HUD Announces Changes to Mortgage and Loan Insurance Programs
On January 23, the Federal Register posted a notice from the U.S. Department of Housing and Urban Development (HUD) regarding mortgage and loan insurance programs.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5766-N-01]
Mortgage and Loan Insurance Programs Under the National Housing
Act–Debenture Interest Rates
AGENCY: Office of the Assistant Secretary for Housing–Federal Housing
Commissioner, HUD.
ACTION: Notice.
SUMMARY: This notice announces changes in the interest rates to be paid
on debentures issued with respect to a loan or mortgage insured by the
Federal Housing Administration under the provisions of the National
Housing Act (the Act). The interest rate for debentures issued under section
221(g)(4) of the Act during the 6-month period beginning January 1, 2014,
is 2 1/2 percent. The interest rate for debentures issued under any other
provision of the Act is the rate in effect on the date that the commitment to
insure the loan or mortgage was issued, or the date that the loan or
mortgage was endorsed (or initially endorsed if there are two or more
endorsements) for insurance, whichever rate is higher. The interest rate
for debentures issued under these other provisions with respect to a
loan or mortgage committed or endorsed during the 6-month period
beginning January 1, 2014, is 3 5/8 percent. However, as a result of
an amendment to section 224 of the Act, if an insurance claim relating
to a mortgage insured under sections 203 or 234 of the Act and
endorsed for insurance after January 23, 2004, is paid in cash, the
debenture interest rate for purposes of calculating a claim shall be the
monthly average yield, for the month in which the default on the
mortgage occurred, on United States Treasury Securities adjusted to
a constant maturity of 10 years.
FOR FURTHER INFORMATION CONTACT: Yong Sun, Department of Housing and
Urban Development, 451 Seventh Street SW., Room 5148, Washington, DC
20410-8000; telephone (202) 402-4778 (this is not a toll-free number).
Individuals with speech or hearing impairments may access this number
through TTY by calling the toll-free Federal Information Relay Service
at (800) 877-8339.
SUPPLEMENTARY INFORMATION: Section 224 of the National Housing Act (12
U.S.C. 1715o) provides that debentures issued under the Act with
respect to an insured loan or mortgage (except for debentures issued
pursuant to section 221(g)(4) of the Act) will bear interest at the
rate in effect on the date the commitment to insure the loan or
mortgage was issued, or the date the loan or mortgage was endorsed (or
initially endorsed if there are two or more endorsements) for
insurance, whichever rate is higher. This provision is implemented in
HUD’s regulations at 24 CFR 203.405, 203.479, 207.259(e)(6), and
220.830. These regulatory provisions state that the applicable rates of
interest will be published twice each year as a notice in the Federal
Register.
Section 224 further provides that the interest rate on these
debentures will be set from time to time by the Secretary of HUD, with
the approval of the Secretary of the Treasury, in an amount not in
excess of the annual interest rate determined by the Secretary of the
Treasury pursuant to a statutory formula based on the average yield of
all outstanding marketable Treasury obligations of maturities of 15 or
more years.
The Secretary of the Treasury (1) has determined, in accordance
with the provisions of section 224, that the statutory maximum interest
rate for the period beginning January 1, 2014, is 3 5/8 percent; and
(2) has approved the establishment of the debenture interest rate by
the Secretary of HUD at 3 5/8 percent for the 6-month period
beginning January 1, 2014. This interest rate will be the rate borne by
debentures issued with respect to any insured loan or mortgage (except
for debentures issued pursuant to section 221(g)(4)) with insurance
commitment or endorsement date (as applicable) within the first 6
months of 2014.
Please click here to view the notice in its entirety.
About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.
