3181908 Zoning Commission Notice of Emergency Action: Case No. 04-33F (Text Amendments: PUDs and Inclusionary Zoning)
-
ZONING COMMISSION FOR THE DISTRICT OF COLUMBIA
NOTICE OF EMERGENCY RULEMAKING
Z.C. Case No. 04-33F
(Text Amendments: PUDs and Inclusionary Zoning – Termination of Affordability Controls upon Foreclosure)
The Zoning Commission for the District of Columbia, pursuant to the authority set forth in sections 1 of the Zoning Act of 1938, approved June 20, 1938 (52 Stat. 797; D.C. Official Code § 6-641.01 (2008 Repl.)) and the authority set forth in section 6(c) of the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1206; D.C. Official Code § 2-505(c) (2011 Repl.)), hereby gives notice of the adoption, on an emergency basis, of amendments to §§ 2409 and 2602 of the Zoning Regulations of the District of Columbia, DCMR Title 11.
The amendment to § 2409 would add a new § 2409.10 that provides for the automatic termination of affordable housing controls imposed upon a unit by a planned unit development (PUD) order upon the unit’s foreclosure or the recordation of a deed in lieu of foreclosure by the first mortgagee; provided, that the agency specified in the affordable unit covenant is provided advance notice and records an acknowledgment of receipt of such notice in the District’s land records. A new § 2602.10 provides for the automatic termination of the Inclusionary Zoning (IZ) controls set forth in Chapter 26 under the same circumstances.
Emergency rulemaking action is required because of the significant decrease in lenders who are willing to lend home purchase mortgages on units with affordability controls that survive foreclosure. At the time IZ was first adopted, FannieMae and FreddieMac dominated the secondary market for home mortgages and they both had underwriting policies that permitted affordability controls to survive foreclosure. Changes in the market have resulted in greater reliance upon the Federal Housing Administration (FHA), which provides mortgage insurance to lenders of home mortgages. FHA regulations provide that a mortgage is ineligible for insurance if “the mortgaged property is subject to legal restrictions on conveyance.” 24 CFR § 203.41(b). However, the regulation provides an exception for eligible government programs if the “restrictions will automatically terminate if title to the mortgaged property is transferred by foreclosure or deed-in-lieu of foreclosure.” 24 CFR § 203.41(c)(2). As a result of FHA’s recent implementation of this regulation, many lenders have imposed similar restrictions, but allow for the same exception.
Because this exception is not contained in the Zoning Regulations, many of the affordable units produced as a result of PUD orders and the IZ regulations do not qualify for mortgage insurance and therefore have become effectively unmarketable. This not only creates an additional hardship for developers at a time of continued economic uncertainty, but causes an unnecessary and harmful delay in the provision of affordable housing mandated by the Commission. The immediate adoption of these amendments is therefore necessary for the “immediate preservation of public ... welfare.” D.C. Official Code § 2-505(c) (2006 Repl.).
This emergency rule was adopted on July 30, 2012, and became effective on that date.
The emergency rule will expire on November 27, 2012, which is the one hundred twentieth (120th) day after the adoption of the rule, or upon the publication of a Notice of Final Rulemaking in the D.C. Register, whichever occurs first.
Title 11 of the District of Columbia Municipal Regulations, ZONING, was amended on an emergency basis as follows:
Chapter 24, PLANNED UNIT DEVELOPMENT PROCEDURES, § 2409, IMPLEMENTATION, is amended by adding a new § 2409.10 to read as follows:
2409.10 A condition in an order approving or modifying a PUD that requires the provision of affordable housing shall no longer apply to a for-sale affordable unit upon foreclosure or a recorded deed in lieu of foreclosure by the first mortgagee, provided:
(a) The first mortgagee sends to the District agency identified in the affordable unit covenant (the Enforcement Agency) a copy of the Notice of Default on a Residential Mortgage required by § 539(b) of An Act To establish a code of law for the District of Columbia, approved March 3, 1901 (31 Stat. 1189; D.C. Official Code § 42-815(b) (2001)) within two (2) business days after the date of mailing of the original Notice of Default on a Residential Mortgage to the borrower;
(b) In the case of a foreclosure, the first mortgagee also sends to the Enforcement Agency a copy of the Notice of Intention to Foreclose a Residential Mortgage as required by 26 DCMR C § 2727 within two (2) business days after the date of mailing of the original Notice of Intention to Foreclose a Residential Mortgage to the borrower; and
(c) The Enforcement Agency files a notice in the land records acknowledging that the notice described in paragraph (a) and, if applicable, the notice described in paragraph (b) were received.
Chapter 26, INCLUSIONARY ZONING, § 2602, APPLICABILITY, is amended as follows:
By amending § 2602.4 to add a reference to new § 2602.10, so that the provision will read as follows:
2602.4 Except as provided in §§ 2602.5, 2602.10, 2603.5, and 2607.1(c) of the Act, all inclusionary units created pursuant to this chapter shall be leased or sold only to eligible households for so long as the inclusionary development exists.
By adding a new § 2602.10 to read as follows:
2602.10 The requirements of this chapter shall no longer apply to a for-sale Inclusionary Unit upon foreclosure or a recorded deed in lieu of foreclosure by the first mortgagee provided:
(a) The first mortgagee sends to the District agency identified in the Inclusionary Development Covenant required by 14 DCMR § 2201.1(b) (the Enforcement Agency) a copy of the Notice of Default on a Residential Mortgage required by § 539(b) of An Act To establish a code of law for the District of Columbia, approved March 3, 1901 (31 Stat. 1189; D.C. Official Code § 42-815(b) (2001)) within two (2) business days after the date of mailing of the original Notice of Default on a Residential Mortgage to the borrower;
(b) In the case of a foreclosure, the first mortgagee also sends to the Enforcement Agency a copy of the Notice of Intention to Foreclose a Residential Mortgage required by 26 DCMR C § 2727 within two (2) business days after the date of mailing of the original Notice of Intention to Foreclose a Residential Mortgage to the borrower; and
(c) The Enforcement Agency files a notice in the land records acknowledging that the notice described in paragraphs (a) and, if applicable, the notice described in paragraph (b) were received.
