Single Family Housing Guaranteed Loan Program

Published date17 November 2020
Record Number2020-24578
SectionProposed rules
CourtRural Housing Service
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.
Proposed Rules Federal Register
73241
Vol. 85, No. 222
Tuesday, November 17, 2020
1
GUS is a tool that helps evaluate the credit risk
but does not replace the informed judgment of the
experienced underwriter’s decision and does not
serve the sole basis for making a final loan decision.
See 7 CFR 3555.107(b).
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3555
[Docket No. RHS–20–SFH–0025]
RIN 0575–AD21
Single Family Housing Guaranteed
Loan Program
AGENCY
: Rural Housing Service,
Agriculture Department (USDA).
ACTION
: Proposed rule.
SUMMARY
: The Rural Housing Service
(RHS or Agency) proposes to amend the
current regulation for the Single-Family
Housing Guaranteed Loan Program
(SFHGLP) to mandate the use of the
Guaranteed Underwriting System (GUS)
and the Lender Loan Closing System
(LLC) by approved lenders. The
Agency’s proposal to mandate the use of
GUS in loan originations and the LLC
for loan closings will allow the Agency
to decrease time-consuming and
expensive manual file reviews, improve
performance monitoring and reduce
program risk of the guaranteed loan
portfolio.
DATES
: Comments must be submitted on
or before January 19, 2021.
ADDRESSES
: Comments may be
submitted by going to the Federal
eRulemaking Portal: Go to http://
www.regulations.gov and in the ‘‘Search
Documents’’ box, enter the Docket
Number RHS–20–SFH–0025 or the RIN#
0575–AD21, and click the ‘‘Search’’
button. To submit a comment, choose
the ‘‘Comment Now!’’ button.
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 under the
‘‘Help’’ tab at the top of the Home page.
Other Information: Additional
information about Rural Development
and its programs is available on the
internet at http://www.rurdev.usda.gov/
index.html.
All comments will be available for
public inspection online at the Federal
eRulemaking Portal (http://
www.regulations.gov).
FOR FURTHER INFORMATION CONTACT
: Ana
Placencia, Finance and Loan Analyst,
Single Family Housing Guaranteed Loan
Division, Rural Development, U.S.
Department of Agriculture, STOP 0784,
Room 2250, South Agriculture Building,
1400 Independence Avenue SW,
Washington, DC 20250–0784.
Telephone: (254) 721–0770; or email:
ana.placencia@usda.gov.
SUPPLEMENTARY INFORMATION
:
Background
Rural Housing Service (RHS) is
issuing a proposed rule to amend the
Single-Family Housing Guaranteed Loan
Program (SFHGLP) regulations found in
7 CFR part 5555, subparts C and D, by
updating the regulations to align the
Agency’s program with the mortgage
industry expectations in the domain of
information technology.
Currently, the Agency allows
approved lenders to submit applications
for loan guarantee requests by mail,
electronic mail (email) or GUS. Loan
requests received by email must be
saved to a folder on a computer drive
before being manually uploaded into the
Electronic Case File (ECF) for
processing. If the loan request is
received in paper format, it must first be
scanned, saved and then uploaded to
ECF, which imposes a time constraint
on both the lender and the agency.
Additionally, Agency staff must place
the application in ECF for processing in
the sequential order in which it was
received. In some cases, paper checks
are still being submitted and manually
processed by Agency staff before being
forwarded to the appropriate finance
center. Agency staff must also manually
upload the documents for review,
separately from the uniform residential
appraisal report.
Approximately 98 percent of lenders
are currently utilizing GUS to submit
loan applications. The remaining two
percent are submitting manually
underwritten loan packages by email or
mail. This translates to roughly 1093
manually submitted loans per year and
3826 staff hours. Lenders that
participate in the SFHGLP generally
participate in other federally insured
mortgage programs that require
utilization of loan origination systems
(LOS). Access to GUS is web-based and
is compatible with the industry’s
leading LOS technology.
The goal of updating this regulation is
to better streamline the processing of the
SFHGLP application using the
automated initiatives of the GUS and
the LLC for all applications and loan
closings transactions. GUS is compatible
with the Loan Origination Systems and
Point of Sale vendors that are widely
accepted throughout the industry. All
SFHGLP loan products are supported by
GUS, except for streamlined-assist
refinance transactions. Lenders will
continue to submit manually
underwritten files for these types of
transactions by electronic means
approved by the Agency. These loans
are different from loans downgraded in
GUS for manual underwriting—the
downgraded loans will continue to be
submitted via GUS for a manual review.
Mandatory use of the automated
underwriting system will not only offer
ease to lenders when uploading closing
documents and payment of the
guarantee and technology fees using the
LLC, but will efficiently and effectively
allow Agency staff the capability to
review loan applications, increase
lender’s ability to transfer loans to
program investors, and lessen the
timeframe for underwriting and
processing loan approvals.
GUS is a robust automated system
that processes application requests and
provides specific loan closing data to
the lender and the Agency. It offers
added benefits to the lender’s decision-
making process by producing
underwriting findings reports and
reliable credit data for managing
borrower risks.
1
Expanded use of the
system will maximize the impact of core
agency programs and drive innovation
that will remove obstacles that delay
loan production.
Discussion of the Rule
In order to provide efficient and
timely delivery of the SFHGLP, it is
necessary to streamline the processing
of SFHGLP applications using
automation initiatives as much as
possible. The Agency proposes to revise
the regulation to mandate that lenders
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Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Proposed Rules
utilize GUS and LLC systems for all
applications and loan closing files.
Mandatory use of GUS and LLC will
allow uniformity in application
submissions, consistency in the timely
processing of loan requests and will
save time and administrative costs for
both lenders and the Agency by
eliminating the requirement for paper
file storage, shredding costs, and mail
with overnight courier fees.
A summary of the changes includes
amending 7 CFR 3555.107(b)
introductory text and (b)(1), to reflect
that the use of the Agency’s automated
underwriting system would be required
for all requests for conditional
commitments and loan guarantees.
Submissions by alternate means, such as
email or hard copy, will not be
permitted and therefore the Agency
proposes to eliminate references to such
submission methods.
The Agency also proposes to amend
§ 3555.107(c) and add paragraphs (c)(1)
and (2) to describe the two types of
loans that would still be manually
underwritten. First, loan products not
supported by the automated origination
system, such as streamlined-assist
refinance transactions, must be
manually underwritten and submitted
via secure email or other electronic
means approved by the Agency. Second,
loans downgraded in the agency’s
automated origination system require
manual underwriting, although lenders
would still submit the loan
documentation via the Agency’s
automated systems.
Concurrently, § 3555.107(i)(4) will be
amended to require all loan
documentation to be submitted via the
Agency’s automated systems with the
exception of the loan products
described in § 3555.107(c)(1).
Regulations § 3555.151(h)(2) would
also be amended to clarify procedures
for manually underwritten loans. The
loan files for manually underwritten
loans would still be submitted through
the automated underwriting system but
require full documentation review, and
credit score validation or compensating
factors.
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
the Department of Agriculture to
promulgate rules and regulations as
deemed necessary to carry out the
purpose of that title.
Executive Order 12866, Classification
This rule has been determined to be
not significant for the purposes of
Executive Order 12866 and, therefore,
has not been reviewed by the Office of
Management and Budget (OMB).
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 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 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.
National Environmental Policy Act
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
Environmental Impact Statement is not
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
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 12372,
Intergovernmental Review of Federal
Programs
This program is not subject to the
requirements of Executive Order 12372,
‘‘Intergovernmental Review of Federal
Programs,’’ as implemented under
USDA’s regulations at 7 CFR part 3015.
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: AIAN@
wdc.usda.gov to request such a
consultation.
Programs Affected
The program affected by this
proposed rule is listed in the Catalog of
Federal Domestic Assistance under
Number 10.410, Very Low to Moderate
Income Housing Loans (Section 502
Rural Housing Loans).
Paperwork Reduction Act
This rule contains no new reporting
or recordkeeping burdens under OMB
control number 0575–0179 that would
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Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Proposed Rules
require approval under the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35).
Executive Order 13771—Reducing
Regulation and Controlling Regulatory
Costs
Executive Order 13771 directs
agencies to reduce regulation and
control regulatory costs and provides
that the cost of planned regulations be
prudently managed and controlled
through a budgeting process. This rule
has been reviewed in accordance with
E.O. 13771 and it has been determined
that because the subject program of this
rule is considered an income transfer
from taxpayers to program beneficiaries,
it is not subject to the requirements of
E.O. 13771.
Civil Rights Impact Analysis
Rural Development has reviewed this
rule in accordance with USDA
Regulation 4300–4, Civil Rights Impact
Analysis, to identify any major civil
rights impacts the rule might have on
program participants on the basis of age,
race, color, national origin, sex or
disability. After review and analysis of
the rule and available data, it has been
determined that implementation of the
rule will not adversely or
disproportionately impact very low,
low- and moderate-income populations,
minority populations, women, Indian
tribes or persons based on their race,
color, national origin, sex, age,
disability, or marital or familiar status.
No major civil rights impact is likely to
result from this rule.
E-Government Act Compliance
Rural Development is committed to
the E-Government Act, which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
USDA 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 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 on 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
Secretary for Civil Rights, 1400
Independence Avenue SW, Washington,
DC 20250–9410;
(2) Fax: (202) 690–7442; or
(3) Email: program.intake@usda.gov.
USDA is an equal opportunity
provider, employer, and lender.
List of Subjects in 7 CFR Part 3555
Construction, Eligible loan purpose,
Home improvement, Loan programs—
housing and community development,
Loan terms, Mortgage insurance,
Mortgages, Rural areas.
For the reasons discussed in the
preamble, the Agency is proposing to
amend 7 CFR part 3555 as follows:
PART 3555—GUARANTEED RURAL
HOUSING PROGRAM
1. 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 C—Loan Requirements
2. Amend § 3555.107 by revising
paragraph (b) introductory text, (b)(1),
(3), and (6), (c), and (i)(4) to read as
follows:
§ 3555.107 Applications for and issuance
of the loan guarantee.
* * * * *
(b) Automated underwriting.
Approved lenders are required to
process SFHGLP loans using Rural
Development’s automated systems. The
automated underwriting system is a tool
to help evaluate credit risk but does not
substitute or replace the careful
judgment of experienced underwriters
and shall not be the exclusive
determination on extending credit. The
lender must apply for and receive
approval from Rural Development to
utilize the automated underwriting
system. Rural Development reserves the
right to terminate the lender’s use of the
automated underwriting system.
(1) Lenders are responsible for
ensuring all data is true and accurately
represented in the automated
underwriting system.
* * * * *
(3) The use of Rural Development’s
automated underwriting system subjects
the lender to indemnification
requirements in accordance with
§ 3555.108.
* * * * *
(6) Lenders will validate findings
based on the output report of the
automated underwriting system.
* * * * *
(c) Manual underwriting. Loans
requiring manual underwriting
(manually underwritten loans) are
described in paragraphs (c)(1) and (2) of
this section. For manually underwritten
loans, full documentation and
verification in accordance with subparts
C, D, and E of this part will be
submitted to Rural Development when
requesting a guarantee and maintained
in the lender’s file. The documentation
will confirm the applicant’s eligibility,
creditworthiness, repayment ability,
eligible loan purpose, adequate
collateral, and satisfaction of other
regulatory requirements. The following
types of loans require manual
underwriting:
(1) Loans that are not supported by
Rural Development’s automated
systems. These loans are submitted by
secure email or other electronic means
approved by the Agency.
(2) Loans downgraded by Rural
Development’s automated system. These
loans are submitted utilizing Rural
Development’s automated system.
* * * * *
(i) * * *
(4) Evidence of documentation
supporting the properly closed loan will
be submitted using Rural Development’s
automated systems, with the exception
of manually underwritten loans defined
in paragraph (c)(1) of this section.
* * * * *
Subpart D—Underwriting the Applicant
3. Amend § 3555.151 by revising
paragraph (h)(2) introductory text to
read as follows:
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Federal Register / Vol. 85, No. 222 / Tuesday, November 17, 2020 / Proposed Rules
§ 3555.151 Eligibility requirements.
* * * * *
(h) * * *
(2) The repayment ratio may exceed
the percentage in paragraph (h)(1) of
this section when certain compensating
factors exist. The handbook, HB–1–
3555, Appendix I, located at https://
www.rd.usda.gov/sites/default/files/
hb-1-3555.pdf, will provide examples
of when a debt ratio waiver may be
granted. The automated underwriting
system will consider any compensating
factors in determining when the
variance is appropriate. Loans
downgraded in the automated
underwriting system which must be
manually underwritten will require the
lender to document compensating
factors. The presence of compensating
factors does not strengthen a ratio
exception when multiple layers of risk
are present in the application.
Acceptable compensating factors,
supporting documentation, and
maximum ratio thresholds, will be
further defined and clarified in the
handbook. Compensating factors
include, but are not limited to:
* * * * *
Elizabeth Green,
Acting Administrator, Rural Housing Service.
[FR Doc. 2020–24578 Filed 11–16–20; 8:45 am]
BILLING CODE 3410–XV–P
DEPARTMENT OF STATE
22 CFR Part 54
[Public Notice: 11237]
RIN 1400–AE37
Passports; Procedures for Passport
Couriers
AGENCY
: Department of State.
ACTION
: Proposed rule.
SUMMARY
: The Department of State (the
Department) proposes regulations to
continue a registration program and
hand delivery procedures for courier
companies used by applicants to
transport their passport applications,
and U.S. passports issued to them, to
and from participating passport
agencies. The purpose of these proposed
rules is to continue the program that
was established by policy, to maintain
vigilance over the security of the
passport application process, require
companies to register with the
Department prior to providing hand
delivery services to certain applicants
for U.S. passports, and to follow a
uniform set of hand delivery
procedures.
DATES
: Written comments must be
received on or before January 19, 2021.
ADDRESSES
: Interested parties may
submit comments to the Department by
any of the following methods:
Visit the Regulations.gov website at:
http://www.regulations.gov and search
for the Regulatory Information Number
(RIN) 1400–AE37 or docket number
DOS–2020–0045.
Mail (paper, disk, or CD–ROM): Office
of Adjudication, Passport Services, U.S.
Department of State, 44132 Mercure
Circle, P.O. Box 1227, Sterling, VA
20166–1227, ATTN: Courier Regulation.
Email: ca-courierreg@state.gov. You
must include the RIN (1400–AE37) in
the subject line of your message.
All comments should include the
commenter’s name, the organization the
commenter represents, if applicable,
and the commenter’s address. If the
Department is unable to read your
comment for any reason, and cannot
contact you for clarification, the
Department may not be able to consider
your comment. After the conclusion of
the comment period, the Department
anticipates publishing a final rule (in
which it will address relevant
comments) as expeditiously as possible.
FOR FURTHER INFORMATION CONTACT
:
Karen A. Pizza, Office of Adjudication,
ca-courierreg@state.gov, (202) 485–
8800.
SUPPLEMENTARY INFORMATION
:
Why is the Department proposing this
rule?
The mission of the Passport Services
directorate within the Bureau of
Consular Affairs, Department of State, is
to issue secure travel documents while
providing the highest level of customer
service, professionalism, and integrity.
Passport Services recognizes that some
applicants residing in the continental
United States who are using expedited
passport processing (22 CFR 51.56)
might want to hire a private courier
company to deliver their passport
applications to a domestic passport
agency for processing and to retrieve
their issued passports. This hand
delivery program for registered courier
companies recognizes that for these
domestic applicants with urgent travel
needs, peace of mind comes from the
additional support that a courier
company may offer. Accordingly, this
program is limited to applicants
requesting expedited passport
processing, and is available both to
applicants who are required to submit
an application by personal appearance
pursuant to 22 CFR 51.21 (i.e., a DS–11),
(and in these cases executed before a
designated passport acceptance agent
pursuant to 22 CFR 51.22(b)), as well as
to applicants who may submit a renewal
passport application pursuant to 22 CFR
51.21(b) (i.e., a DS–82). As this program
applies only to domestic passport
agencies, its scope is limited to the
continental United States.
To facilitate the processing of
passport applications and promote fair
and efficient use of Department
resources, this rule formalizes
procedures for private domestic courier
companies that applicants use to
transport their passport applications
and issued passports to and from
domestic passport agencies. The
procedures proposed in this rulemaking
are a formalization and update of
practices and procedures already in
place, which are familiar to private
courier companies. These procedures
will be implemented by domestic
passport agencies participating in the
Department’s passport hand delivery
program for registered courier
companies.
How will the program work?
A courier company must be registered
at a passport agency before it may hand
deliver passport applications or
passports to or from that passport
agency. The courier company must be
registered with each passport agency at
which it proposes to offer hand delivery
services.
The Department will collect
identifying information from the courier
company for its registration and require
the courier company to certify that the
requirements set out in this proposed
rule are met by all of its employees who
will hand deliver passport applications
or passports. The Department will notify
a courier company and the passport
agency or agencies where its registration
is accepted, and the start date after
which it can provide hand delivery
services at each agency.
Passport agencies’ resources are
utilized to serve customers who apply
in person at a passport agency, to
process applications of customers who
apply at a passport acceptance facility
or renew through the mail, and to
process applications submitted by
registered courier companies. The
priority is to serve customers with
urgent travel who apply in person.
Passport agencies assign resources to
each of these work flows based upon
historical data and demand projections
to best meet the needs of U.S. citizens,
particularly those with immediate
travel.
The total number of companies that
may be registered at each passport
agency will be established by the
Department and is based upon available
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