Supporting Statement A (2502-0416)

4

Supporting Statement for Paperwork Reduction Act Submissions

Request for Termination of Multifamily Mortgage Insurance

OMB Control Number: 2502-0416

(HUD-9807)

A. Justification

1. Generally, a contract of mortgage insurance for a multifamily housing project may be terminated either by prepayment in full of the insured project mortgage or by acceptance of a request for voluntary termination made jointly by the mortgagor and mortgagee. Regulations at 24 C.F.R. 207.253 and 207.253a prescribe procedures for termination of mortgage insurance. Certain mortgage notes insured under Title II of the Housing and Community Development Act of 1987 and Title VI of the Cranston-Gonzalez National Affordable Housing Act of 1990, Section 250(a) of the National Housing Act, however, place restrictions on prepayment in full of the mortgage. This submission deals with mortgages insured under various sections of the National Housing Act, codified at 12 U.S.C. 1715 et seq.

2. Information is collected from mortgagees who want to terminate the contract for mortgage insurance with the Department of Housing and Urban Development (HUD). HUD uses this information to determine if the mortgage has been paid in full or if a mortgagor or mortgagee mutually agrees to terminate the insurance.

Mortgages with No Prepayment Restrictions

Mortgagees may request insurance termination for a multi-family mortgage if the mortgage is paid in full or voluntary termination is requested. If a mortgage note contains no restriction, the mortgagee submits a completed HUD-9807 and required attachments to HUD. HUD uses this information to terminate the mortgage insurance and determine whether a refund is due the mortgagor or funds are due HUD.

Mortgages with Prepayment Restrictions

Mortgages that have prepayment restrictions require prior approval from HUD before the HUD-9807 is completed. The mortgagee sends HUD a narrative request signed by the mortgagor. The form together with HUD’s letter authorizing the prepayment/voluntary termination is then submitted.

Mortgages for Low-Income Housing and subject to Section 250(a) of the National Housing Act for prepayment must notify tenants, HUD, and local government of their intent to prepay the mortgage. Additionally, Section 250(a) requires the owner to execute and record a Rental Use Agreement.

Mortgages for Low-Income Housing and subject to Section 219 of the FY1999 Appropriations for prepayment must notify tenants, HUD, and local government of their intent to prepay at least 150 days prior to prepayment, but no more than 270 days prior to. In lieu of posting this statutorily required notification, the owner may opt to execute a Rental Use Agreement which will maintain the low-income affordability of the project through the remainder of the mortgage’s maturity date.

Mortgages insured under Section 207/223(f) may prepay their mortgage but must execute a Rental Use Agreement if the mortgage is within HUD’s statutory 5-year lock-out period from final endorsement.

Mortgages for Projects Financed with Bond Refunding Agreements – agreement and Issuer’s written consent.

This is the only method whereby HUD can learn that the mortgage has been paid in full or that a mortgagor or mortgagee mutually agree to terminate the insurance.

3. This information collection is not collected electronically. The small volume of responses does not justify the development of an automated information collection system. The subject form is available via the Internet. The volume of requests for termination is larger due to property owners taking advantage of the market’s declining interest rates and desire to recapitalize older projects. It is not cost effective for the Department to develop a system capable of automated collection for less than 10 percent of the multifamily portfolio.

4. There is no duplication. The entire collection of information reported on this form is needed to process a termination. The information is not available through any other source.

5. The collection of information does not involve small business or other small entities.

6. It would be impossible to maintain the insurance-in-force records without notification from the mortgagee.

7. This collection complies with all of the guidelines stated in the OMB 83-I, except the requirement to submit the form within 30 days from the date of the prepayment. Section 24 207.253(a) states that “Notice of the prepayment in full of the mortgage or loan shall be given to the Commissioner, on a form prescribed by the Commissioner, within 30 days from the date of the prepayment.” This is required so that no additional premiums will be due HUD.

8. Information collected is conducted in a manner consistent with the guidelines of 5 CFR 1320.8 (d). The Notice announcing this collection of information appeared in the Federal Register on (Vol. , No. , pages ). No comments were received.

The Department also consulted with several mortgagees (i.e., Wells Fargo, Berkadia Commercial Mortgage, and Greystone Servicing Corporation) in reference to the submission of the HUD Form 9807 on all prepayments/terminations. The mortgagees have provided comments with suggestions for improving instructions for the form. The Department has taken these recommendations under review but has not chosen to update the form at this time.

9. There are no payments or gifts to respondents.

10. No assurance of confidentiality, statute, regulation, or agency policy is provided.

11. There are no questions of a sensitive nature.

12. Annual Burden Estimate:

Information Collection	Number of Respondents	Frequency of Response	Total Annual Responses	Burden Hours per Response	Total Annual Burden Hrs	Hourly Cost	Total Annual Cost
Requests to Prepay with 30 days’ notice
HUD-9807/mortgagor’s Narrative request	973	1	973	.25	243	$28	$68o4
Subtotal	973		973		243		$6804
Mortgages Restructured through Office of Recapitalization
Mortgagor’s narrative request	31	1	31	.25	8	$28	$224
Subtotal	31		31		8		$224
Mortgages for Low-Income Housing (subject to Section 219)
Prepayment notification to tenants, HUD, and local government	132	1	132	.25	33	$28	$924
Subtotal	132		132		33		$924
Mortgages Subject to Section 250(a) of the National Housing Act
Notice to tenants / local government / review of tenant comments	38	1	38	.25	10	$28	280
Use Agreement	38	1	38	.25	10	$28	$280
Subtotal	38		38		10		$280
Mortgages Insured under the Section 207/223(f) Insurance Program
Mortgagor Request	340	1	340	.25	85	$28	$2380
Subtotal	340		340		85		$2380
Mortgages Insured Under Healthcare Programs
Mortgagor Request	377	1	377	.25	94	$28	$2632
Subtotal	377		377		94		$2632
Total	1891		1891		473		$13244

Hourly cost is based on an estimate of owner and mortgagee staff annual salary of $60,000.

13. There are no additional costs to respondents.

14. Annual Cost to the Federal Government:

Information Collection	Number of Responses	Hours per Response	Total Annual Hours	Hourly Cost	Total Annual Cost
HUD-9807 and all other documents	1891	1.00	1891	$45	$85095

Estimated hourly cost is based on the annual salary of a GS-1101-13 Housing Project Manager for reviewing the information.

15. This is a revision of a currently approved collection. Language has been added to page 2 of the Instructions for submitting the form relative to Section 236 prepayments. There is also an attachment to the form (Section 236 Consolidated Application Package). There has been a slight decrease in the number of annual responses, specifically for Section 236 mortgages and Section 221(d)(3) Below Market Interest Rate mortgages (those subject to Section 250 or Section 219 for prepayment as the portfolio of those mortgages have mostly matured or already refinanced). Adjustments were necessary for the number of respondents as that number should reflect the same as the number of responses. An adjustment was also made to the burden hours for those 9807 forms submitted for mortgages with Notes that require a 30 day notice to prepay.

16. The results of this collection will not be published.

17. HUD is not requesting approval to avoid displaying the expiration date on the form HUD-9807.

18. No exceptions to the certification statement identified in Item #19 on form OMB 83-I, “Certification for Paperwork Reduction Act Submissions.”

B. Collections of Information Employing Statistical Methods

This information collection does not employ statistical methods.