospace Regional Aircraft): Amendment 39– 15982. Docket No. FAA–2009–0432; Directorate Identifier 2008–NM–168–AD.

* * * * *

Issued in Renton, Washington, on August 24, 2009.

Ali Bahrami,

Manager, Transport Airplane Directorate, Aircraft Certification Service.

[FR Doc. E9–21039 Filed 9–1–09; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 206

[Docket No. FR–4989–F–02] RIN 2502–AI34

Home Equity Conversion Mortgage (HECM) Counseling Standardization and Roster

AGENCY: Office of the Assistant

Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION: Final rule.

SUMMARY: This final rule amends HUD’s HECM program regulations by

establishing testing standards to qualify individuals as HECM counselors eligible to provide HECM counseling to

prospective HECM borrowers. The rule also establishes a HECM Counseling Roster (Roster) of eligible HECM counselors and provides for their removal for cause. This rule is intended to contribute to improving the quality of HECM counseling. HECM counseling enables elderly homeowners to make more informed decisions when considering mortgage options and whether to pursue a HECM loan. This final rule follows the publication of a January 8, 2007, proposed rule, takes into consideration the public comments received on the proposed rule, and makes certain changes in response to public comment and upon further consideration of certain issues by HUD.

DATES: Effective Date: October 2, 2009.

FOR FURTHER INFORMATION CONTACT:

Margaret Burns, Director, Office of Single Family Program Development, Office of Housing, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 9278, Washington, DC 20410–8000; telephone number 202–708–2121 (this is not a toll- free number). Hearing- and speech- impaired individuals may access this number through TTY by calling the toll- free Federal Information Relay Service at 800–877–8339.

SUPPLEMENTARY INFORMATION: I. Background—The January 8, 2007 Proposed Rule

Section 255 of the National Housing Act (12 U.S.C. 1715z–20) (NHA)

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authorizes HUD to insure reverse mortgages, referred to as HECMs, which can be used by senior homeowners, age 62 and older, to convert the equity in their homes to monthly streams of income or a line of credit to be accessed as needed. HECMs must be repaid when the borrower no longer occupies the home. A HECM is originated by a lending institution, such as a mortgage lender, bank, credit union, or savings and loan association, and the mortgage is insured by HUD. HUD’s regulations implementing the HECM program are codified at 24 CFR part 206.

To assist the senior homeowner in making an informed decision of whether a HECM meets their needs, the

homeowner, consistent with section 255 of the NHA, is required to receive counseling by a HUD-approved HECM counselor. Section 255(f) of the NHA requires the provision of consumer education and information to HECM mortgagors by entities other than the lender. Each mortgagee must make available to a homeowner, at the time of the loan application, a written list of the names and addresses of third-party information sources that are approved by HUD as responsible to provide the statutorily required counseling. The counseling must include information on options other than a HECM, the

financial implications of entering into a HECM, the tax consequences of a HECM, and any other information that HUD or the prospective borrower may request.

On January 8, 2007, at 72 FR 870, HUD published a proposed rule to amend HUD’s HECM regulations by establishing testing standards to qualify individuals as counselors eligible to provide HECM counseling to prospective borrowers. In addition, HUD proposed to establish a Roster of eligible HECM counselors and provide for their removal for cause. The regulatory amendments were designed to improve the quality of HECM

counseling, which would enable elderly homeowners to make more informed decisions when considering whether to pursue a HECM loan.

In addition to soliciting comments generally, the proposed rule solicited specific comments on two areas of interest. First, the proposed rule requested input from housing counseling agencies and counselors concerning the implementation of the HECM Roster for HECM counselors who have already passed the HECM

counseling exam. Specifically, the rule asked whether HUD should adopt a delayed implementation for those counselors who have already passed the exam, or, alternatively, should those

counselors automatically be included in the Roster for a period of time before they must repeat the exam. Second, the rule invited comments that address whether a counselor should be required to take the exam on a regular basis, for example, every 2 years, in order to remain on the Roster, and if a counselor should be required to take the exam on a regular basis, how often should the counselors take the exam to remain on the Roster.

II. The Housing and Economic Recovery Act of 2008 (HERA)

Section 255 of the NHA was recently amended by the FHA Modernization Act, Title I of Division B of the Housing and Economic Recovery Act of 2008 (HERA) (Pub. L. 110–289, approved July 30, 2008), which was enacted to

modernize, streamline, and expand the scope of several Federal Housing Administration (FHA) programs. Section 2122 of the FHA Modernization Act amended section 255 of the NHA to provide, among other things, that: (1) Adequate counseling must be provided to HECM mortgagors; (2) such

counseling shall be provided by counselors who meet qualification standards; and (3) adequate HECM counseling must be provided from an independent third party not associated with or compensated by a party involved in originating or servicing the mortgage, funding the loan underlying the mortgage, or the sale of annuities or other financial or insurance products. Accordingly, the final rule incorporates these statutory changes.

III. This Final Rule; Changes to the January 8, 2007 Proposed Rule

This final rule follows publication of the January 8, 2007, proposed rule and takes into consideration the public comments received on the proposed rule. Moreover, this final rule makes certain changes in response to those comments, and conforms the regulations provided by this final rule to the statutory amendments made to section 255 of the NHA by section 2122 of the FHA Modernization Act. The final rule makes five changes to the proposed regulatory language:

1. Automatic placement on the

counselor Roster of counselors who passed HUD examination. The final rule

provides that HECM counselors who have taken and passed the exam as of the effective date of this final rule will be automatically included on the HECM counseling Roster.

2. Reinstatement of counselors

removed from Roster. The final rule

provides that a counselor who has been removed from the Roster and seeks

reinstatement must submit evidence that the deficiencies previously cited by HUD have been addressed and that program improvements have been made that justify reinstatement. The evidence to be provided shall be written

documentation attesting to the fact that deficiencies previously identified by HUD have been addressed and corrected and that improvements have been made that justify the reinstatement of the counselor.

3. Eligibility of counselors for

placement on Roster. The final rule

provides that to be eligible for placement on the Roster a counselor must not be listed on the General Services Administration’s Suspension and Debarment List, HUD’s Limited Denial of Participation List, or HUD’s Credit Alert Interactive Response System.

4. Identified period to submit a

written appeal. The final rule provides

that a counselor shall have 30 days to submit a written appeal of a proposed removal from the Roster.

5. Maximum duration for the period

of removal. The final rule provides that

a counselor may be removed for a maximum period of one year.

In addition to the five changes described above, HUD has taken the opportunity afforded by the final rule to reorganize portions of the proposed rule and to make other nonsubstantive, technical changes to the regulatory language for purposes of clarity and organization.

IV. Discussion of the Public Comments on the January 8, 2007 Proposed Rule

The public comment period on the proposed rule closed on March 9, 2007. HUD received 29 public comments on the proposed rule, covering a range of issues. Comments were received from housing counselors, counseling agencies, and industry organizations. This section of the preamble presents a summary of the key issues raised by public commenters and HUD’s responses to those issues. As will be reflected in the discussion that follows, some of the issues raised by commenters were not directed to placement or removal of counselors on the Roster, but rather focused on other aspects of HUD’s housing counseling regulations. Proposed changes to HUD’s Housing Counseling regulations were not the subject of this rulemaking. Nevertheless, several good suggestions for changes were submitted. HUD is taking these suggestions under consideration and may, as a result, through separate rulemaking, propose changes to HUD’s Housing Counseling regulations,

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consistent with the suggestions proposed.

Comment: Several commenters

offered general support for HUD’s effort to establish a HECM Roster. One commenter requested that HUD certify organizations rather than individual counselors.

Response: HUD has not revised the

rule in response to these comments. Approval of an organization would not assure that the individual counselors employed by the organization are trained and qualified to provide the necessary counseling. HUD continues to feel strongly that a roster of HECM exam-qualified individual counselors is critical to ensure that the counselors providing these services are qualified to do so.

Comment: One commenter requested

that all counselors on the Roster follow a standard protocol of topics covered.

Response: HUD has not revised the

rule in response to this comment. However, the adoption of a standard counseling protocol is required by section 255 of the NHA, as amended by the FHA Modernization Act, no later than July 30, 2009. Section 255(f), as recently amended, directs HUD to establish qualification standards and protocols for HECM counselors. Section 2132 of the FHA Modernization Act of 2008 authorizes HUD to issue additional requirements, by notice, for the purpose of facilitating implementation of the provisions of the FHA Modernization Act. Accordingly, the standard counseling protocols will be issued by notice, in accordance with section 2132, on or prior to the statutory deadline.

Comment: Several commenters asked

HUD to clarify the requirements that lenders provide the list of counselors to clients. The commenters suggested that HUD should permit HECM lenders to provide less than the complete list of HECM counselors for a client’s State because the full list of counselors may be overwhelming in number. One of these commenters recommended that a mortgagee should have the option of providing a list of HUD-approved HECM counselors with whom the mortgagee has experience, a list of such counselors within the geographic area, or any other criteria that enables the mortgagee to provide a reasonably limited list.

Response: HUD will take the

suggestion made by the commenters under advisement. However, the comment was outside the scope of the proposed rule, which was exclusively concerned with the placement and removal procedures for the proposed new HECM Roster. Accordingly, HUD has not revised the proposed rule in response to the commenters’ suggestion.

Comment: One commenter suggested

that counselors should have to disclose relationships that a counseling agency may have with some of the lenders.

Response: HUD agrees that all HUD-

approved housing counseling agencies must take precautions to eliminate any appearance of a conflict of interest or preferential treatment to any particular lender or lenders. In accordance with HUD’s Housing Counseling Program regulations, agencies providing such services are required, pursuant to 24 CFR 214.303(g), to provide all clients with a disclosure statement that explicitly describes the various types of services provided by the agency and any financial relationships between the agency and any other industry partners. Further, the disclosure must clearly state that the client is not obligated to receive any other services offered by the organization or its exclusive partners.

Any language that permits a party directly or indirectly associated with funding or origination of an HECM to provide housing counseling, or any language allowing compensation to an agency by a third party originating or funding the HECM, has been and will be removed from guidance or revised to conform with section 255(d)(2)(B) of the National Housing Act, as recently amended by section 2122 of HERA. In this regard, see FHA Mortgagee Letter 2008–28, entitled ‘‘Prohibition on Mortgagee Funded Home Equity Conversion Mortgage (HECM) Counseling,’’ which states that mortgagees are no longer permitted to pay for HECM counseling on behalf of mortgagors. The mortgagee letter advises FHA mortgagee lenders of the conflict- of-interest provisions that the FHA Modernization Act directs counseling agencies to avoid. As noted earlier in this preamble, section 255 of the National Housing Act, as amended by the FHA Modernization Act, requires that counseling must come from an independent third party that is neither directly or indirectly associated with or compensated by a party involved in originating or servicing the mortgage, the funding of the loan underlying the mortgage, or the sale of annuities, investments, long-term care insurance, or any other type of financial or

insurance product. A copy of Mortgagee Letter 2008–28 may be downloaded from the HUD Client Information and Policy System (HUDCLIPS) Web site at

http://www.hud.gov/hudclips.

Comment: Several commenters stated

the regulation governing provision of counseling services, 24 CFR 206.41(a), should be revised to clarify that clients are referred to counselors and agencies within their State or local area to

encourage face-to-face counseling, and that a Roster listing counselors by State would promote this. HUD should encourage counseling to take place face- to-face, and permit telephone

counseling only in limited cases.

Response: This suggestion is outside

the scope of the proposed rule, which was exclusively concerned with the policies and procedures governing placement and removal from the new HECM Roster. However, it is HUD’s position that the client should have a choice regarding whether to have face- to-face counseling or telephone

counseling. Clients have various reasons for requiring telephone counseling, such as limited mobility, either as a result of physical impairment or lack of

transportation, or because they live in a remote rural area where the distance to the nearest counseling agency is prohibitive.

requested additional information on how the names of counselors would be made available to the public. The commenters suggested that HUD should post the names on its Web site.

Response: Exam-qualified HECM

counselors eligible to provide HECM counseling services will be listed on HUD’s Web site. Lenders also will be able to access this list through HUD’s Web site. Only exam-qualified counselors who are meeting the continuing education and other requirements will be listed on the HUD Web site, and the Web site will be updated regularly.

Comment: A commenter wrote that

the Roster should include relevant dates, including the date that the counselor was placed on the Roster, the termination date, etc.

Response: HUD will include relevant

dates, including when a counselor was added to HUD’s Web site as a provider of HECM counseling services. HUD is developing an electronic certification that can be created only by counselors on the Roster.

Comment: A commenter asked HUD

to state whether HUD or another entity will maintain the Roster. Another commenter suggested that HUD establish a single contact to manage the Roster, to ensure consistency.

Response: HUD’s Office of Single

Family Housing will maintain the Web site and the list of counselors approved to provide HECM counseling services.

Comment: As noted earlier in the

preamble, HUD specifically requested comments on the implementation of the proposed regulatory requirements for counselors who have already passed the HECM counseling program. The commenters who submitted comments

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on this issue uniformly recommended that counselors who have already taken and passed the exam be automatically included on the Roster. The commenters differed on whether such counselors should be required to retake the examination within a certain time period. For example, one commenter suggested that counselors who passed the exam within the past 2 years should have 2 years to retake the exam, and that counselors who passed the exam more than 2 years ago should be required to retake the exam within one year.

Response: HUD agrees with the

commenters that counselors who have already taken and passed the exam should be automatically included on the Roster. The final rule provides that HECM counselors who have passed the standardized HECM counseling exam on or before the effective date of this final rule will be automatically included on the Roster, without needing to submit an application for placement on the Roster. Such counselors will not be required to retake the examination immediately, but must comply with all other eligibility criteria to maintain their listing on the Roster, including taking the examination every 3 years, or be subject to removal in accordance with § 206.306 of the final rule.

Comment: As noted above, the

preamble to the proposed rule specifically requested comments on whether counselors should be required to retake the examination on a regular basis to maintain their listing on the Roster. In response to this solicitation, several commenters submitted comments on the frequency of testing. The majority of comments opposed a retesting requirement. Several commenters suggested that, in lieu of the need to retake the test on a periodic basis, counselors should be subject to continuing education requirements. Those commenters writing in support of a retesting requirement differed on the time period for retaking the test. For example, several commenters suggested that testing should take place every 2 years, while another commenter wrote that testing should take place every 3 years. Two commenters wrote that counselors should be tested every 3 years, to eliminate the need to demonstrate continuing education, which would be administratively burdensome.

commenters who wrote in favor of a retesting requirement, and the final rule requires that counselors periodically retake the HECM counseling

examination. Testing is required as part of the application process for placement on the Roster. After placement on the

Roster, counselors are required to take the examination every 3 years to maintain their listing on it. HUD is in favor of periodic testing because the HECM program is a complicated program that will change over time, and it is vital that counselors remain aware of changes to the HECM program and be conversant in them. Testing is an efficient and effective way to measure knowledge of and familiarity with new and sophisticated elements of the program. Counselors listed on the Roster are required to meet continuing

education requirements. Specifically, this final rule requires continuing education for all HECM counselors no less than once every 2 years. For purposes of satisfying this requirement, continuing education encompasses HUD-approved training, as well as professional courses selected by the counselor. Proof of continuing education must be kept on file at the counseling agency and must be made available to HUD for inspection upon request.

Comment: One commenter asked that

HUD clarify in 24 CFR 206.302 the time frame for certification of a counselor and the time frame in which the counselor will appear on the Roster following certification. This same commenter wrote that HUD should consider a HECM counseling certificate valid as long as the counselor who signed the certificate appeared on the Roster at the time the counseling took place and that the lender is not required to validate this information.

Response: HUD is developing an

electronic certification that can be created only by counselors on the Roster. Although no changes are being made to the regulatory text, the automatic Internet-based certification addresses the concerns raised by the commenter concerning time frame and validity issues. Internet-based

certification is automatic and will be available within a day or two of

applying, provided that counselor meets all of the requirements. No lender verification will be needed so long as the certification appears in the system. A lender will be able to view the certificate so long as he or she knows the certification number. The

counselor’s certificate will be valid on the day the certificate was produced electronically.

Comment: Several commenters wrote

that the current HECM counseling exam is too difficult and complicated. The commenters wrote that the test questions should be more relevant to HECM counseling and the current exam questions do not reflect relevance to HECM counseling to the degree they

should. One commenter wrote that the exam should focus on counseling situations rather than on underwriting technicalities.

Response: It is highly important that

HECM counselors understand the features of HECMs and reverse mortgages in general. Because reverse mortgages are a relatively complex product available to seniors, it is important for counselors to be able to explain the various technical aspects of a reverse mortgage to their clients. The test reflects the knowledge required of counselors so that they are fully familiar with HECMs and can provide the advice sought by senior homeowners about this product.

Comment: Several commenters wrote

that the exam, in the past, has been available on a limited basis and that this, coupled with staffing level difficulties, may present barriers for agencies in their efforts to maintain staff listed on the Roster. These commenters suggested that the exam be widely publicized and more widely available.

Response: The exam is available to

people at testing centers across the United States. The locations of these testing centers are available online at

http://www.hecmexam.org. Explicit

instructions in reference to scheduling an appointment to take the exam are provided on the Web site. Testing is available at testing centers, within their respective business hours.

Comment: One commenter wrote that

HECM testing should be provided by an objective third party, to avoid the possibility of excluding candidates from competing agencies or intermediaries.

Response: The tests are administered

by objective third parties at test centers throughout the United States. HUD will review and update the exam on a periodic basis as program requirements change.

submitted comments on the continuing education requirements. Some of the commenters wrote that training and training materials should be available from HUD without cost to counselors. One commenter wrote that training should be provided by objective, third- party providers and not by lenders.

Response: Training and professional

development for counselors is very important to the success of the HECM program. HUD currently provides funding for scholarships, travel, and lodging to make training and technical assistance available to HECM

counselors. HUD funds are limited and may not be available to pay for

continuing education of all counselors providing HECM services. Objective

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training is available from a variety of nonprofit organizations.

HUD should require that counselors on the Roster be employed by a HUD- approved housing counseling agency.

Response: HUD agrees with this

commenter. However, no change to the language of the proposed rule is necessary. That is because, as provided in the proposed rule (and the final rule), to be eligible for placement on the Roster, a counselor must be employed by a HUD-approved housing counseling agency or an affiliate of a HUD-

approved intermediary or State housing finance agency.

HUD should prohibit the listing on the Roster of counselors who have been convicted of a felony or who work for lenders or for any commercial entity that sells goods or services to reverse mortgage borrowers. This commenter wrote that consumers need to know that counselors do not have a personal financial interest in the outcome of the counseling.

Response: Housing counseling

agencies must adhere to the regulation found in 24 CFR part 214, Housing Counseling Program. The regulation at 24 CFR 214.103(c), regarding ineligible activities, states that an agency’s directors, partners, officers, principals, or employees must not be indicted for or convicted of a criminal offense that reflects upon the responsibility, integrity, or ability of the agency to participate in housing counseling activities. These offenses include criminal offenses that can be prosecuted at a local, State, or Federal level. This provision of the Housing Counseling Program regulations is strengthened by section 255(d)(2)(B) of the National Housing Act, which, as recently

amended, provides that counseling must be provided by an independent third party not directly or indirectly associated with or compensated by a party originating a mortgage, funding a mortgage, or selling annuities or other financial or insurance products.

Further, as noted above, HUD has revised the rule to help ensure that only high-performing counselors are eligible for placement on the Roster.

Specifically, the final rule provides that to be eligible for placement on the Roster a counselor must not be listed on the General Services Administration’s Suspension and Debarment List, HUD’s Limited Denial of Participation List, or HUD’s Credit Alert Interactive Response System.

only experience and effective tracking

and monitoring methods can ensure effective HECM counseling.

Response: HUD recognizes the

importance of good documentation, tracking, and monitoring efforts. HUD performs periodic reviews of housing counseling agencies and reviews files during that process.

HUD should clarify what ‘‘actions’’ a counselor must have the appropriate technology to monitor. Another commenter wrote that HUD should not require the use of particular technology that would be redundant to the current client management system in use by a HUD-approved counseling organization.

Response: HUD’s Housing Counseling

Program regulations at 24 CFR 214.103 require agencies participating in HUD’s Housing Counseling Program to utilize a client management system (CMS) in order to collect and report client-level data, including the results of the counseling. A CMS provides for collection and reporting of client-level information, including, but not limited to, financial and demographic data, counseling services provided, and outcomes data. HUD does not require any particular technology, so long as the technology is compatible with the HUD Agency Reporting Module (ARM) system and can transmit data to the ARM database. For reporting purposes, there is no lender involvement required. HUD requires counselors to follow up to determine from the client the outcome of the counseling.

Comment: Two commenters suggested

that HUD revise 24 CFR 206.306(c) to provide maximum duration for the period of removal.

Response: HUD has the administrative

duty to remove counselors from the Roster for the amount of time it deems necessary, depending on the issue. HUD agrees with the Commenter and has revised the regulation to specify a maximum 12-month period of removal. Counselors may be removed for a maximum period of one year. A maximum 12-month period of removal is consistent with HUD practice under other Rosters for participation in FHA programs and has proven to be an adequate amount of time for parties to remedy inadequacies and for HUD’s Office of Housing to verify such remedies. HUD will determine the duration of the removal on a case-by- case basis, taking into consideration the individual facts of the case and

pursuant to the removal procedures described in § 206.306 of the final rule. To be placed on the Roster again, counselors must apply for reinstatement upon completion of their required removal duration.

Comment: A commenter requested

that HUD provide 30 days instead of the proposed 20 days for counselors to submit a written appeal.

commenter and has revised the rule to provide a counselor with 30 days rather than 20 days to submit a written appeal.

Comment: One commenter asked that

HUD revise the removal provisions to remove counselors from the Roster if they receive anything of value from a mortgage lender, broker, servicer, investor, lead generator, or other industry entity.

Response: A HUD-approved

counseling agency cannot either directly or indirectly be associated with or compensated by a party involved in originating or servicing the HECM, funding the HECM loan underlying the mortgage, or the sale of annuities, investments, long-term care insurance or any other type of financial or insurance product. As noted earlier, such prohibition is now a statutory requirement under section 255(d)(2)(B) of the NHA.

HUD should confirm that the counselor will be removed on the effective date of the removal notice, to avoid any confusion as to whether the counselor was approved at the time the counseling was provided.

Response: The HECM counselor

Roster will remain consistent with other HUD roster programs and the appeal process provided in these programs. If the counselor does not submit a timely written response to the proposed removal notice, the removal will be effective 30 days after the date of the removal notice. If the agency appeals the removal within 30 days of the letter, the effective date will be the date of HUD’s notice after the appeal.

Comment: A commenter asked HUD

to revise 24 CFR 206.306 to indicate that a counselor applying for reinstatement must submit evidence that the

deficiencies previously cited by HUD have been addressed and program improvements have been made to justify reinstatement.

Response: The final rule provides that

HUD will require that a counselor seeking reinstatement must submit evidence that the deficiencies

previously identified by HUD have been addressed and program improvements have been made that justify

reinstatement.

V. Findings and Certifications

Paperwork Reduction Act

The information collection

requirements in this final rule have been