Guaranteed Rural Rental Housing Change in Initial Guarantee Fee and Annual Guarantee Fee

Published date03 September 2019
Record Number2019-18773
SectionProposed rules
CourtRural Housing Service
Federal Register, Volume 84 Issue 170 (Tuesday, September 3, 2019)
[Federal Register Volume 84, Number 170 (Tuesday, September 3, 2019)]
                [Proposed Rules]
                [Pages 45927-45929]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-18773]
                ========================================================================
                Proposed Rules
                 Federal Register
                ________________________________________________________________________
                This section of the FEDERAL REGISTER contains notices to the public of
                the proposed issuance of rules and regulations. The purpose of these
                notices is to give interested persons an opportunity to participate in
                the rule making prior to the adoption of the final rules.
                ========================================================================
                Federal Register / Vol. 84, No. 170 / Tuesday, September 3, 2019 /
                Proposed Rules
                [[Page 45927]]
                DEPARTMENT OF AGRICULTURE
                Rural Housing Service
                7 CFR Part 3565
                [Docket No. RHS-19-MFH-0017]
                RIN 0575-AD15
                Guaranteed Rural Rental Housing Change in Initial Guarantee Fee
                and Annual Guarantee Fee
                AGENCY: Rural Housing Service, USDA.
                ACTION: Proposed rule.
                -----------------------------------------------------------------------
                SUMMARY: The Rural Housing Service (RHS or the Agency) is proposing to
                amend its regulation to remove the stated amount that the Agency will
                charge for the initial and annual guarantee fees. The regulation change
                will allow the Agency the flexibility to establish or make any future
                changes to the initial and annual guarantee fees without the need for a
                regulatory change.
                DATES: Comments on the proposed rule must be received on or before
                November 4, 2019.
                ADDRESSES: You may submit comments to this rule by any of the following
                methods:
                 Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower ``Search Regulations and Federal
                Actions'' box, select ``Rural Housing Service'' from the agency drop-
                down menu, then click on ``Submit.'' In the Docket ID column, select
                RHS-19-MFH-0017 to submit or view public comments and to view
                supporting and related materials available electronically. Information
                on using Regulations.gov, including instructions for accessing
                documents, submitting comments, and viewing the docket after the close
                of the comment period, is available through the site's ``User Tips''
                link.
                 Postal Mail/Commercial Delivery: Submit written comments
                to Michele L. Brooks, Director, Innovation Center--Regulations
                Management Division, Rural Development, U.S. Department of Agriculture,
                STOP 1522, 1400 Independence Avenue SW, Washington, DC 20250-1522. All
                written comments will be available for public inspection during regular
                work hours at 1400 Independence Avenue SW, Mailstop 1522, Washington,
                DC 20250.
                FOR FURTHER INFORMATION CONTACT: Tammy Daniels, Finance and Loan
                Analyst, Multi-Family Housing Guaranteed Loan Division, Rural Housing
                Service, U.S. Department of Agriculture, STOP 0781-Room# 1263S, 1400
                Independence Avenue SW, Washington, DC 20250-0781, Telephone: (202)
                720-0021 (this is not a toll-free number); email:
                [email protected].
                SUPPLEMENTARY INFORMATION:
                Background and Summary of Changes
                 RHS administers the Section 538 Guaranteed Rural Rental Housing
                Program (GRRHP) under the authority of the Housing Act of 1949, as
                amended (42 U.S.C. 1490p-2). Under the GRRHP, RHS guarantees loans for
                the development of housing and related facilities in rural areas.
                Section 538(g) authorizes the Secretary of Agriculture to charge
                certain fees to lenders for loan guarantees. See 42 U.S.C. 1490p-2(g).
                The charged fees are required to be used to offset costs associated
                with loan guarantees. See 42 U.S.C. 1490p-2(u).
                 The Agency's GRRHP implementing regulation is at 7 CFR part 3565
                and currently sets the exact percentage of the initial guarantee fee
                and the annual guarantee fee charged by the Agency. The Agency is
                proposing to amend the regulation by removing the language that
                indicates the specific amount of the initial guarantee fee and the
                annual guarantee fee currently charged by the Agency. The Agency is
                making this change to allow for flexibility and to allow the program to
                create the maximum housing affordability to residents by lowering
                program costs when practical. In most cases, the annual guarantee fee
                is passed onto the borrower, where it is most likely included in the
                interest rate. Thus, any reduction in the fee will result in a lower
                interest rate and would ultimately create a reduction in rental rates.
                 The calculation of the initial guarantee fee is the product of the
                percentage of the guarantee times the initial principal amount of the
                guaranteed loan. The initial guarantee fee will be due at the time the
                closing package is submitted to the Agency for review and approval. The
                GRRHP annual fee is a non-refundable amount that the lender must pay
                the year that the loan closes and going forward each year that the loan
                guarantee remains in effect. Due to the negative subsidy, combined with
                the overall health of the Section 538 GRRHP portfolio, the Agency would
                like to have the flexibility in its regulation to reduce the annual
                guarantee fee due on the outstanding principal amount of the loan that
                will be charged each year or portion of a year that the guarantee is in
                effect. For example, if a guaranteed loan closes on any date between
                January 1 and December 31, 2018, the effective date for the fee
                determination will be December 31, 2018. The annual fee will be
                collected by February 28, 2019, and each calendar year going forward
                while the guarantee remains in effect.
                 If changes do occur in the fee amounts, the Agency will release
                those changes through a notice in the Federal Register. When the fee
                changes are announced in the Federal Register, the Agency will provide
                guidance on how to process the loans which will be impacted by the new
                fee structure. Interested parties will be able to locate current fees
                on the Agency's public website.
                Executive Order 12866--Classification
                 This proposed rule has been determined to be non-significant and;
                therefore, was not reviewed by the Office of Management and Budget
                (OMB) under Executive Order 12866.
                Authority
                 The Guaranteed Rural Rental Housing program (GRRHP) is administered
                subject to appropriations by the U.S. Department of Agriculture (USDA)
                as authorized under the Housing Act of 1949 as amended, Section 538,
                Public Law 106-569, 42 U.S.C. 1490 p-2.
                Environmental Impact Statement
                 This document has been reviewed in accordance with 7 CFR part 1970,
                subpart A, ``Environmental Policies.'' RHS determined that this action
                does not constitute a major Federal action significantly affecting the
                quality of the environment. In accordance with the National
                Environmental Policy Act of 1969, Public Law 91-190, an
                [[Page 45928]]
                Environmental Impact Statement is not required.
                Regulatory Flexibility Act
                 The rule has been reviewed with regard to the requirements of the
                Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has
                determined and certified by signature on this document that this rule
                will not have a significant economic impact on a substantial number of
                small entities since this rulemaking action does not involve a new or
                expanded program nor does it require any more action on the part of a
                small business than required of a large entity.
                Executive Order 13132--Federalism
                 The policies contained in this rule do not have any substantial
                direct effect on States, on the relationship between the National
                Government and the States, or on the distribution of power and
                responsibilities among the various levels of Government. This rule does
                not impose substantial direct compliance costs on State and local
                Governments; therefore, consultation with States is not required.
                Executive Order 12988--Civil Justice Reform
                 This rule has been reviewed under Executive Order 12988. In
                accordance with this rule: (1) Unless otherwise specifically provided,
                all State and local laws that conflict with this rule will be
                preempted; (2) no retroactive effect will be given to this rule except
                as specifically prescribed in the rule; and (3) administrative
                proceedings of the National Appeals Division of the Department of
                Agriculture (7 CFR part 11) must be exhausted before bringing suit in
                court that challenges action taken under this rule.
                Unfunded Mandate Reform Act (UMRA)
                 Title II of the UMRA, Public Law 104-4, establishes requirements
                for Federal Agencies to assess the effects of their regulatory actions
                on State, local, and tribal Governments and on the private sector.
                Under section 202 of the UMRA, Federal Agencies generally must prepare
                a written statement, including cost-benefit analysis, for proposed and
                Final Rules with ``Federal mandates'' that may result in expenditures
                to State, local, or tribal Governments, in the aggregate, or to the
                private sector, of $100 million or more in any one-year. When such a
                statement is needed for a rule, section 205 of the UMRA generally
                requires a Federal Agency to identify and consider a reasonable number
                of regulatory alternatives and adopt the least costly, more cost-
                effective, or least burdensome alternative that achieves the objectives
                of the rule.
                 This rule contains no Federal mandates (under the regulatory
                provisions of title II of the UMRA) for State, local, and tribal
                Governments or for the private sector. Therefore, this rule is not
                subject to the requirements of sections 202 and 205 of the UMRA.
                Paperwork Reduction Act
                 The information collection requirements contained in this
                regulation have been approved by OMB and have been assigned OMB control
                number 0575-0189. This proposed rule contains no new reporting and
                recordkeeping requirements that would require approval under the
                Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
                E-Government Act Compliance
                 RHS is committed to complying with the E-Government Act by
                promoting the use of the internet and other Information Technologies in
                order to provide increased opportunities for citizen access to
                Government information, services, and other purposes.
                Programs Affected
                 The program affected by this regulation is listed in the Catalog of
                Federal Domestic Assistance under numbers 10.438--Rural Rental Housing
                Guaranteed Loans (Section 538).
                Executive Order 13175, Consultation and Coordination With Indian Tribal
                Governments
                 This executive order imposes requirements on RHS in the development
                of regulatory policies that have tribal implications or preempt tribal
                laws. RHS has determined that the rule does not have a substantial
                direct effect on one or more Indian tribe(s) or on either the
                relationship or the distribution of powers and responsibilities between
                the Federal Government and Indian tribes. Thus, this rule is not
                subject to the requirements of Executive Order 13175. If tribal leaders
                are interested in consulting with RHS on this rule, they are encouraged
                to contact USDA's Office of Tribal Relations or RD's Native American
                Coordinator at: [email protected] to request such a consultation.
                Executive Order 12372--Intergovernmental Consultation
                 These loans are subject to the provisions of Executive Order 12372,
                which require intergovernmental consultation with State and local
                officials. RHS conducts intergovernmental consultations for each loan
                in accordance with 2 CFR part 415, subpart C.
                Non-Discrimination Statement
                 In accordance with Federal civil rights law and U.S. Department of
                Agriculture (USDA) civil rights regulations and policies, the USDA, its
                Agencies, offices, employees, and institutions participating in or
                administering USDA programs are prohibited from discriminating based on
                race, color, national origin, religion, sex, gender identity (including
                gender expression), sexual orientation, disability, age, marital
                status, familial/parental status, income derived from a public
                assistance program, political beliefs, or reprisal or retaliation for
                prior civil rights activity, in any program or activity conducted or
                funded by USDA (not all bases apply to all programs). Remedies and
                complaint filing deadlines vary by program or incident.
                 Persons with disabilities who require alternative means of
                communication for program information (e.g., Braille, large print,
                audiotape, American Sign Language, etc.) should contact the responsible
                Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or
                contact USDA through the Federal Relay Service at (800) 877-8339.
                Additionally, program information may be made available in languages
                other than English.
                 To file a program discrimination complaint, complete the USDA
                Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or
                write a letter addressed to USDA and provide in the letter all of the
                information requested in the form. To request a copy of the complaint
                form, call (866) 632-9992, submit your completed form or letter to USDA
                by:
                 (1) Mail: U.S. Department of Agriculture, Director, Office of
                Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410;
                 (2) Fax: (202) 690-7442; or
                 (3) Email: [email protected].
                 USDA is an equal opportunity provider, employer, and lender.
                List of Subjects in 7 CFR 3565
                 Conflict of interest, Credit, Fair housing, Loan programs-housing
                and community development, Low and moderate-income housing,
                Manufactured homes, Mortgages, Rent subsidies, Reporting and
                recordkeeping requirements, Rural areas.
                [[Page 45929]]
                 For the reasons set forth in the preamble, 7 CFR part 3565 is
                proposed to be amended as follows:
                PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM
                0
                1. The authority citation for part 3565 continues to read as follows:
                 Authority: 5 U.S.C. 301; 7 U.S.C 1989; 42 U.S.C. 1480.
                Subpart B--Guarantee Requirements
                0
                2. Amend Sec. 3565.53 introductory text by adding a sentence at the
                end and revising paragraphs (a) and (b) to read as follows:
                Sec. 3565.53 Guarantee fees.
                 * * * Changes to the initial and annual guarantee fees will be
                established by the Agency and will be published in a Notice in the
                Federal Register.
                 (a) Initial guarantee fee. The Agency will establish and charge an
                initial guarantee fee of up to one percent of the guarantee amount. For
                purposes of calculating this fee, the guarantee amount is the product
                of the percentage of the guarantee times the initial principal amount
                of the guaranteed loan.
                 (b) Annual guarantee fee. An annual guarantee fee will be charged,
                as established by the Agency, each year or portion of a year that the
                guarantee is in effect. This fee will be collected on February 28, of
                each calendar year.
                * * * * *
                Bruce W. Lammers,
                Administrator, Rural Housing Service.
                [FR Doc. 2019-18773 Filed 8-30-19; 8:45 am]
                 BILLING CODE 3410-XV-P
                

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