[Federal Register Volume 75, Number 43 (Friday, March 5, 2010)]
[Proposed Rules]
[Pages 10194-10195]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-4495]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 75, No. 43 / Friday, March 5, 2010 / Proposed
Rules
[[Page 10194]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3550
RIN 0575-AC81
Direct Single Family Housing Loans and Grants
AGENCY: Rural Housing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: Through this action, the Rural Housing Service (RHS) is
proposing to amend its regulations for the Direct Single Family Housing
Loans by reinstating language to enable full repayment of the entire
subsidy in event of foreclosure or deed-in-lieu of foreclosure
(voluntary conveyance). This action will clarify that in the event of
foreclosure or deed-in-lieu of foreclosure (voluntary conveyance) the
RHS will recapture the full subsidy from the value of the property.
DATES: Written comments must be received on or before May 4, 2010 to be
assured for consideration.
ADDRESSES: You may submit comments to this rule by any of the following
methods: Agency Web Site: http://www.rurdev.usda.gov/regs/. Follow the
instructions for submitting comments on the Web Site.
E-Mail: comments@wdc.usda.gov. Include the RIN number
(0575-AC81) in the subject line of the message.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Submit written comments via the U.S. Postal Service
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, STOP 0742, 1400 Independence Avenue, SW.,
Washington, DC 20250-0742.
Hand Delivery/Courier: Submit written comments via Federal
Express Mail or another mail courier service requiring a street address
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, 300 7th Street, SW., 7th Floor, Suite 701,
Washington, DC 20024.
All written comments will be available for public inspection during
regular work hours at the 300 7th Street, SW., address listed above.
FOR FURTHER INFORMATION CONTACT: Janet L. Carter, Senior Loan
Specialist, Rural Housing Service, Stop 0783, 1400 Independence Avenue,
SW., Washington, DC 20250-0783, Telephone: 202-720-1489.
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be not significant and was not
reviewed by the Office of Management and Budget (OMB) under Executive
Order 12866.
Paperwork Reduction Act of 1995
There are no new reporting and recordkeeping requirements
associated with this rule.
E-Government Act Compliance
The RHS is committed to complying with the E-Government Act, 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.
Civil Justice Reform
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. In accordance with that Executive Order: (1) All State
and local laws and regulations that are in conflict with this rule will
be preempted; (2) No retroactive effect will be given to this rule; and
(3) Administrative proceedings in accordance with the regulations of
the National Appeals Division of USDA at 7 CFR part 11 must be
exhausted before bringing suit in court challenging action taken under
this rule unless those regulations specifically allow bringing suit at
an earlier time.
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
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, 2
U.S.C. 1532, RHS 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 RHS to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, more cost-effective or least burdensome alternative that
achieves the objectives of the rule. This rule contains no Federal
mandates (under the regulatory provisions of Title II of the UMRA) for
State, local, and tribal Governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
the UMRA.
Programs Affected
The programs affected by this proposed rule are 10.410, Low to
Moderate Income Housing Loans and 10.417, Very Low-Income Housing
Repair Loans and Grants.
Intergovernmental Consultation
For the reasons set forth in the final rule related Notice to 7 CFR
part 3015, subpart V, these programs are not subject to Executive Order
12372 which requires intergovernmental consultation with State and
local officials.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It is the determination of RHS
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, an Environmental Impact Statement is not required.
Regulatory Flexibility Act
This 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 of this document that this rule
will not have a significant economic impact on a substantial number of
small entities. This rule reinstates a requirement on Agency applicants
and borrowers; however, the requirement of full subsidy recapture in
event of foreclosure or voluntary conveyance will apply solely to the
individual applicants and borrowers of Section 502
[[Page 10195]]
Direct Single Family Housing financing and will not apply to small
entities. There will be no significant information collection, or
regulatory requirements imposed on small entities under this proposed
rule.
Federalism
The policies contained in this rule do not have any substantial
direct effect on States, the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose a substantial direct compliance cost on State and local
Governments. Therefore, consultation with the States is not required.
Background
In the event of a foreclosure or deed-in-lieu of foreclosure
(voluntary conveyance), the original recapture regulation promulgated
on October 1, 1979 provided for recapture of the full amount of subsidy
granted in determining the balance owed. However, when the Section 502
SFH direct loan program was restructured on November 22, 1996, the
revised recapture regulation, 7 CFR 3550.162, this provision was
omitted. Therefore, because of the omission of the critical language in
the regulation, full recovery is not currently supported by regulatory
authority.
Foreclosure or deed-in-lieu of foreclosure (voluntary conveyance)
is a last resort to protect the government's interest after all other
servicing actions have failed. Recovery of some or the entire payment
subsidy provided to direct single family housing borrowers or
``recapture'' is provided for by statute in 42 U.S.C. 1490a(a)(1)(D).
The statute gives the Secretary broad discretion in determining the
amount of the subsidy recapture.
Currently, there is no clear regulatory authority in 7 CFR 3550 for
full recovery of the payment assistance subsidy that the borrower
receives as was provided for in the original regulation. In addition,
prior to the revision of the original recapture regulation in 1996, the
Subsidy Repayment Agreement also provided that the full amount of the
subsidy was repayable in the event of a foreclosure or deed in lieu of
foreclosure (voluntary conveyance). The current Subsidy Repayment
Agreement only provides for the formula calculation of the subsidy for
repayment. Further, there was no discussion in the preamble
implementing the proposed and final rules regarding an intent to change
this provision. This rule will clarify the subsidy repayment
requirement in event of foreclosure or deed-in-lieu of foreclosure
(voluntary conveyance) by restoring the original regulatory authority
and policy of full recovery of the subsidy in these foreclosure
situations. The current Subsidy Repayment agreement will be revised to
reflect the language of the regulation once the proposed regulation is
finalized. Recovery of the subsidy will only come from proceeds from
the sale of the property. The borrower will not be personally liable
for any deficiency in repayment of the full subsidy to the Agency as a
result of this action and the Agency will not seek to recover unpaid
subsidy from assets of the borrower other than the property which was
security for the loan.
List of Subjects in 7 CFR Part 3550
Administrative practice and procedure, Conflict of interests,
Environmental impact statements, Equal credit opportunity, Fair
housing, Accounting, Housing, Loan programs--Housing and community
development, Low and moderate income housing, Manufactured homes,
Reporting and recordkeeping requirements, Rural areas, Subsidies.
For the reasons stated in the preamble, chapter XXXV, Title 7 of
the Code of Federal Regulations, is proposed to be amended as follows:
PART 3550--DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS
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
2. Section 3550.162 is revised to read as follows:
Sec. 3550.162 Recapture.
(a) Recapture policy. Borrowers with loans approved or assumed on
or after October 1, 1979, will be required to repay subsidy amounts
received through payment subsidy or deferred mortgage assistance.
Amounts to be recaptured are due and payable in the event of
foreclosure or when the borrower transfers title or ceases to occupy
the property. The real estate that secures the loan is the only
security for the repayment of the subsidy granted on the loan. The
repayment of subsidy is not a personal obligation of the borrower and
no amount attributed to subsidy shall be included in any deficiency
sought to be collected from a borrower after a voluntary conveyance or
foreclosure.
(b) Amount to be recaptured. (1) The maximum amount to be
recaptured is the amount of principal reduction attributed to subsidy
and the lesser of:
(i) The amount of subsidy received; or
(ii) 50 percent of the value appreciation.
(2) Foreclosure or deed-in-lieu of foreclosure (voluntary
conveyance). Notwithstanding the provisions of paragraph (b)(1) of this
section the unpaid balance of loans being liquidated by deed-in-lieu of
foreclosure (voluntary conveyance) to the government or foreclosure
shall include the total amount of subsidy that has been granted on the
loan.
(3) The value appreciation of property with a cross-collateralized
loan is based on the market value of the dwelling and lot. If located
on a farm, the lot size would be a typical lot for a single family
housing property.
(4) Interest reduced from the promissory note rate to six percent
under the Service member Civil Relief Act (SCRA) is not subject to
recapture.
Dated: January 28, 2010.
Tammye Trevi[ntilde]o,
Administrator, Rural Housing Service.
[FR Doc. 2010-4495 Filed 3-4-10; 8:45 am]
BILLING CODE 3410-XV-P