Mr. Richard A.
Department of Housing and Urban Development
451 Seventh Street, SW
Washington, D.C. 20410
Dear Mr. Hauser:
On May 22, 2001, the Department of Housing and Urban Development
(HUD) submitted a draft notice for Office of Management and Budget
(OMB) review under Executive Order No. 12866 relating to the establishment
of a demonstration risk-sharing program. The demonstration would
test the feasibility of entering into contracts with private mortgage
insurers and other parties to reduce costs and risk to the Federal
government while speeding mortgage processing.
In the course of OMB's review of this draft notice OMB has held
discussions with HUD staff regarding the objectives of this program.
Specifically, many of the issues discussed relate to a letter of
April 23, 1998 by which HUD's Deputy Assistant Secretary for
Single Family Housing described a three year attempt to implement
a risk sharing program and concluded that such a program "is not
in the best interest of FHA or the general public." The letter described
at length the reasons behind the decision.
We have understood for some weeks that HUD is reassessing its position
about pursuing this initiative in light of OMB's questions. Because
this may take some time, I am returning this rule to you for reconsideration
under Executive Order 12866. In light of the April 1998 letter noted
above, we would appreciate a briefing by your staff should the Department
decide to resubmit this draft rule.
John D. Graham
Office of Information and Regulatory Affairs