Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Proposed Rules

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1 10695 (g) Inspection Except s provided by prgrph (h) of this AD: Within 12 months fter the effective dte of this AD, inspect to determine the prt number nd seril number of ech Thles Avionics AOA probe, in ccordnce with the Accomplishment Instructions of Airbus Service Bulletin A , excluding Appendix 01, dted Jnury 29, If ny probe is found hving prt number (P/N) C16291AA nd hving seril number listed in Thles Avionics Service Bulletin C16291A , Revision 01, dted December 3, 2009: Within 12 months fter the effective dte of this AD, replce the AOA probe, in ccordnce with the Accomplishment Instructions of Airbus Service Bulletin A , excluding Appendix 01, dted Jnury 29, A review of irplne mintennce records is cceptble in lieu of this inspection if the prt number nd seril number of the instlled AOA probes cn be conclusively determined from tht review. (h) Exception For ny irplne on which Airbus modifiction (instlltion of Thles Avionics AOA probes P/N C16291AB) or modifiction (instlltion of Goodrich AOA probes P/N 0861ED) hs been embodied in production nd on which no AOA probe replcement hs been mde since first flight: The ctions specified in prgrph (g) of this AD re not required. (i) Prts Instlltion As of the effective dte of this AD, no person my instll Thles Avionics AOA probe, P/N C16291AA, hving seril number listed in Thles Avionics Service Bulletin C16291A , Revision 01, dted December 3, 2009, on ny irplne, unless tht Thles Avionics probe hs been inspected, re-identified nd tested, in ccordnce with the Accomplishment Instructions of Thles Avionics Service Bulletin C16291A , Revision 01, dted December 3, (j) Other FAA AD Provisions The following provisions lso pply to this AD: (1) Alterntive Methods of Complince (AMOCs): The Mnger, Interntionl Brnch, ANM 116, Trnsport Airplne Directorte, FAA, hs the uthority to pprove AMOCs for this AD, if requested using the procedures found in 14 CFR In ccordnce with 14 CFR 39.19, send your request to your principl inspector or locl Flight Stndrds District Office, s pproprite. If sending informtion directly to the Interntionl Brnch, send it to Attn: Snjy Rlhn, Aerospce Engineer, Interntionl Brnch, ANM 116, Trnsport Airplne Directorte, FAA, 1601 Lind Avenue SW., Renton, Wshington ; telephone (425) ; fx (425) Informtion my be emiled to: 9-ANM-116-AMOC-REQUESTS@f.gov. Before using ny pproved AMOC, notify your pproprite principl inspector, or lcking principl inspector, the mnger of the locl flight stndrds district office/ certificte holding district office. The AMOC pprovl letter must specificlly reference this AD. (2) Airworthy Product: For ny requirement in this AD to obtin corrective ctions from mnufcturer or other source, use these ctions if they re FAA-pproved. Corrective ctions re considered FAA-pproved if they re pproved by the Stte of Design Authority (or their delegted gent). You re required to ssure the product is irworthy before it is returned to service. (k) Relted Informtion Refer to MCAI Europen Avition Sfety Agency Airworthiness Directive , dted October 13, 2011; Airbus Service Bulletin A , excluding Appendix 01, dted Jnury 29, 2010; nd Thles Avionics Service Bulletin C16291A , Revision 01, dted December 3, 2009; for relted informtion. Issued in Renton, Wshington, on Februry 6, Ali Bhrmi, Mnger, Trnsport Airplne Directorte, Aircrft Certifiction Service. [FR Doc Filed ; 8:45 m] BILLING CODE P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Chpter II [Docket No. FR 5572 N 01] Federl Housing Administrtion (FHA) Risk Mngement Inititives: Revised Seller Concessions AGENCY: Office of the Assistnt Secretry for Housing Federl Housing Commissioner, HUD. ACTION: Request for comments. SUMMARY: On July 15, 2010 (75 FR 41217), HUD issued notice seeking comment on three inititives tht HUD proposed would contribute to the restortion of the Mutul Mortgge Insurnce Fund (MMIF) cpitl reserve ccount. On September 3, 2010 (75 FR 54020), HUD published follow-up finl rule implementing the proposl to introduce minimum credit score nd reduce the mximum lon-to-vlue rtio for FHA single fmily mortgge insurnce. HUD is in the process of implementing nother notice tightening the underwriting stndrds for mortgge lon trnsctions tht re mnully underwritten. This document ddresses the third proposl; nmely, the proposl to reduce the mount of closing costs seller my py on behlf of homebuyer purchsing home with finncing insured by the Federl Housing Administrtion (FHA). This document tkes into considertion the public comments on the July 15, 2010, finl VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 rule regrding the proposed cp on seller concessions nd revises the proposed cp in response. HUD is seeking comment for 30 dys on this revised proposl for limiting seller concessions. DATES: Comment Due Dte Mrch 26, FOR FURTHER INFORMATION CONTACT: Krin Hill, Director, Office of Single Fmily Progrm Development, Office of Housing, Deprtment of Housing nd Urbn Development, 451 7th Street SW., Room 9278, Wshington, DC 20410; telephone number (this is not toll-free number). Persons with hering or speech impirments my ccess this number through TTY by clling the toll-free Federl Rely Service t SUPPLEMENTARY INFORMATION: I. Bckground A. HUD s July 15, 2010 Notice On July 15, 2010, t 75 FR 41217, HUD issued notice seeking comment on three inititives tht HUD proposed would contribute to the restortion of the Mutul Mortgge Insurnce Fund (MMIF) cpitl reserve ccount. The proposed chnges were developed to preserve both the historicl role of the Federl Housing Administrtion (FHA) in providing home finncing vehicle during periods of economic voltility nd HUD s socil mission of helping underserved borrowers. In the July 15, 2010, notice, HUD proposed the following: (1) To reduce the mount of closing costs seller (or other interested third prties) my py on behlf of homebuyer purchsing home with FHA-insured mortgge finncing for the purposes of clculting the mximum mortgge mount; (2) to introduce credit score threshold, s well s reduce the mximum lon-to-vlue (LTV) for borrowers with lower credit scores who represent higher risk of defult nd mortgge insurnce clim; nd (3) to tighten underwriting stndrds for mortgge lon trnsctions tht re mnully underwritten. Over the pst 3 yers, the volume of FHA insurnce hs incresed rpidly s privte sources of mortgge finnce retreted from the mrket. FHA s shre of the single-fmily mortgge mrket ws estimted t 17 percent (33 percent for home purchse mortgges) in Fiscl Yer (FY) 2010, up from 3.4 percent in FY 2007, nd the dollr volume of insurnce written hs jumped from the $77 billion issued in FY 2007 to $319 billion in FY The growth in the MMIF portfolio over such short period of time coincided with worsening

2 10696 Federl Register / Vol. 77, No. 36 / Thursdy, Februry 23, 2012 / Proposed Rules economic conditions tht hve seen high levels of defults nd foreclosures nd, consequently, uncceptble risks of loss to the MMIF. 1 The Ntionl Housing Act (12 U.S.C et seq.), which uthorizes FHA s mortgge insurnce, envisions tht FHA will djust progrm stndrds nd prctices, s necessry, to operte the MMIF on finncilly sound bsis. The independent cturil study conducted in 2009 showed tht the MMIF cpitl rtio hs fllen below its sttutorily mndted threshold. 2 Consistent with HUD s responsibility under the Ntionl Housing Act to ensure tht the MMIF remins finncilly sound, HUD published the July 15, 2010, notice nd sought public comment on the three proposls described bove. The July 15, 2010, notice represented nother step in HUD s effort to preserve the MMIF nd preserve FHA s source of vilble credit for ffordble home mortgges. Interested prties re referred to the July 15, 2010, notice for detils regrding the proposed chnges to FHA requirements. B. The September 3, 2010 Finl Rule Implementing New Credit Score nd Lon-to-Vlue Requirements At the close of the public comment period on August 16, 2010, HUD hd received 902 public comments in response to the July 15, 2010, notice. The mjority of the public comments focused on the reduction in seller concessions. In order to provide the necessry dditionl time to consider the issues rised by the commenters, HUD decided to seprtely implement the three proposls contined in the July 15, 2010, notice. On September 3, 2010, t 75 FR 54020, HUD published finl rule implementing the introduction of minimum credit score nd the reduction 1 While the Federl Credit Reform Act of 1990 requires tht FHA (nd ll other government credit gencies) estimte nd budget for the nticipted cost of mortgge lon gurntees, the Ntionl Housing Act imposes specil requirement tht the MMIF hold n dditionl mount of funds in reserve to cover unexpected losses. FHA mintins these bck-up funds in the MMIF cpitl reserve ccount, specil reserve ccount. 2 On November 13, 2009, HUD relesed n independent cturil study tht reported tht FHA will likely sustin significnt losses from mortgge lons mde prior to 2009, due to the high concentrtion of seller-finnced downpyment ssistnce mortgge lons nd declining rel estte vlues ntionwide, nd tht the MMIF cpitl reserve reltive to the mount of outstnding insurnce in force hd fllen below the sttutorily mndted 2 percent rtio. The cpitl rtio generlly reflects the reserves vilble (net of expected clims nd expenses), s percentge of the current portfolio, to ddress unexpected losses. The report cn be found t: offices/hsg/fhfy09nnulmngementreport.pdf. in the mximum LTV rtio for FHA single fmily mortgge insurnce. The September 3, 2010, finl rule lso contined discussion of the public comments received in response to the new credit score nd LTV requirements. The finl rule dvised tht HUD s decision on the two other proposls described in the July 15, 2010, notice would be ddressed seprtely. Commencing on October 4, 2010, borrowers were required to hve minimum decision credit score of no less thn 500 to be eligible for FHA finncing. The LTV for FHA-insured mortgge lons (purchse nd refinnce) is limited to 90 percent for borrowers with decision score between 500 nd 579. Mximum FHA-insured finncing (96.5 percent LTV for purchse trnsctions nd percent for rtend-term refinnce trnsctions) continues to be vilble for borrowers with credit scores t or bove 580. However, FHA is providing specil, temporry llownce to permit higher LTV mortgge lons for borrowers with lower decision credit scores, so long s they involve reduction of existing mortgge indebtedness pursunt to FHA progrm djustments nnounced in HUD Mortggee Letter Interested reders re referred to the September 3, 2010, finl rule nd HUD Mortggee Letter for dditionl informtion regrding the new credit score nd LTV requirements. All HUD Mortggee Letters re vilble t: hudclips/letters/mortggee/. C. Proposed Finl Rule Implementing Revised Mnul Underwriting Requirement HUD is in the process of finlizing rule implementing the revised mnul underwriting requirements nd ddressing the public comments received on this proposl in response to the July 15, 2010, notice. The new mnul underwriting requirements will reduce the risk to the MMIF nd ensure tht homebuyers re offered mortgge lons tht re sustinble. As discussed in the July 15, 2010, notice, the purpose of mortgge underwriting is to determine borrower s bility nd willingness to repy the debt nd to limit the probbility of defult. An underwriter must consider borrower s credit history, evlute the borrower s cpcity to repy the lon bsed on income nd current debt, determine if csh to be used for closing is sufficient nd from n cceptble source, nd determine if the vlue of the collterl supports the mount of money being borrowed. In cses where the borrower hs very VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 limited or nontrditionl credit history, credit score my not hve been issued by the credit bureus, or the credit score my be bsed on references tht re few in number or do not effectively predict future credit worthiness. Mortgge lons for borrowers in this ctegory re mnully underwritten s re ll Refer risk clssifictions provided by FHA s TOTAL Mortgge Score Crd. These ctegories of borrowers require more extensive review tht cn be tilored to circumstnces to discern the level of risk. Mnul underwriting guidelines re generlly more stringent to ddress tht higher risk level. The finl rule will consider fctors for mnully underwritten mortgge lons. II. This Notice Reduction of Seller Concession: Revised Proposl for Reducing Seller Concessions This notice revises the third proposl contined in the July 15, 2010, notice; nmely, the proposed cp on the mount of seller concessions tht cn be considered s offsets to ctul closing costs rther thn inducements to purchse. When homeseller pys ll or prt of the buyer s closing costs nd other fees, such pyments re referred to s seller concessions. Seller concessions include ny pyment towrd the borrower s closing costs nd other fees, by ny third prty with n interest in the trnsction, including the seller, builder, developer, mortgge broker, lender, or Settlement Compny. HUD s existing policy defining seller concessions provides tht ny concessions exceeding 6 percent must be treted s inducements to purchse, resulting in reduction in the FHA mortgge mount. A. Chnges to the July 15, 2010, Notice In the July 15, 2010, notice, HUD proposed to cp the seller concessions in FHA-insured, single-fmily mortgge trnsctions t 3 percent of the lesser of the sles price or pprised vlue, for the purpose of clculting the mximum insured mortgge mount, reducing it from the 6 percent limittion currently in plce. As discussed in the July 15, 2010, notice, conventionl mortgge lenders hve cpped llownces for seller concessions t 3 percent of the sles price on lons with LTV rtios similr to FHA. Lons gurnteed by the Deprtment of Veterns Affirs hve cp on seller concessions of 4 percent of the sles price. In the July 15, 2010, notice, HUD lso provided sttisticl dt illustrting higher incidence of home loss for borrowers who received seller concessions in excess of 3 percent. The proposed cp ws designed to lign FHA s single-fmily mortgge

3 10697 insurnce progrms to industry prctice nd reduce home loss mong homebuyers relying on FHA-insured finncing. Of the homebuyers with FHA-insured mortgges, 82 percent of such homebuyers mke only the minimum required downpyment of 3.5 percent. It is importnt, therefore, for HUD to ssure tht llowble mortgge mounts re ppropritely djusted for wht my ctully be inducements to purchse. For borrowers hving more thn the minimum required downpyment of 3.5 percent, this rule my or my not ffect them. As noted in the premble, the mjority of the 902 public comments received in response to the July 15, 2010, notice pertined to the proposed cp on seller concessions. Comments were submitted by mortgge lenders, credit unions, reltors, home builders, stte housing finnce gencies, nd other interested orgniztions. After creful considertion of the issues rised by the commenters, HUD hs decided to mke the following chnges to the proposed cp to seller concessions nd seek public comment on those chnges: Reduce the mount of seller concessions permitted s offsets to ctul closing costs to 3 percent 3 or $6,000, whichever is greter, but not llow the offsets, in ny event, to exceed the borrower s ctul costs. This reduction in concession llownces does not pply to HUD s Rel Estte Owned homes nd Neighborhood Stbiliztion progrms, for which the llownce remins t 6 percent. Limit cceptble uses of seller concessions to pyments towrd borrower closing costs, prepid items, discount points, the FHA Up Front Mortgge Insurnce Premium, nd ny Interest Rte Buydown. This revised definition elimintes pyment supplements such s homeowner or condominium ssocition fees, mortgge interest pyments, nd mortgge pyment protection plns. To ddress potentil future increses in closing costs, the $6,000 cp estblished in this notice is not sttic but tied to n index. The dollr limittion my increse nnully, nd t the sme percentge rte s the FHA ntionl lon limit floor, rounded up to the nerest $100 for nything t or bove $50 increments nd rounded down to the nerest $100 for nything below $50 increments. For exmple, should the FHA ntionl lon limit floor rise by 1.5 percent, then the cp my increse to $6,100. Any increse in the dollr limittion will be nnounced vi mortggee letter, most likely in the sme mortggee letter tht nnounces the new FHA lon limits for the upcoming clendr yer. This revised proposl tkes into considertion the disproportiontely negtive impct n cross-the-bord reduction to 3 percent would hve hd on borrowers with low nd moderte incomes who re purchsing modestly priced homes. It lso ppropritely limits the dollr mount of seller concessions on higher-priced homes, which under currently policy could be s high s $43, Concession mounts bove the revised-proposl limit would not be prohibited, but rther would result in dollr-for-dollr reduction in the sles price for the purpose of clculting the mximum insured lon mount. B. Definition of Acceptble Concessions As prt of the revised proposl on reducing seller concessions, HUD is lso proposing to nrrow the definition of cceptble concessions. In this new definition, HUD continues to permit sellers to py for the borrower s ctul costs to close on the lon, s well s py the Up Front Mortgge Insurnce Premium due on the lon nd fund n Interest Rte Buydown. 5 Wht HUD proposes to eliminte re pyment supplements offered by sellers, such s yer s worth of homeowner ssocition fees, 6 months worth of mortgge interest, or mortgge pyment protection plns. HUD believes tht these types of pyment supplements, while permissible under current seller concession guidnce, re relly inducements to purchse nd should be treted s such. The impct of this revised definition should be miniml on the housing mrket since the lon level review of FHA-insured lons reveled tht sellers typiclly offer concessions tht py for borrowers ctul costs to cquire the property, nd not pyment supplements. Current seller concession definition The seller nd/or interested third prty my contribute towrds the buyer s: Closing Costs Prepid Expenses Discount Points Interest Rte Buydowns nd other pyment supplements (i.e. Homeowner Assocition fees) Pyments of mortgge interest for fixed-rte mortgges Mortgge Pyment Protection Insurnce nd Up-Front Mortgge Insurnce Premium All other third-prty contributions re considered inducements to purchse, resulting in dollr-for-dollr reduction to the lesser of sle price or pprised vlue before pplying the pproprite LTV fctor (96.5%). This excludes closing costs nd prepid items pid by the lender through premium (rebte) pricing. Proposed seller concession definition The seller nd/or interested third prty my contribute towrds the buyer s: Closing Costs Prepid Expenses Discount Points UFMIP Interest Rte Buydowns All other third-prty contributions re considered inducements to purchse, resulting in dollr-for-dollr reduction to the lesser of sle price or pprised vlue before pplying the pproprite LTV fctor (96.5%). This excludes closing costs nd prepid items pid by the lender through premium (rebte) pricing. Closing costs vry from borrower to borrower, lender to lender, nd stte to stte. These costs even vry from closing cost study to closing cost study, becuse ech study defines closing costs in 3 The percentge is bsed on the lesser of sles price or pprised vlue. 4 Tht mount is 6 percent of FHA s current ntionl mortgge limit ceiling of $729,750. slightly different wys. The definition of closing costs for HUD s nlysis included fixed nd vrible closing costs, but not prepid expenses, becuse prepid expenses re typiclly finnced. 5 Interest Rte Buydowns re designed to reduce the borrower s monthly pyment during the erly yers of the mortgge. At settlement, n escrow ccount is estblished nd ech month, the servicing lender drws down n mount equl to VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 Fixed costs re those tht re fixed dollr mount, re not tied to percentge of the lon mount, nd re generlly offered within dollr rnge. Vrible costs re those tht re bsed the difference between the principl nd interest pyment (P&I) t the Note rte, nd the P&I t the buydown rte. For more informtion on FHA requirements for Interest Rte Buydowns, see HUD Hndbook A.2.

4 10698 Federl Register / Vol. 77, No. 36 / Thursdy, Februry 23, 2012 / Proposed Rules on percentge of the lon mount, or property vlue. Prepid items include funds needed to estblish n escrow ccount, s well s stte nd locl property txes nd per diem interest. FHA s Upfront Mortgge Insurnce CATEGORIES OF CLOSING COSTS Premium is lso included in this ctegory, nd it is typiclly prepid by finncing into the mortgge mount. Fixed Vrible Prepid Apprisl... Adjusted Origintion Chrge... Hzrd/Homeowners Insurnce. Credit Report... Lender s Title Insurnce... Flood Insurnce. Survey... Lender s Title Insurnce... Homeowners/Condominium Assocition Fees. Pest Inspection... Owner s Title Insurnce... Upfront Mortgge Insurnce Premium. Title Services... Trnsfer Tx... Txes. Lien Certifiction Per Diem Interest. Flood Certifiction Flood Determintion Lender Inspection In the July 15, 2010, notice, HUD clrified the definition of Interested Third Prty. HUD is not revising the definition of Interested Third Prty but clrifying the definition where it ws vgue nd possibly subject to vried interprettion. Current interested third prty definition Seller or other interested prties such s rel estte gents, builders, developers, etc., or combintion of these prties. Clrifiction of interested third prty definition Seller or other interested prty such s rel estte gent, builder, developer, mortgge broker, lender, nd/or settlement compny. C. Sttutory Authority FHA hs determined tht mintining the mount of eligible seller concessions t 6 percent of the sles price of the property increses the risk of defult nd clim pyment by FHA from the insurnce fund. FHA s determintion is solidly bsed on sttutory grounds in both the Ntionl Housing Act nd the Deprtment of Housing nd Urbn Development Act (42 U.S.C et seq.) There re five specific sttutory res tht support the ction by FHA to reduce the mount of llowble seller concessions for FHA purposes: (1) The mortggor s bility to py the mortgge; (2) the mount of funds the mortggor must hve vilble to close; (3) the Secretry s fiduciry duty to the MMIF; (4) the cpitl rtio of the MMIF; nd (5) FHA risk mngement. Ech one of these five sttutory grounds is explined in more detil below. 1. Ability to py mortgge pyment. Section 203(b)(4) of the Ntionl Housing Act provides tht the mortgge, in order to be eligible for insurnce, must contin complete mortiztion provisions stisfctory to the Secretry requiring periodic pyments by the mortggor not in excess of his resonble bility to py s determined by the Secretry. FHA hs found tht seller concessions cn, in some instnces, ffect the borrower s bility to mke monthly mortgge pyments some time fter the mortgge lon is closed. An exmple is when certin reoccurring homeownership costs re prepid on temporry bsis, but then, fter the prepyment period ends, become the finncil burden of the mortggor. FHA hs found tht the seller concessions such s prepyment of txes or homeowner ssocition fees, which then become due yer or two lter, cn result in mortggors experiencing mortgge pyment shock nd subsequent defult. This exmple of n impct on mortggor s resonble bility to py illustrtes cler sttutory bsis under section 203(b)(4) of the Ntionl Housing Act for issuing this notice. 2. Money to close. Section 203(b)(9)(A) of the Ntionl Housing Act, s mended by the Housing nd Economic Reform Act of 2008 (Pub. L , pproved July 30, 2008), ddresses the need for mortggor to mke minimum investment in the purchse of the mortgged property. Under section 203(b)(9)(A) of the Ntionl Housing Act, the mortggor shll hve pid on ccount of the property n mount equl to not less thn 3.5 percent of the pprised vlue of the property or such lrger mount s the Secretry my determine. The reduction in seller concessions impcts on the funding tht the homebuyer hs to bring to the tble to close. Indirectly, by reducing the mount of seller concessions, the Secretry is determining tht the mortggor must py on ccount of the property n mount tht cn be greter thn the minimum 3.5 percent. Requiring, directly or indirectly, tht the mortggor must come to the closing tble with VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 more of his own funds is clerly rooted in this sttutory provision of the Ntionl Housing Act. 3. Fiduciry Duty to the MMIF. The determintion to decrese the llowble mount of seller concessions is prt of FHA s ongoing risk mngement prctices. FHA is lrge government insurnce corportion, nd hs sttutorily mndted requirements plced upon it to mnge its finncil ffirs prudently. One of the sttutes with such mndte is found t section 202()(3) of the Ntionl Housing Act. Under tht section, the Secretry hs fiduciry duty to ensure tht the MMIF remins finncilly sound. Tking ction such s issuing this Notice regrding seller concessions furthers the Secretry s obligtion to meet the requirements of this section of the Ntionl Housing Act. Reducing defults nd subsequent clims for insurnce benefits pyments from the MMIF logiclly should finncilly help the MMIF. 4. Cpitl Rtio of the MMIF. Coupled with the fiduciry duty to preserve the MMIF is the sttutory requirement to mintin n dequte MMIF cpitl rtio. Under section 205(f)(2) of the Ntionl Housing Act, the Secretry shll ensure tht the cpitl rtio of the MMIF is mintined t not less thn 2 percent. The rtio hs fllen below this threshold, nd this is one ction of mny tht FHA is tking to ddress this sttutory requirement. 5. FHA Risk Mngement. Under section 4(b) of the Deprtment of Housing nd Urbn Development Act,

5 10699 the Secretry shll ensure tht mngers of the FHA re held ccountble for progrm opertions nd risk mngement long with other duties. Becuse the ction proposed by this Notice ddresses risk mngement directly, reducing the mount of eligible seller concessions is uthorized under this sttutory provision. As is more fully ddressed in Section III of this Notice, which discusses the public comments received on the July 15, 2010, notice, some progrm prticipnts hve expressed concerns tht reducing the mount of seller concessions my impct the housing mrket t time when the mrket is depressed. However, FHA lso hs obligtions to mnge the MMIF soundly nd prudently. The reduction in the mount of seller concessions is specificlly being implemented to directly meet these sttutory mndtes, nd is being done in ccordnce with specific sttutory uthority governing required funds to close nd the mortggor s bility to mke the monthly mortgge pyments. FHA officils would be remiss in their fiscl responsibilities if this ction, fter thoughtful study nd nlysis of progrm dt nd creful review of nd tking into ccount the public comments, ws not implemented. D. Reducing Seller Concessions Mny of the commenters on the July 15, 2010, notice suggested tht the primry illustrtion of credit risk for lons with high rtes of seller concessions ws not pproprite becuse it focused on lons insured from 2005 to 2008, nd those insurnce endorsements hd lrge shres with seller-funded downpyment ssistnce nd with lower borrower credit scores thn re cceptble to HUD tody. In response, HUD hs completed n nlysis of 2009 nd 2010 lons. These ltter lons were originted fter the use of seller-funded downpyments ws mde illegl, nd fter lenders tightened their own internl credit guidelines to eliminte the low credit score lons tht mde up sizble portion of FHA insurnce ctivity in the 2005-to-2008 period. Lons outside of current HUD policy on minimum borrower credit scores lso were excluded from the nlysis, though they comprised only smll number of the 2009 nd 2010 lon origintions. 6 In this new nlysis, HUD ddresses four key res: (1) The distribution of closing costs nd concessions in dollr mounts nd in percent of property vlue, for different sized lons; (2) the introduction into the FHA portfolio of lons for much lrger mounts thn hd been insured in previous yers; (3) the juxtposition of closing costs nd concessions, by percent of property vlue; nd (4) the credit risk ssocited with different levels of seller concessions. To prepre this revised proposl, HUD updted its dt nlysis to use more recent lon origintions. While this does not provide the type of lon sesoning tht demonstrtes long-run performnce nd credit risk, s ws shown in Tble C of the July 15, 2010, notice, it does permit differentition between low- nd high-blnced lons to degree not possible with erlier lon origintions. Prior to pssge of the Economic Stimulus Act of 2008, the FHA ntionl lon limit ceiling ws $369,720; fter tht, it rose to $729,750, where it remins tody, which cuses HUD to be concerned bout credit risk from high dollr concession mounts on high blnced lons with high lon-tovlue rtios. For this nlysis, HUD developed dt set of borrower-required closing costs nd seller concessions tht covers 74 percent of the two million FHA insured home purchse lons originted in 2009 nd To mesure credit risk on these lons, HUD focused only on 2009 lon origintions, which now hve s much s 26 months of sesoning. Ptterns of credit risk lredy seen in this popultion re likely to persist over the life of the lons. Tble A shows the distribution of borrower-required closing costs s percentge of home vlue. Tht informtion highlights how fixed-cost fctors tend to crete percentge mounts tht re gretest for smll blnce lons. More thn 70 percent of lons of up to $180,000 hve closing costs in excess of 3 percent of property vlue, while mong lons bove $240,000, the shre is just 26 percent. TABLE A BORROWER CLOSING COSTS BY LOAN AMOUNT AND PERCENT OF PROPERTY VALUE [ FHA-insured lon origintions] Percent of property vlue (rows sum to 100%) <= >6 <= > All Property vlue is mesured s the lesser of the purchse price nd the pprisl mount. Ech ctegory here, except for the finl one, represents mounts up to the percentge shown in the column heding. Concessions re present in 65 percent of FHA-insured home purchse lons. Tht rte ppers to hve been firly constnt over time; dt smples tken by HUD on FY 2000 to 2002 home purchse lons insured by FHA show 6 These re lons for which borrower credit scores re below 500, or for which the credit scores re below 580 if the lon-to-vlue rtio is bove 90 percent. similr rte of concessions. Tble B provides compnion to Tble A, highlighting the distribution of seller concessions, by size, in percent of home vlue. The gretest rte of use of concessions is for lon mounts up to 7 Lons were excluded from this nlysis primrily becuse HUD ws not ble to discern from the vrious dt submitted by lenders the mounts of totl borrower required closing costs VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 $240,000, nd the gretest shre of concessions for mounts bove 3 percent of property vlue re for the lowest lon mount ctegories shown there, nd especilly for lon mounts up to $180,000. nd/or the presence of seller concessions. A smll number of lons were excluded becuse borrower credit scores were below current limits for FHA eligibility.

6 10700 Federl Register / Vol. 77, No. 36 / Thursdy, Februry 23, 2012 / Proposed Rules TABLE B SELLER CONTRIBUTIONS AS A PERCENT OF PROPERTY VALUE [ FHA-insured lon origintions] Percent of property vlue (rows sum to 100%) >6 b <= > All Property vlue is mesured s the lesser of the purchse price nd the pprisl mount. Ech ctegory here, except for the finl one, represents mounts up to the percentge shown in the column heding. b Shres of lons with rtes of closing costs nd concessions bove 6 percent rose in 2010 in conjunction with higher shre of lons on properties with purchse prices below $50,000. Tble C juxtposes informtion from Tbles A nd B to show how concession rtes lign with closing-cost rtes. Shded cells represent lons for which concessions re generlly lrger thn the closing costs. Those ccount for 7 percent of ll lons nd 10 percent of lons with concessions. Tble C lso shows tht the lrgest single concentrtion of lons (13.77 percent) is found where both closing costs nd concessions re between 2 nd 3 percent of home vlue. As seen in Tble A, closing costs occur in this rnge for more thn 30 percent of ll homepurchse lons insured by FHA. Tble B shows tht concessions in this rnge represent 24 percent of ll subject lons, nd 37 percent of lons with concessions. The next lrgest concentrtions seen in Tble C (for lons with positive concessions) re for lons where closing costs nd concessions re both between 1 nd 2 percent of property vlue (7.62 percent), nd those where ech mesure is between 3 nd 4 percent of property vlue (7.21 percent). The next highest concentrtions lso re djcent to the most populted group. TABLE C BORROWER CLOSING COSTS AND CONCESSIONS, IN PERCENTAGE OF PROPERTY VALUE [ FHA-insured lon origintions] Closing cost rte (% of vlue) Concessions rtes (% of vlue) 0 b <= >6 All All Property vlue is the lesser of purchse price nd pprisl mount. b Any mount up to $500 is considered zero. Tble D provides summry sttistics on the dollr mounts of closing costs nd concessions, by the sme four lon- mount clsses shown in Tbles A nd B. TABLE D BORROWER CLOSING COSTS AND SELLER CONCESSIONS DESCRIPTIVE STATISTICS BY LOAN AMOUNT Cost or concession Lons Percentiles 5th 25th 50th 75th 95th Dollr Amounts <= Cost ,548 1,489 2,561 3,435 4,476 6,904 Concession , ,049 3,251 4, Cost ,048 1,789 3,385 4,571 6,054 9,594 Concession , ,000 4,703 7, Cost ,623 2,335 4,759 6,586 8,933 14,610 Concession , ,150 6,468 10,062 > Cost... 69,346 3,209 6,794 9,795 14,253 23,702 Concession... 69, ,527 8,155 16,453 Percentge of Home Vlue <= Cost , Concession , VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1

7 10701 TABLE D BORROWER CLOSING COSTS AND SELLER CONCESSIONS DESCRIPTIVE STATISTICS BY LOAN AMOUNT Continued Cost or concession Lons Percentiles 5th 25th 50th 75th 95th Cost , Concession , Cost , Concession , > Cost... 69, Concession... 69, Tbles E G prllel Tbles A C nd provide performnce informtion for lons originted in The defining metric is filure rte, which includes ll lons tht hve either resulted in n insurnce clim (s of Mrch 31, 2011), re presently in foreclosure processing, or else hve gone through the foreclosure process but the insurnce clim hs not yet been filed or processed. HUD dopted this metric becuse present economic circumstnces re resulting in delys both in foreclosure completions nd in clim filings. In ddition, focusing on such filures is more directly ssocited with losses to the FHA insurnce opertions thn re delinquency rte mesures. 9 These tbles show tht, within ech lon mount ctegory, credit risk is highest for lons with lrger closing costs nd with lrger concessions. For lon mounts bove $240,000, credit risk rises fster nd higher thn it does for lower lon mounts, s closing cost nd concessions ech exceed 3 percent of property vlue. Tble F shows tht while the lowest risk lons re those in the highest lon mount ctegory (bove $360,000), when no concessions re present, the highest risk is for the sme ctegory of lons when concessions re bove 4 percent of property vlue, nd especilly when they re bove 5 percent. In Tble E, the highest lonmount group lso shows the highest credit risk of ll is when closing costs exceed 4 percent. TABLE E TO-DATE FAILURE RATES BY LOAN AMOUNT AND BORROWER CLOSING COST RATES [2009 Lon origintions] Lon mt Borrower closing cost (percent of property vlue b ) <= >6 All <= > All Filure is defined s lon hving either resulted in n insurnce clim, or in foreclosure processing tody, or else foreclosure ction hs been completed nd clim filing is pending. Dt s of Mrch 31, b Property vlue is mesured s the lesser of the purchse price nd the pprisl mount. Ech ctegory here, except for the finl one, represents mounts up to the percentge shown in the column heding. TABLE F TO-DATE FAILURE RATES BY LOAN AMOUNT AND SELLER CONCESSIONS RATES [2009 Lon origintions] Seller concessions (percent of property vlue b ) 0 b <= >6 All <= > c All Filure is defined s lon hving either resulted in n insurnce clim, or in foreclosure processing tody, or else foreclosure ction hs been completed nd clim filing is pending. Dt is s of Mrch 31, b Any mount up to $500 is considered zero; other ctegories represent mounts greter thn the next lower limit, nd up to the percentge listed; rows dd to 100 percent. c There re just 19 lons in this cell. 8 Lons originted in 2010 re still too new for there to be defined performnce ptterns. The 2009 lons comprise 51.6 percent of the cses in this nlysis. 9 HUD recognizes tht not ll lons for which foreclosure process is strted will result in loss of home to the borrower nd clim pyment from FHA. However, the vrious rtes t which VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 foreclosure ctions hve been initited do provide vlid mesure for differentiting credit risk cross groups of lons.

8 10702 Federl Register / Vol. 77, No. 36 / Thursdy, Februry 23, 2012 / Proposed Rules TABLE G TO-DATE FAILURE RATES BY CLOSING COST (CC) AND SELLER CONCESSIONS (SC) RATES b [2009 Lon origintions] Closing costs (%) Seller concessions (%) 0 c <= >6 by CC rte <= > by SC rte Filure is defined s lon hving either resulted in n insurnce clim, or in foreclosure processing tody, or else foreclosure ction hs been completed nd clim filing is pending. Shded cells represent lons for which concessions re lrger thn closing costs. Dt is s of Mrch 31, b Rtes re in percent of property vlue (lesser of purchse price nd pprisl mount). c Any mount up to $500 is considered zero; other ctegories represent mounts greter thn the next lower limit, nd up to the percentge listed; rows dd to 100 percent. E. Estblishing the Seller Concession Percentge Cp nd Dollr Limittion The Deprtment recognizes tht n cross-the-bord reduction in concession llownces could hve lrge negtive impct on the bility of low- nd moderte-income households to purchse moderte-priced homes. Thus, HUD is revising its proposed limittion on seller concessions to ddress comments to tht effect tht were provided in response to the July 15, 2010, notice. Mny comments recommended tht HUD combine percentge cp with dollr limittion. Such two-prt proposl could directly ddress the higher credit risk of highblnce lons with lrge seller concessions, while mintining sufficiently high llownce for the resonble rnge of closing costs found on moderte-priced homes. Such twoprt pproch would: (1) Reduce the mount of concessions seller (or other interested third prty) could provide tht would be considered in excess of ctul closing costs or inducements to sle, nd (2) Minimize the impct tht such reduction might hve on ffordbility nd ccess to homeownership for firsttime homebuyers needing the low downpyments permitted by FHA in wht is still frgile housing mrket. To determine resonble percentge cp nd dollr limittion, HUD compred the rnge of ctul closing costs for homebuyers with FHA-insured mortgges, s seen in Tble D, with the credit risk chrcteristics of lons with high concessions found in Tbles F nd G. The result is new proposl permitting concessions s offsets to ctul closing costs on individul lons up to the greter of 3 percent or $6,000 of the lesser of the sles price or pprised vlue. In mthemticl terms, this limittion cn be described s: Minimum [closing_cost, mximum ($6,000, 0.03* property_vlue)] where property_vlue = min (sle price, pprised vlue) except for 203k where property_vlue = pprised_vlue. Under this proposl, the limiting fctor on the llowble dollr mount of concessions will be: Closing costs, when the mount is less thn $6,000; Closing costs, when they re bove $6,000 but less thn 3 percent of property vlue; $6,000, when tht is more thn 3 percent of property vlue nd less thn totl closing costs; or 3 percent of property vlue, when tht mount is both greter thn $6,000 nd less thn closing costs. Tble H provides some benchmrk vlues for understnding how this proposl would ffect homebuyers with minimum downpyments, t different lon mounts. For the homebuyer with $120,000 mortgge (buying $126,000 home), concessions would be considered offsets to ctul closing costs where closing costs re s high s $6,000, or 4.78 percent of the home vlue. The lon mount fter which the 3 percent of property vlue is greter thn $6,000 is $194,930 (buying $200,000 home). For ll lrger lon mounts, borrower my use concessions s offsets to ctul closing costs up to 3 percent of property vlue. At $360,000, concessions my be used to offset ctul closing costs, up to $11,304. For very high lon mount of $600,000, the 3 percent concessions llownce is $18,000. TABLE H COMPONENTS OF THE PROPOSED LIMIT ON SELLER CONCESSIONS [Exmples t vrious lon mounts] Lon Amount... $120,000 $180,000 $194,930 $240,000 $360,000 Property Vlue b... $125,596 $188,394 $200,000 $251,192 $376,788 $6,000 s % of Vlue % 3.18% 3.00% 2.39% 1.59% 3.0% of Vlue... $3,768 $5,652 $6000 $7,536 $11,304 Presumed to include the FHA Upfront Mortgge Insurnce Premium of 1 percent. b Bsed upon borrower mking the minimum downpyment of 3.5 percent. (Clculted s lon_mount/(0.965/1.01), to lso ccount for the typicl finncing of the 1 percent upfront insurnce premium.) Referring gin to Tble D, the $6,000 limittion is generous to borrowers with lon mounts up to $180,000. In tht rnge, $6,000 is beyond the 90th percentile of ll borrower closing costs. Thus, less thn 10 percent of borrowers with lon mounts under $180,000 would hve concession llownces tht VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 re less thn their ctul closing costs. For borrowers in the next lon mount ctegory ($180, ,000), $6,000 nerly reches the 75th percentile of

9 10703 closing costs. However, $6,000 is not the binding limit for borrowers with lon mounts of $195,000 or greter (see Tble H). In tht rnge, 3 percent of the property vlue is greter thn $6,000 nd becomes the mount tht is compred with ctul closing costs to determine mximum llowble concessions. Tble I illustrtes the impct of this revised proposl to the existing concessions limittion nd t different sles prices under the proposed reduction. Concessions re more generous thn the existing 6 percent limittion for sles prices below $100,000. For sles prices between $100,000 nd $200,000, the dollr cp llows for seller concessions greter thn 3 percent. Any sles price bove $200,000 is limited to the 3 percent cp. TABLE I COMPARISON OF LIMITATIONS ON SELLER CONCESSIONS Sles price Existing seller concessions limittion Proposed reduction of seller concessions is the greter of Proposed percentge cp 6 percent 3.0 percent $6,000 % $100, $6,000 $3,000 $6, $120, ,200 3,600 6, $140, ,400 4,200 6, $160, ,600 4,800 6, $180, ,800 5,400 6, $200, ,000 6,000 6, $220, ,200 6,600 6, $240, ,400 7,200 6, $260, ,600 7,800 6, $280, ,800 8,400 6, $300, ,000 9,000 6, The ctul effects of the proposed limittion, when pplied to the 2009 nd 2010 lon origintions used in this nlysis, re shown in Tbles J nd K. Overll, the limittion would hve ffected just 13.4 percent of those home purchse lons. The dollr size of the resulting excess contributions is shown in Tble J. For the lowest lon mount group, the medin effect is under $1,000; for the highest lon mount group, it is bove $4,000. However, s seen in Tble K, mong the 9.7 percent of borrowers with lon mounts up to $180,000 tht re ffected, the binding constrint tht cretes excess concessions is the ctul mount of closing costs in nerly ll of those situtions (93.4 percent). For the fewer thn 7 percent of the ffected borrowers in this group, the $6,000 dollr limittion is greter thn their closing costs. For lon mounts bove $240,000, the shre of ffected lons constrined by closing costs is more closely blnced with the shre tht is constrined by 3 percent of property vlue (56 nd 44 percent, respectively). TABLE J PROPOSED CONCESSIONS LIMITATION, AFFECTS BY LOAN SIZE CATEGORY [ FHA-insured lons] Number of lons ffected Shre of lons ffected % Dollr reductions t vrious percentiles (ffected lons only) 5th 25th 50th 75th 95th <= , $86 $480 $988 $1,670 $3, , ,434 2,562 4, , ,001 2,247 4,106 8,160 > , ,850 4,138 7,541 14,635 TABLE K PROPOSED CONCESSIONS LIMITATION SOURCE OF CONSTRAINT ON AFFECTED LOANS, BY LOAN SIZE CATEGORY Closing cost % Binding constrint Property vlue % Dollr limit % <= > All Note: Rows sum to 100%. VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1

10 10704 Federl Register / Vol. 77, No. 36 / Thursdy, Februry 23, 2012 / Proposed Rules F. Considering Alterntive Approches There were vriety of lterntive pproches suggested by commenters. Some commenters recommended tht HUD defer instituting cp in fvor of monitoring the performnce of lons with seller concessions for period of 2 yers. Others suggested dopting the cp used by other federl progrms such s the Deprtment of Veterns Affirs Home Lon Progrm or cpping seller concessions bsed on the buyer s credit score. While these lterntives to the proposed reduction ll hd merit, HUD believes tht they do not sufficiently ddress the risk to the MMIF nd/or they do not dequtely mitigte the impct tht reduction in seller concessions my hve hd on the housing mrket. In considering ll of the lterntive pproches, HUD sought to chieve both of these gols. The comments tht recommended combining percentge cp with dollr limittion met these gols nd provided HUD the opportunity to revise this proposl in mnner tht would both benefit the housing mrket nd FHA s Mutul Mortgge Insurnce Fund. Section III of this notice discusses ll of the significnt issues rised by the public comments regrding the July 15, 2010, notice s proposed reduction in the llowble mount of seller concessions, nd HUD s responses to these issues. III. Discussion of the Public Comments Regrding Proposed Reduction in Sellers Concessions A. Support for Proposed Limit on Seller Concessions A minority of the comments expressed support for reducing seller concessions. The commenters wrote tht the cp would require more serious commitment from borrowers nd should lso help reduce risks to the FHA insurnce funds. HUD Response. HUD pprecites the support for reducing seller concessions. It believes tht this reduction will reduce risk to the MMIF, while t the sme time preserving FHA s mission of helping underserved borrowers obtin ffordble home finncing. B. Proposed Cp Will Be Ineffective nd Hrmful Comment: HUD filed to provide dequte justifiction for the proposed reduction, nd reducing seller concessions will not result in reduced risk to FHA. Severl commenters questioned HUD s stted rtionle for limiting seller concessions. The commenters wrote tht the dt provided in the July 15, 2010, notice regrding the seller concession cp filed to demonstrte significnt risk to the FHA portfolio to justify the chnge. Further, commenters questioned the ccurcy of the sttisticl dt illustrting the correltion between higher seller concessions nd n incresed rte of defult. HUD Response. HUD hs mended its proposl in response to these comments. The Deprtment conducted more complex nlysis of portfolio performnce involving seller concessions, which reveled tht the risk to the MMIF incresed for lons with lrger closing costs nd concessions. Tble E demonstrtes tht for lon mounts in excess of $240,000 for FY 2009, credit risk rises fster nd higher thn it does for lower lon mounts when closing costs nd concessions exceed 3 percent. Tble F shows tht the highest risk exists with lons greter thn $360,000 nd concessions re bove 4 percent. Comment: Proposed cp does not ddress true problems in the housing mrket. Severl commenters wrote tht the proposed cp will be ineffective becuse it fils to ddress the true cuses of incresed defults. Some of these commenters wrote tht unscrupulous lending prctices were primrily responsible for the incresed mortgge defults, while other commenters pointed t rtificilly inflted pprisls nd sles prices. HUD Response. HUD hs mended its proposl in response to these comments. The Deprtment grees tht reducing seller concessions lone will not ddress the true problems ssocited with incresed defults nd the voltility in the housing mrket. However, this revised proposl, in conjunction with other efforts to strengthen enforcement ctions nd reduce risk, will help ensure tht borrowers relying on FHA-insured finncing hve sufficient investment in their home purchses nd re therefore less likely to defult. This revised proposl will lso help curtil prctice where seller concessions re offered n mount bove the borrower s ctul costs s n offset to higher sles price. Comment: Proposed cp will hrm the housing mrket. Severl commenters wrote tht the proposed cp could hve chilling effect on the origintion of new mortgges. Commenters wrote tht reducing seller concessions from 6 percent to 3 percent would reduce the qulified borrower pool nd remove lrge portion of borrowers who would otherwise be pproved under stringent underwriting requirements. The commenters wrote tht mny FHA buyers require the seller s contribution VerDte Mr<15> :27 Feb 22, 2012 Jkt PO Frm Fmt 4702 Sfmt 4702 E:\FR\FM\23FEP1.SGM 23FEP1 in order to proceed with the purchse of the home. Additionlly the reduction in sellers concessions, some commenters rgued, could result in less money vilble for post-purchse incidentls including home improvements nd emergencies. HUD Response. HUD mended its proposl in response to these comments. HUD recognizes tht borrowers with lower lon mounts were more negtively impcted by the initil proposl from the July 15, 2010, notice thn borrowers with high lon mounts. However, s evidenced in Tbles A, B, C, nd D, the impct of ny chnge to seller concessions would not be s gret s indicted by the commenters. As shown in Tble C, the lrgest single concentrtion of lons (13.77 percent) is where both closing costs nd concessions re between 2 nd 3 percent of home vlue. In Tble A, closing costs occur in this rnge for more thn 30 percent of ll home purchse lons insured by FHA. Tble B shows tht concessions in this rnge represents 37 percent of lons with concessions. The next lrgest concentrtion is for lons where closing costs nd concessions re between 1 nd 2 percent of property vlue (7.62 percent). Tble A highlights how fixed cost fctors tend to crete percentge mounts tht re gretest for smll blnce lons. Over 70 percent of lons of up to $180,000 hve closing costs in excess of 3 percent of property vlue. This difference is ttributed to the fct tht mny closing costs re fixed (e.g., pprisls, title services, inspections, nd flood nd lien certifictions), nd not percentge of lon mount (e.g., origintion chrge, title insurnce). Therefore, the revised proposl llows for greter thn 6 percent seller concessions on lons with sles price of less thn $100,000 nd llows for seller concessions greter thn 3 percent for lons with sles price up to $200,000. It is nticipted tht this revised proposl will minimize, if not eliminte, the concerns tht reduction in seller concessions would hve negtive impct on the housing mrket. Also, this proposl will ssist borrowers who re less ble to bsorb the post-purchse finncil costs of home improvements nd emergency repirs, by not requiring them to devote ll vilble funds to the cquisition of the home. Comment: Reduction in seller s cp will disproportiontely impct lowincome nd first-time homebuyers. Severl commenters suggested tht the proposed seller concession cp will unfirly impct low-income nd firsttime homebuyers. The reduction from 6 percent to 3 percent will impct less