CFR Part: “7 CFR Part 3555”
RIN Number: “RIN 0575-AD22”
Citation: “86 FR 30555”
Document Number: “Docket No. RHS-21-SFH-0003”
Page Number: “30555”
Agency: “Rural Housing Service,
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
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
All comments will be available for public inspection online at the Federal eRulemaking Portal (https://www.regulations.gov).
FOR FURTHER INFORMATION CONTACT:
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
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
This action will align lender approval requirements with those of other Federal credit programs and incorporates best practice recommendations outlined in
FOOTNOTE 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
(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
A summary of the changes includes amending 7 CFR 3555.51(a)(8) to eliminate (a)(8)(iv) because it refers to the
(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
(4) Builder-Contractor Requirements
(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
Section 510(k) of Title V the Housing Act of 1949 (42 U.S.C. 1480(k)), as amended, authorizes the Secretary of the
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
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
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
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
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
Civil Rights Impact Analysis
E-Government Act Compliance
In accordance with Federal civil rights law and
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
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
(1) Email: OAC@usda.gov
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.
(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:
(a) * * *
(8) A Federally supervised lender. Acceptable sources of Federal supervision include:
(i) Being a member of the
(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
(ii) one or more lines of credit with a minimum aggregate of
(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
(2) Regularly check
(3) Underwrite loans according to
(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;
(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;
(14) Maintain eligibility under paragraph (a) of this section;
(16) Be neither debarred nor suspended from participation in Federal programs, not debarred, suspended or sanctioned under state licensing and certification laws and regulations;
(18) Remain free from default and delinquency on any debt owed to the Federal government;
(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
(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.
(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.
Acting Administrator, Rural Housing Service.
[FR Doc. 2021-11937 Filed 6-8-21;
BILLING CODE 3410-XV-P