Single Family Housing Guaranteed Loan Program

CourtAgriculture Department,Rural Housing Service
Citation86 FR 30555
Publication Date09 Jun 2021
Record Number2021-11937
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
30555
Vol. 86, No. 109
Wednesday, June 9, 2021
1
Falcon Capital Advisors, CLIN 0003 Report,
Capital and Financial Requirements for Non-
Regulated Lenders available at https://
www.rd.usda.gov/page/usda-linc-training-resource-
library.
2
Available at: https://fiscal.treasury.gov/files/
dms/circ-a129-upd-0113.pdf. OMB requires credit
granting agencies to establish and publish in the
Federal Register specific eligibility criteria for
lender or servicer participation in Federal credit
programs, including qualification requirements for
principal officers and staff of the lender or servicer.
OMB Circular A–129, p. 12.
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3555
[Docket No. RHS–21–SFH–0003]
RIN 0575–AD22
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 update the requirements
for Federally supervised lenders,
minimum net worth and experience for
non-supervised lenders, approved
lender participation requirements,
treatment of applicants with delinquent
child support payments and builder
credit requirements. These changes
would promote an efficient and robust
management and oversight structure of
lenders in the SFHGLP, strengthen
underwriting practices by denying loan
guarantees for applicants who are
subject to administrative offset to collect
delinquent child support payments and
streamline requirements for screening
builder-contractors by lenders.
DATES
: Comments must be submitted on
or before August 9, 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–21–SFH–0003) or the
RIN# 0575–AD22, 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 (https://
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 as
outlined in 7 CFR part 3555, subparts B,
C and D by updating the regulations to
strengthen oversight and management of
the growing SFHGLP portfolio. The
revisions align with the standards for
managing credit programs
recommended by the Office of
Management and Budget (OMB) for
Federally supervised lenders, minimum
net worth, minimum experience for
non-supervised lenders, and approved
lender participation requirements. The
revisions would also provide guidance
for processing applicants with
delinquent child support payments and
relaxes builder requirements to better
align with the credit program
requirements of other Federal agencies.
Discussion of the Rule
(1) Minimum Net Worth Requirements
for Non-Supervised Lenders
Currently, the Agency does not
impose minimum financial or
experience criteria for non-supervised
lenders. Non-supervised lenders (i.e.,
lenders not supervised by federal
entities listed in § 3555.51(a)(8)) that do
not meet the minimum capital and
financial requirements are considered to
have a weak financial position that may
pose an incremental risk to the program.
The Agency proposes to amend
§ 3555.51 and add paragraph (b)(i) and
(ii) to reflect that non-supervised
lenders must have a minimum adjusted
net worth of $250,000, or at least
$50,000 in working capital plus one
percent of the total volume in excess of
$25 million in guaranteed loans
originated, serviced or purchased during
the lender’s prior fiscal year, up to a
maximum required adjusted net worth
of $2.5 million and one or more lines of
credit with a minimum aggregate of $1
million. The proposed financial
thresholds are based on
recommendations of a third-party
contractor’s analysis
1
of participating
lenders. The contractor’s
recommendation for adopting these
capital and financial requirements for
non-supervised lenders was derived
from an analysis of the capital and net
worth requirements of recognized
sources or eligibility determinations
outlined in § 3555.51(a). Establishing
minimum financial requirements for
non-supervised lenders would
potentially reduce the Agency’s risk of
doing business with entities that have
insufficient financial resources. Lenders
that meet these minimum financial
requirements also demonstrate
trustworthiness that would contribute to
the success of the SFHGLP. The
contractor recommendation was
determined using a combination
approach of the Veterans
Administration (VA) base requirement
and adding the volume component,
which is structured and capped
following the FHA standard, see Falcon
Capital Advisor, CLIN 0003 Report. The
flexibility would allow the Agency to
adjust the requirements in the technical
handbook without requiring revisions to
the regulatory language.
This action will align lender approval
requirements with those of other
Federal credit programs and
incorporates best practice
recommendations outlined in Office of
Management and Budget (OMB)
Circular A–129.
2
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(2) Federally Supervised Lenders
Currently, the regulation requires that
all lenders approved for participation in
the SFHGLP must provide additional
information to demonstrate its ability to
originate, underwrite and service loans.
However, the Agency has determined
that lenders that are Federally
supervised and meet the criteria in the
current § 3555.51(a)(8) have
demonstrated ability and should not be
required to provide additional
documentation. The proposal will
alleviate the process for obtaining
Agency approval, reduce the required
lender documentation and reflect a
more streamlined process for Federally
supervised lenders.
A summary of the changes includes
amending 7 CFR 3555.51(a)(8) to
eliminate (a)(8)(iv) because it refers to
the Office of Thrift Supervision (OTS),
which no longer exists. Furthermore,
the current § 3555.51(a)(9) and (10) is
intended to provide a path for lenders
that are not regulated by state or federal
agencies and do not meet the
requirements of (a)(1) through (8) an
opportunity to participate in the
SFHGLP. Therefore, the Agency also
proposes to amend the introductory
texts of § 3555.51(a)(9) and (10) to
clarify that when lenders cannot meet
the demonstrated ability criteria
outlined under § 3555.51(a)(1) through
(8), those lenders must submit
additional documentation to
demonstrate their ability to originate
loans.
(3) Approved Lender Participation
Requirements
Lenders must meet applicable
requirements in order to begin and
continue participation in the SFHGLP.
Currently, the Agency generally reviews
each lender every 2 years to ensure
compliance. However, this process is
not codified in the regulations.
Therefore, the Agency proposes to
amend § 3555.51 and add paragraph (c)
under SFHGLP participation
requirements, to clarify that lender
eligibility will be reviewed every 2 years
for continued participation in the
SFHGLP. The proposal will also add a
requirement that principal officers of
lenders must have a minimum of 2 years
of experience in originating or servicing
guaranteed mortgage loans as
recommended in OMB Circular A–129.
In order to be deemed eligible for
continued lender participation in the
SFHGLP, the lender and its principal
officers must continue to meet all the
criteria as outlined in § 3555.51 which,
as proposed to be amended, would
include (a) specific experience in
underwriting and servicing loans, (b)
financial requirements for non-
supervised lenders, and (c) SFHGLP
participation requirements.
(4) Builder-Contractor Requirements
At present, § 3555.105(b)(4) and (5)
require that builder-contractors have
acceptable credit histories free of
judgments, collections, or liens related
to previous projects the builder-
contractor was involved with and that
they not have a criminal history.
Currently, the lender is responsible for
obtaining the [builder-contractor’s]
credit history and background checks.
However, the Agency has determined
that these requirements are not the
industry standard. The builder-
contractor’s ability to participate in such
projects should be based on the
applicant’s and lender’s review of the
builder-contractor’s experience,
reputation and financial ability to
complete the project in a timely,
efficient and competent manner. The
proposal would remove § 3555.105(b)(4)
and (5). The changes would streamline
screening requirements, reduce
administrative burden on the lender and
would also align with other Federal
programs, including the Direct Section
502 loan program, which do not have
such requirements for builder-
contractors. The Agency is specifically
soliciting comments on the impact of
eliminating the credit and criminal
background checks for building
contractors.
(5) Applicants Delinquent on Child
Support
Currently, the Agency does not have
explicit instructions on how lenders
should treat an applicant’s delinquent
child support payments that are subject
to collection by federal administrative
offset. The Agency considers delinquent
child support payments subject to
administrative offset a significant
derogatory obligation and an indication
that an applicant does not have the
reasonable ability or willingness to meet
their obligations. Furthermore, it would
be against the federal government’s
interest to guarantee a loan for an
applicant from whom the federal
government is simultaneously pursuing
collection for a delinquent debt.
Therefore, RHS proposes to amend
§ 3555.151(i) to specify that borrowers
with delinquent child support payments
subject to collection by administrative
offset are ineligible unless the payments
are brought current, the debt is paid in
full, or otherwise satisfied.
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, 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 SFHGLP, 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 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.
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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
require approval under the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35).
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,
disability, marital or familial status.
Based on the review and analysis of the
rule and all available data, issuance of
this Final Rule is not likely to negatively
impact low and moderate-income
populations, minority populations,
women, Indian tribes or persons with
disability, by virtue of their age, race,
color, national origin, sex, disability, or
marital or familial status.
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.
Nondiscrimination 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, 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 https://
www.usda.gov/oascr/how-to-file-a-
program-discrimination-complaint 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: mail: U.S. Department of
Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400
Independence Avenue SW, Washington,
DC 20250–9410; or
(1) Email: OAC@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, and 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.
2. Amend § 3555.51 by:
(a) Revising paragraph (a)(8);
(b) Revising the introductory text of
paragraphs (a)(9) and (10);
(c) Revising paragraph (b) and (b)(1);
(d) Adding paragraph (c).
The revisions and additions read as
follows:
§ 3555.51 Lender eligibility.
* * * * *
(a) * * *
(8) A Federally supervised lender.
Acceptable sources of Federal
supervision include:
(i) Being a member of the Federal
Reserve System;
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(ii) The Federal Deposit Insurance
Corporation (FDIC);
(iii) The National Credit Union
Administration (NCUA);
(iv) The Office of the Comptroller of
the Currency (OCC);
(v) The Federal Housing Finance
Board regulating lenders within the
Home Loan Bank (FHLB) system.
(9) If lenders cannot meet the
requirements under (a)(1) through (8),
they may demonstrate its ability to
originate and underwrite loans by
submitting appropriate documentation,
examples of which include, but are not
limited to: * * *
(10) A lender that proposes to service
loans that cannot meet (a)(1) through (8)
must demonstrate its ability by
submitting appropriate documentation,
examples of which include but are not
limited to: * * *
(b) Financial Requirements for Non-
Supervised Lenders. All lenders not
covered in paragraph (8) of this section,
must have:
(i) A minimum adjusted net worth of
$250,000, or $50,000 in working capital
plus one percent of the total volume in
excess of $25 million in guaranteed
loans originated, serviced or purchased
during the lender’s prior fiscal year, up
to a maximum required adjusted net
worth of $2.5 million, and
(ii) one or more lines of credit with a
minimum aggregate of one million
dollars.
* * * * *
(c) SFHGLP participation
requirements Lenders and their agents
must comply with the following
requirements:
(1) Keep up to date, and comply with,
all Agency regulations and handbooks,
including all amendments and revisions
of program requirements and policies.
Lenders must also comply with all other
applicable federal, state, and local laws,
rules, and requirements, including those
under the purview of the Consumer
Financial Protection Bureau, such as the
Real Estate Settlement Procedures Act
and the Truth in Lending Act. Lenders
who originate a minimal number loans,
as determined by the Agency, in a 24
month time frame may be required to
take updated training to ensure a
lender’s continued knowledge of the
program;
(2) Regularly check Rural
Development’s website for new
issuances related to the program;
(3) Underwrite loans according to
Rural Development regulations and
process and approve loans in
accordance with program instructions;
(4) Review loan applications for
accuracy and completeness;
(5) Ensure that applicant income
limits are not exceeded;
(6) Ensure that borrowers have
adequate loan repayment ability and
acceptable credit histories;
(7) Ensure that loss claims include
only supportable costs;
(8) Cooperate fully with Agency
reporting and monitoring requirements;
(9) Comply with limitations on loan
purposes, loan limitations, interest
rates, and loan terms;
(10) Inform Rural Development
immediately after the sale, transfer, or
change of servicers of any Agency
guaranteed loan;
(11) Maintain reasonable and prudent
business practices consistent with
generally accepted mortgage industry
standards, such as maintaining fidelity
bonding;
(12) Remain responsible for servicing
even if servicing has been contracted to
a third party;
(13) Use Rural Development, HUD,
Fannie Mae, or Freddie Mac forms,
unless otherwise approved by Rural
Development;
(14) Maintain eligibility under
paragraph (a) of this section;
(15) Notify Rural Development if there
are any material changes in organization
or practices;
(16) Be neither debarred nor
suspended from participation in Federal
programs, not debarred, suspended or
sanctioned under state licensing and
certification laws and regulations;
(17) Notify Rural Development in the
event of its bankruptcy or insolvency;
(18) Remain free from default and
delinquency on any debt owed to the
Federal government;
(19) Allow Rural Development or its
representative access to the lender’s
records, including, but not limited to,
records necessary for on-site and desk
reviews of the lender’s operation and
the operations of any of its agents to
verify compliance with Agency
regulations and guidelines;
(20) Maintain adequate operational
quality control and reporting procedures
to prevent fraud;
(21) Maintain complete loan files with
all required documentation that is
accessible by Agency upon request for
review;
(22) Execute a lender’s agreement
provided by Rural Development;
(23) Evidence that principal officers
must have a minimum of two years of
experience in originating or servicing
guaranteed mortgage loans; and
(24) Provide documentation as
required by the Agency to be reviewed
every two years for continued lender
participation.
* * * * *
§ 3555.105 [Amended]
4. Amend § 3555.105 by removing
paragraphs (b)(4) and (5) and
renumbering paragraph (b)(6) as
appropriate.
5. Amend § 3555.151 by adding
paragraph (i)(9) to read as follows:
§ 3555.151 Eligibility Requirements.
* * * * *
(i) * * *
(9) Applicants with delinquent child
support payments subject to collection
by administrative offset are ineligible
unless the payments are brought
current, the debt is paid in full, or
otherwise satisfied.
* * * * *
Chadwick Parker,
Acting Administrator, Rural Housing Service.
[FR Doc. 2021–11937 Filed 6–8–21; 8:45 am]
BILLING CODE 3410–XV–P
AGENCY FOR INTERNATIONAL
DEVELOPMENT
22 CFR Part 212
RIN 0412–AA97
United States Agency for International
Development: Regulation To
Implement the Freedom of Information
Act
AGENCY
: Agency for International
Development (USAID).
ACTION
: Proposed rule.
SUMMARY
: This regulation updates
certain procedures and standards
USAID follows in processing requests
for records under the Freedom of
Information Act (‘‘FOIA’’).
DATES
: Submit comments on or before
August 9, 2021.
ADDRESSES
: Address all comments for
this proposed rule to Alecia S. Sillah,
Supervisory FOIA Team Lead, Bureau
for Management, Office of Management
Services, Information Records Division,
U.S. Agency for International
Development, electronically at foia@
usaid.gov.
FOR FURTHER INFORMATION CONTACT
:
Christopher A. Colbow, Bureau for
Management, Office of Management
Services, Information Records Division,
U.S. Agency for International
Development, 1300 Pennsylvania
Avenue, USAID Annex, Room 2.4.0A,
Washington, DC 20523; tel. 202–916–
4661; foia@usaid.gov.
SUPPLEMENTARY INFORMATION
:
I. Background
This rulemaking proposes revisions to
22 CFR part 212, USAID’s regulations
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