Single Family Housing Direct and Guaranteed Loan Programs
| Citation | 84 FR 29034 |
| Record Number | 2019-12988 |
| Published date | 21 June 2019 |
| Section | Rules and Regulations |
| Court | Rural Housing Service |
Federal Register, Volume 84 Issue 120 (Friday, June 21, 2019)
[Federal Register Volume 84, Number 120 (Friday, June 21, 2019)]
[Rules and Regulations]
[Pages 29034-29038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12988]
[[Page 29034]]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Parts 3550 and 3555
RIN 0575-AD13
Single Family Housing Direct and Guaranteed Loan Programs
AGENCY: Rural Housing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Housing Service (RHS or Agency) published a proposed
rule on August 31, 2018 to amend its regulations for the direct and
guaranteed single family housing loan and grant programs. Through this
action, RHS finalizes the rule as final based on public comments, but
with a revision to the definition of rural area to cite the statute
which defines rural area and with a technical correction to the
suspension or debarment requirement.
DATES: Effective on July 22, 2019, except for the amendment to Sec.
3550.63 which is effective on August 5, 2019.
FOR FURTHER INFORMATION CONTACT: Shannon Chase, Finance and Loan
Analyst, Single Family Housing Direct Loan Origination Branch, USDA
Rural Development, STOP 0783, 1400 Independence Ave. SW, Washington, DC
20250-0783, Telephone: (515) 305-0399. Email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
In order to improve the delivery of the single family housing loan
programs and to promote consistency among the programs when
appropriate, RHS will make the following revisions to 7 CFR parts 3550
and 3555.
(1) Revising the definition of rural area in Sec. 3550.10 to refer
to the definition found in section 520 of the Housing Act of 1949, as
amended; and very low-, low-, and moderate-income definitions to allow
for a two-tier income limit structure (income banding) for the single
family housing direct loan and grant programs.
The revision to the rural area definition is technical in nature,
as the Agency's definition is already derived from the definition in
section 520 of the Housing Act of 1949, as amended. The revision will
minimize the need for the Agency to update its regulation and Handbooks
in response to future changes to section 520 of the Housing Act of
1949, as amended.
The revisions to the income definitions will help minimize the
impact of varying minimum wages established by the states and
territories and the observed disconnect between minimum wages and the
low median income in many areas. Under current regulations, the income
of a household with two people earning the minimum wage would exceed
the low-income eligibility limit in 39 to 93 percent of the counties in
16 states and territories. In other words, under current regulations
and income limits, the income from a two-person household earning
minimum wage may be considered too high to qualify for a direct loan.
In accordance with Section 501(b)(4) of the Housing Act of 1949 (42
U.S.C. 1471(b)(4)), the terms ``low income families or persons'' and
``very low-income families or persons'' mean those families and persons
whose income do not exceed the respective levels established for low-
income families and very low-income families under the United States
Housing Act of 1937 (42 U.S.C. 1437 et seq.). The income levels in the
Housing Act of 1937 are generally established by the U.S. Department of
Housing and Urban Development (HUD). RHS currently uses the HUD income
levels without income banding. However, HUD programs authorized by the
Housing Act of 1937 focus on renting as opposed to home purchases,
which contributes to the disqualification of households with minimum
wage earners as described above. The Agency has been operating a pilot
in 23 states to test the alternate methodology of a two-tier income
limit structure to address this issue.
For the pilot, the Agency used the authority in 42 U.S.C.
1437a(b)(2)(D), which provides for HUD and USDA to consult on income
ceilings for rural areas, taking into account the types of programs
that will use the income ceilings as well as subsidy characteristics.
Based on this authority, the Agency used a two-tier income limit
structure for the single family housing programs which bands together
1-4 person households using the 4-person income level set by HUD, and
5-8 person households using the 8-person income level established by
HUD. The pilot has successfully served more borrowers, providing
meaningful homeownership opportunities to those who would otherwise be
denied. The Agency will use income banding to determine all limits for
very low-income, low-income, moderate-income, 38 year term and adjusted
median income.
Such banding has successfully been used to establish the moderate
income limits in the guaranteed single family housing loan program for
years (the term ``moderate income'' is not defined in Section 501(b)(4)
of the Housing Act of 1949 and therefore is not restricted in the same
way as ``very low-'' and ``low-income'').
The Agency has consulted with HUD, and both agencies agree that the
two-tier income limit approach is suitable for the USDA single family
housing loan and grant programs. The impacted income definitions in
Sec. 3550.10 are revised to state that the respective limit is ``an
adjusted income limit developed in consultation with HUD''. The two-
tier income limits will be published annually via a Procedure Notice
and posted to the Agency website at https://www.rd.usda.gov/files/RD-DirectLimitMap.pdf.
The Agency is revising the definition of moderate income so that it
does not exceed the moderate income limit established for the
guaranteed single family housing loan program. The Agency will publish
a specific limit in the program handbook.
The revisions to the income definitions will ultimately allow the
Agency and HUD to account for the differences between renting (which is
the focus of HUD and 42 U.S.C. 1437 et seq.) and owning a home. This
action will improve program availability to the intended recipients.
(2) Revising Sec. 3550.54(d) to remove the requirement that net
family assets be included in the calculation of repayment income.
Currently, net family assets are considered for determining annual
income, down payment purposes, and repayment income. The Agency will
exclude net family assets from repayment income calculations because
repayment income focuses on the income of those who sign the promissory
note, whereas net family assets considers other family members. Net
family assets will still be considered for annual income and down
payment purposes.
The Agency is revising the regulation so that the list of net
family assets considered for annual income and down payment purposes
would exclude amounts in voluntary retirement accounts such as
individual retirement accounts (IRAs), 401(k) plans, Keogh accounts,
and the cash value of life insurance policies.
In addition, the Agency is excluding the value of tax advantaged
college savings plans, the value of tax advantaged health or medical
savings or spending accounts, and other amounts deemed by the Agency,
from net family assets considered in the determination of annual income
and down payments.
Excluding these types of assets when considering annual income or
down
[[Page 29035]]
payment requirements will help safeguard the assets for their intended
purposes and promote a healthy financial support system for the
household when it does incur education and health care costs, or enters
retirement.
The Agency is also removing from net family assets the value, in
excess of the consideration received, for any business or household
assets disposed of for less than the fair market value during the 2
years preceding the income determination. This change recognizes that
it is not productive or meaningful to consider assets which have been
disposed of in the past.
Lastly, the Agency is making two minor changes primarily for
consistency between the direct and guaranteed single family housing
loan regulations. The Agency will include in net family assets any
equity in capital investments for consistency with the guaranteed
single family housing loan regulations, as well as obtaining a full
understanding of an applicant's financial condition before making a
decision on a loan. In the exclusions from net family assets, the
Agency will change the language from ``American Indian trust land'' to
``American Indian restricted land''. The terms ``trust land'' and
``restricted'' are often used interchangeably, and the revision is for
consistency between the direct and guaranteed programs, and will not
result in any substantive changes.
(3) Revising the methodology used to determine the area loan limits
in Sec. 3550.63(a) to use a percentage(s), as determined by the
Agency, of the applicable local HUD section 203(b) limit.
The revisions to the area loan limit methodology will streamline
the determination of area loan limits and improve the reliability of
the data set used to establish the area loan limits. The current
process to annually establish the area loan limits uses a data set
based on overly restrictive nationalized parameters and requires a
significant amount of staff time on all levels (field, state, and
national). Currently, Sec. 3550.63(a) allows for two methods that a
State Director may use to establish area loan limits. The first option
is based on the cost to construct a modest home plus the market value
of an improved lot based on recent sales data. The second option allows
the State Director to use State Housing Authority (SHA) limits as long
as the limit is within 10 percent of the cost data plus the market
value of the improved lot. This second option is rarely used because
the SHA limits are usually not within the 10 percent limit.
For the first option, the most widely used option, the Agency
contracts with a third party that provides building cost data for real
estate valuations to obtain construction costs, but those construction
costs are based on parameters for homes that do not reflect the varied
modest homes available to program borrowers. In addition, obtaining the
market value is a time-consuming process relying on collecting and
updating recent home sales data, which is particularly difficult given
Agency staff appraiser shortages over the past few years.
The Agency has been operating a pilot to test the alternate
methodology of basing the area loan limits on a percentage of the FHA
Forward One-Family mortgage limits (the HUD 203(b) limit). Under the
pilot, 80 percent of the HUD 203(b) limit was used to establish the
area loan limits in selected pilot states. The 80 percent was
established based on a side-by-side, county-by-county comparison of the
Agency's existing area loan limits to various percentages of the HUD
203(b) limits. It was determined that 80 percent of the HUD 203(b)
limits was adequate to cover the loan amounts in the majority of states
(vs. lower percentages of 60-70 percent).
While the pilot states generally experienced increases in their
area loan limits, the increases were not significant, in part because
an applicant's qualification amount continues to be limited to
repayment ability, property eligibility criteria (for example,
properties financed through the program are currently subject to 2,000
square feet), and other factors. Average loan amounts in the pilot
states increased 13.4 percent from Fiscal Year 2015 to 2017, while
average loan amounts in the non-pilot states have increased 5.4 percent
during the same period.
The Agency believes the slightly higher percent increase in the
pilot states is acceptable for several reasons. For example, the
alternate methodology makes new construction under the program more
feasible, and new construction can improve a rural community's housing
stock and economy. In addition, this action will save the Agency more
than $70,000 each year (which is the cost to obtain the construction
cost data set from a nationally recognized residential cost provider).
A significant amount of staff time will also be saved.
The Agency will determine the percentage(s) based on housing market
conditions and trends, and publish the percentage(s) in the program
handbook. The resulting area loan limits will be posted to the Agency
website at https://www.rd.usda.gov/files/RD-SFHAreaLoanLimitMap.pdf.
The change allows the Agency to adjust the percentage(s) as necessary
in order to be responsive to housing market conditions and trends.
(4) Revising Sec. 3550.68(b)(2) to convert a borrower currently
receiving payment assistance method 1 to payment assistance method 2
should that borrower receive a subsequent loan. The change is related
to the income banding proposal, as payment assistance method 2 will
more closely align the subsidy provided with what is actually needed
for affordability. The change avoids potentially over-subsidizing
borrowers using payment assistance method 1 under the income banding
system and reduces the potential for negative impacts to the program's
subsidy rate. In addition, RHS is making a technical correction to the
proposed regulatory text, which stated that the conversion would occur
if a borrower ``received'' a subsequent loan, implying that the
conversion to payment assistance method 2 would apply retroactively and
only apply to loans already received. This meaning is not supported by
the preamble to the proposed rule. The final regulatory text will
correctly state that the conversion will occur if a borrower
``receives'' a subsequent loan, to ensure that the conversion applies
to any future loan.
(5) Revising the definition of low-income in Sec. 3555.10 for the
single family housing guaranteed loan program to allow for the two-tier
income limit structure (income banding) discussed above. The two-tier
income limits will be published annually via a Procedure Notice and
posted to the Agency website at https://www.rd.usda.gov/files/RD-GRHLimitMap.pdf.
The single family housing guaranteed loan program provides
guarantees to lenders who make loans to low- and moderate-income
borrowers in rural areas who are without sufficient resources or credit
to obtain a loan without the guarantee. As mentioned, the guaranteed
loan program already uses the two-tier income limit structure for
moderate income limits. This change would allow the two-tier income
limit structure to be used for determining the very low- and low-income
limits in the guaranteed loan program.
(6) Making a technical correction to the suspension or debarment
requirement in Sec. 3550.53(f) to refer to 2 CFR parts 180 and 417,
instead of 7 CFR 3017 which is obsolete.
[[Page 29036]]
II. Discussion of Relevant Public Comments Received on August 31, 2018,
Proposed Rule
The 60-day comment period for the proposed rule published at 83 FR
44504 ended on October 30, 2018. A total of 30 comments were received.
Commenters included affordable housing nonprofit organizations, the
National Association of Home Builders, the National Association of
Realtors, the National Council of State Housing Agencies, the National
Rural Housing Coalition, the Rural Community Assistance Corporation and
the public.
Comments on the two-tier income limit structure (income banding).
The Agency received several comments on the two-tier income limit
structure, and whether that change will limit the program's ability to
serve lower income borrowers, potentially allowing limited subsidy and
loan dollars to go to higher income households. One commenter noted
that while appropriation levels for the program have been modestly
increased over time, these increases are not enough to meet the need,
before expanding the pool of income eligible applicants through two-
tier income limits.
The Agency also received a few comments about possible
contradictions between the two-tier income limits and other HUD
programs such as Self-Help Homeownership Opportunity Program (SHOP),
Home Investment Partnerships program (HOME), and/or Community
Development Block Grant (CDBG).
Agency Response: The program is subject to a statutory requirement
in section 502(d) of the Housing Act of 1949, as amended, which
requires that (1) not less than 40 percent of the funds approved in
appropriation Acts for use under this section shall be set aside and
made available only for very low-income families or persons; and (2)
not less than 30 percent of the funds allocated to each State under
this section shall be available only for very low-income families or
persons. This requirement serves to ensure that proportionate funding
is available each year for very low-income households. In turn, the
revision seeks to expand the program to account for areas where
households with members earning minimum wage may currently be
considered too high to qualify for a direct loan. Based on the pilot
and other analysis, the Agency believes the income banding will help
make loans available to households (such as those earning minimum wage)
that were incongruously excluded from the program due to reliance on
limits not tailored for the program's intended recipients. The Agency
does not believe the changes will open the program to higher income
households at the expense of lower income households, and adopts the
changes as proposed.
The Agency has consulted with HUD regarding the implications of
differing income limits within its programs, and the Agency's two-tier
income limits. HUD has not taken a position on changing income limits
for SHOP, HOME, CDBG or other HUD administered programs.
Comments on revising the methodology used to determine the area
loan limits. The Agency received a couple of comments which did not
support revising the methodology used to determine the area loan limits
to use a percentage of the applicable local HUD section 203(b) limit.
The commenters noted that the 203(b) loan limits are not based on
housing sale prices except for high cost counties and would not be
their preferred basis for determining loan limits for this program.
While they generally do not object to changing the method, their
concern was the proposed change will lead to larger loan sizes, and
subsidy going to fewer borrowers with larger loans leading to less
total loans and subsidy for lower-income borrowers.
Agency Response: It is the Agency's expectation that by using a
reasonable percentage(s) of the HUD section 203(b) limit, rather than
the full limits, the Agency's respective area loan limits will reflect
local, rural housing costs in a reasonable and consistent manner. Under
the revision, the Agency will have the flexibility to establish a
percentage(s) which will be responsive to housing market conditions and
trends. These considerations, in conjunction with the expected cost
savings to the Agency, suggest that this will be the most efficient and
reasonable method, and the proposal is adopted without change.
Comments on business or household assets disposed of for less than
fair market value. The Agency received a couple of comments regarding
the change which would no longer consider the value of business or
household assets disposed of for less than fair market value during the
previous two years, in excess of the consideration received, as net
family assets. The commenters believe the existing policy helps protect
the Agency from potential fraud, and that applicants selling or
transferring assets for less than market value may be doing so to
reduce their required contribution toward the purchase of the home, or
to qualify for payment assistance.
Agency Response: The change recognizes that it is not productive or
meaningful to consider assets which have been disposed of in the past.
The percentage of applicants who have documented that they disposed of
assets for less than the market value in the preceding two years is
nominal. When an applicant has disposed of assets in this manner, the
market value of the asset in question generally does not exceed the
applicable asset threshold for eligibility or down payment
requirements. The proposal is adopted without change.
Comments on converting borrowers from payment assistance method 1
to method 2 should that borrower receive a subsequent loan. The Agency
received a comment regarding whether the Agency is concerned with the
amount of subsidy per household, or the total amount of subsidy awarded
in any given fiscal year; and whether the Agency expects the total
number of loans and amount of subsidy to increase.
Agency Response: The Agency is watchful of subsidy levels on both a
per household and cumulative basis. Standardized payment assistance
formulas and periodic reviews of the households' pertinent financial
information help to ensure that households do not receive more than the
maximum subsidy allowed, which in turns controls the amount of
cumulative subsidy that is provided. In addition, this revision will
only impact existing borrowers currently under payment assistance
method 1, who receive subsequent loans. It is expected that this
revision will reduce the potential for a negative impact on the
program's subsidy rate, while aligning future subsidy with what the
applicable households need for affordability. Therefore, the Agency
does not expect a significant increase in the number of loans or amount
of subsidy because of this revision, and the proposal is adopted
without change.
Statutory Authority
Section 510(k) of Title V the Housing Act of 1949 (42 U.S.C.
1480(k)), as amended, authorizes the Secretary of Agriculture to
promulgate rules and regulations as deemed necessary to carry out the
purpose of that title.
Executive Order 12866
The Office of Management and Budget (OMB) has designated this rule
as not significant under Executive Order 12866.
[[Page 29037]]
Executive Order 12988, Civil Justice Reform
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Except where specified, all State and local laws and
regulations that are in direct conflict with this rule will be
preempted. Federal funds carry Federal requirements. No person is
required to apply for funding under this program, but if they do apply
and are selected for funding, they must comply with the requirements
applicable to the Federal program funds. This rule is not retroactive.
It will not affect agreements entered into prior to the effective date
of the rule. Before any judicial action may be brought regarding the
provisions of this rule, the administrative appeal provisions of 7 CFR
part 11 must be exhausted.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effect of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, the
Agency generally must prepare a written statement, including a 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 the Agency to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, most cost-effective, or least burdensome
alternative that achieves the objectives of the rule.
This final rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments or the private sector. Therefore, this rule is not subject
to the requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1970,
subpart A, ``Environmental Policies.'' It is the determination of the
Agency that this action does not constitute a major Federal action
significantly affecting the quality of the human environment, and, in
accordance with the National Environmental Policy Act of 1969, Public
Law 91-190, neither an Environmental Assessment nor an Environmental
Impact Statement is required.
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 States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
governments. Therefore, consultation with the States is not required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.) the undersigned has determined and certified by signature of this
document that this rule, while affecting small entities, will not have
an adverse economic impact on small entities. This rule does not impose
any significant new requirements on program recipients nor does it
adversely impact proposed real estate transactions involving program
recipients as the buyers.
Executive Order 12372, Intergovernmental Review of Federal Programs
This program/activity is not subject to the provisions of Executive
Order 12372, which require intergovernmental consultation with State
and local officials. (See the document related to 7 CFR part 3015,
subpart V, at 48 FR 29112, June 24, 1983; 49 FR 22675, May 31, 1984; 50
FR 14088, April 10, 1985.)
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
This Executive order imposes requirements in the development of
regulatory policies that have tribal implications or preempt tribal
laws. RHS has determined that the final 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 the Indian tribes. Thus, this final
rule is not subject to the requirements of Executive Order 13175.
Programs Affected
The following programs, which are listed in the Catalog of Federal
Domestic Assistance, are affected by this final rule: Number 10.410,
Very Low to Moderate Income Housing Loans (specifically the section 502
direct and guaranteed loans), and Number 10.417, Very Low-Income
Housing Repair Loans and Grants (specifically the section 504 direct
loans and grants).
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.), the information collection activities associated with
this rule are covered under OMB Number: 0575-0172. This final rule
contains no new reporting or recordkeeping requirements that would
require approval under the Paperwork Reduction Act of 1995.
E-Government Act Compliance
RHS is committed to complying with the E-Government Act, 44 U.S.C.
3601 et seq., to promote the use of the internet and other information
technologies to provide increased opportunities for citizen access to
Government information and services, and for other purposes.
Non-Discrimination Policy
In accordance with Federal civil rights law and U.S. Department of
Agriculture (USDA) civil rights regulations and policies, the USDA, its
Agencies, offices, and 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, family/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 Office of the Assistant
[[Page 29038]]
Secretary for Civil Rights, 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 Parts 3550 and 3555
Administrative practice and procedure, Environmental impact
statements, Fair housing, Grant programs-housing and community
development, Housing, Loan programs-housing and community development,
Low and moderate income housing, Manufactured homes, Reporting and
recordkeeping requirements, Rural areas.
For the reasons stated in the preamble, chapter XXXV, title 7 of
the Code of Federal Regulations, is amended as follows:
PART 3550--DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS
0
1. The authority citation for part 3550 continues to read as follows:
Authority: 5 U.S.C. 301; 42 U.S.C. 1480.
Subpart A--General
0
2. Section 3550.10 is amended by revising the definitions of ``low
income'', ``moderate income'', ``rural area'', and ``very low-income''
to read as follows:
Sec. 3550.10 Definitions.
* * * * *
Low income. An adjusted income limit developed in consultation with
HUD under 42 U.S.C. 1437a(b)(2)(D).
* * * * *
Moderate income. An adjusted income that does not exceed the
moderate income limit for the guaranteed single family housing loan
program authorized by Section 502(h) of the Housing Act of 1949, as
amended.
* * * * *
Rural area. An area defined in section 520 of the Housing Act of
1949, as amended.
* * * * *
Very low-income. An adjusted income limit developed in consultation
with HUD under 42 U.S.C. 1437a(b)(2)(D).
* * * * *
Subpart B--Section 502 Origination
0
3. In Sec. 3550.53, paragraph (f) is revised to read as follows:
Sec. 3550.53 Eligibility requirements.
* * * * *
(f) Suspension or debarment. Applications from applicants who have
been suspended or debarred from participation in Federal programs will
be handled in accordance with 2 CFR parts 180 and 417.
* * * * *
0
4. In Sec. 3550.54:
0
a. Revise the first sentence of paragraph (d) introductory text;
0
b. Revise paragraphs (d)(1) introductory text and (d)(1)(i);
0
c. Revise paragraphs (d)(1)(iv) through (vi);
0
d. Remove paragraph (d)(1)(vii);
0
e. Revise paragraphs (d)(2)(i) and (v); and
0
f. Add paragraphs (d)(2)(vi) through (x).
The revisions and additions read as follows:
Sec. 3550.54 Calculation of income and assets.
* * * * *
(d) Net family assets. Income from net family assets must be
included in the calculation of annual income. * * *
(1) Net family assets include, but are not limited to:
(i) Equity in real property or other capital investments, other
than the dwelling or site;
* * * * *
(iv) Stocks, bonds, and other forms of capital investments that are
accessible without retiring or terminating employment;
(v) Lump sum receipts such as lottery winnings, capital gains,
inheritances; and
(vi) Personal property held as an investment.
(2) * * *
(i) Interest in American Indian restricted land;
* * * * *
(v) Amounts in voluntary retirement plans such as individual
retirement accounts (IRAs), 401(k) plans, and Keogh accounts (except at
the time interest assistance is initially granted);
(vi) The value of an irrevocable trust fund or any other trust over
which no member of the household has control;
(vii) Cash value of life insurance policies;
(viii) The value of tax advantaged college savings plans (529 plan,
Coverdell Education Savings Account, etc.);
(ix) The value of tax advantaged health or medical savings or
spending accounts; and
(x) Other amounts deemed by the Agency not to constitute net family
assets.
0
5. Effective on August 5, 2019, in Sec. 3550.63, paragraph (a)(1) is
revised to read as follows:
Sec. 3550.63 Maximum loan amount.
* * * * *
(a) * * *
(1) The area loan limit is the maximum value of the property RHS
will finance in a given locality. This limit is based on a
percentage(s) of the applicable local HUD section 203(b) limit. The
percentage(s) will be determined by the Agency and published in the
program handbook. The area loan limits will be reviewed at least
annually and posted to the Agency website.
* * * * *
0
6. In Sec. 3550.68, paragraph (b)(2) is revised to read as follows:
Sec. 3550.68 Payment subsidies.
* * * * *
(b) * * *
(2) If a borrower receiving payment assistance using payment
assistance method 1 receives a subsequent loan, payment assistance
method 2 will be used to calculate the subsidy for the initial loan and
subsequent loan.
* * * * *
PART 3555--GUARANTEED RURAL HOUSING PROGRAM
0
7. The authority citation for part 3555 continues to read as follows:
Authority: 5 U.S.C. 301; 42 U.S.C. 1471 et seq.
Subpart A--General
0
8. Section 3555.10 is amended by revising the definition of ``low-
income'' to read as follows:
Sec. 3555.10 Definitions and abbreviations.
* * * * *
Low-income. An adjusted income limit developed in consultation with
HUD under 42 U.S.C. 1437a(b)(2)(D).
* * * * *
Dated: June 12, 2019.
Bruce W. Lammers,
Administrator, Rural Housing Service.
[FR Doc. 2019-12988 Filed 6-20-19; 8:45 am]
BILLING CODE 3410-XV-P
