80 FR 60298 - Single Family Housing Guaranteed Loan Program

DEPARTMENT OF AGRICULTURE
Rural Housing Service

Federal Register Volume 80, Issue 193 (October 6, 2015)

The Rural Housing Service (RHS or Agency) proposes to amend the current regulation for the Single Family Housing Guaranteed Loan Program (SFHGLP) on the subject of liquidation value appraisals. In order to reduce overall processing time, reduce cost, and expedite claim submission, lenders will order the liquidation value appraisal used to estimate a loss claim against the SFHGLP instead of the Agency. Currently, if a Real Estate Owned (REO) property remains unsold by the lender at the end of the permissible marketing period, the Agency will order a liquidation value appraisal and apply an acquisition and management resale factor to estimate holding and disposition cost. This amendment will require the servicing lender to order the liquidation value appraisal. The costs associated with obtaining the liquidation value appraisal can then be included in the liquidation costs paid under the guarantee.

[Federal Register Volume 80, Number 193 (Tuesday, October 6, 2015)]
[Proposed Rules]
[Pages 60298-60300]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-25324]


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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. 80, No. 193 / Tuesday, October 6, 2015 / 
Proposed Rules

[[Page 60298]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3555

RIN 0575-AD04


Single Family Housing Guaranteed Loan Program

AGENCY: Rural Housing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Housing Service (RHS or Agency) proposes to amend 
the current regulation for the Single Family Housing Guaranteed Loan 
Program (SFHGLP) on the subject of liquidation value appraisals. In 
order to reduce overall processing time, reduce cost, and expedite 
claim submission, lenders will order the liquidation value appraisal 
used to estimate a loss claim against the SFHGLP instead of the Agency. 
Currently, if a Real Estate Owned (REO) property remains unsold by the 
lender at the end of the permissible marketing period, the Agency will 
order a liquidation value appraisal and apply an acquisition and 
management resale factor to estimate holding and disposition cost. This 
amendment will require the servicing lender to order the liquidation 
value appraisal. The costs associated with obtaining the liquidation 
value appraisal can then be included in the liquidation costs paid 
under the guarantee.

DATES: Written or email comments on the proposed rule must be received 
on or before December 7, 2015 to be assured for consideration.

ADDRESSES: You may submit comments on this proposed rule by any one of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments electronically.
     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 Ave. SW., 
Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit written comments via Federal 
Express mail, or other 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, Washington, 
DC 20024.
    All written comments will be available for public inspection during 
regular work hours at the 300 7th Street SW., 7th Floor address listed 
above.

FOR FURTHER INFORMATION CONTACT: Lilian Lipton, Loan Specialist, Single 
Family Housing Guaranteed Loan Division, STOP 0784, Room 2250, USDA 
Rural Development, South Agriculture Building, 1400 Independence Avenue 
SW., Washington, DC 20250-0784, telephone: (202) 260-8012, email is 
[email protected].

SUPPLEMENTARY INFORMATION: RHS proposes to amend the current regulation 
for the Single Family Housing Guaranteed Loan Program (SFHGLP) on the 
subject of liquidation value appraisals. In order to reduce overall 
processing time, reduce cost, and expedite claim submission, lenders 
will order the liquidation value appraisal used to estimate a loss 
claim against the SFHGLP instead of the Agency. Specifically, SFHGLP 
proposes to amend 7 CFR 3555.306(f)(3), 3555.352(e), 3555.353(b)(1), 
and 3555.354(b)(1)(i) and (ii) and (2).

Executive Order 12866, Classification

    This proposed rule has been determined to be non-significant and, 
therefore was not reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866.

Executive Order 12988, Civil Justice Reform

    This proposed 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 proposed 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 proposed 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 1940, 
subpart G, ``Environmental Program.'' 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

[[Page 60299]]

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 change will not have a significant impact on a 
substantial number of small entities. This rule does not impose any 
significant new requirements on Agency applicants and borrowers, and 
the regulatory changes affect only Agency determination of program 
benefits for guarantees of loans made to individuals.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    Executive Order 13175 imposes requirements on RHS in the 
development of regulatory policies that have Tribal implications or 
preempt tribal laws. RHS has determined that the proposed 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 proposed rule is not subject to the requirements of 
Executive Order 13175. If a Tribe determines that this rule has 
implications of which RHS is not aware and would like to engage with 
RHS on this rule, please contact USDA's Native American Coordinator at 
(720) 544-2911 or [email protected].

Executive Order 12372, Intergovernmental Consultation

    Theses loan are subject to the provisions of Executive Order 12372, 
which require intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each SFHGLP 
in accordance with 2 CFR part 415, subpart C.

Programs Affected

    The program affected by this regulation 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

    The information collection and record keeping requirements 
contained in this regulation have been approved by OMB in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The 
assigned OMB control number is 0570-0179.

E-Government Act Compliance

    The Agency 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.

Non-Discrimination Policy

    The U.S. Department of Agriculture (USDA) prohibits discrimination 
against its customers, employees, and applicants for employment on the 
bases of race, color, national origin, age, disability, sex, gender 
identity, religion, reprisal, and where applicable, political beliefs, 
marital status, familial or parental status, sexual orientation, or all 
or part of an individual's income is derived from any public assistance 
program, or protected genetic information in employment or in any 
program or activity conducted or funded by the Department. (Not all 
prohibited bases will apply to all programs and/or employment 
activities.)
    If you wish to file a Civil Rights program complaint of 
discrimination, complete the USDA Program Discrimination Complaint Form 
(PDF), found online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any USDA office, or call (866) 632-
9992 to request the form. You may also write a letter containing all of 
the information requested in the form. Send your completed complaint 
form or letter to us by mail at U.S. Department of Agriculture, 
Director, Office of Adjudication, 1400 Independence Avenue SW., 
Washington, DC 20250-9410, by fax (202) 690-7442 or email at 
[email protected].
    Individuals who are deaf, hard of hearing or have speech 
disabilities and you wish to file either an EEO or program complaint 
please contact USDA through the Federal Relay Service at (800) 877-8339 
or (800) 845-6136 (in Spanish).
    Persons with disabilities, who wish to file a program complaint, 
please see information above on how to contact us by mail directly or 
by email. If you require alternative means of communication for program 
information (e.g., Braille, large print, audiotape, etc.) please 
contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

Background Information

    The SFHGLP growth has been driven by tight credit markets in which 
lenders are reluctant to make mortgage loans without Government 
backing. In order to reduce the time it takes to review and pay a 
claim, and to increase efficiency of the loss claim process, the 
program is streamlining the process involved with liquidation value 
appraisals by requiring the lender to order the appraisal and include 
the costs associated with this action in the liquidation costs.
    The described change was recommended by a Lean Six Sigma task force 
as a business process which will improve loss claim payment timeframes 
by requiring lenders to order liquidation value appraisals, instead of 
the agency doing so. It will shorten the loss claims process by at 
least twenty-five-percent, save approximately $203,112 or 5,850 staff 
hours, and allow the Customer Service Center (CSC) to focus on other 
stages of the liquidation process that potentially represent greater 
risk to the taxpayer. As currently performed today, staff will continue 
to review all appraisals and therefore the proposed change involves no 
additional program risk.

List of Subjects in 7 CFR Part 3555

    Home improvement, Loan Programs--Housing and community development, 
Mortgage insurance, Mortgages, Rural areas.

    Therefore, chapter XXXV, title 7 of the Code of Federal Regulations 
is proposed to be amended as follows:

PART 3555--GUARANTEED RURAL HOUSING PROGRAM

0
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 G--Servicing Non-Performing Loans

0
2. Section 3555.306 is amended by revising paragraph (f)(3) to read as 
follows:


Sec.  3555.306  Liquidation.

* * * * *
    (f) * * *
    (3) The lender must notify the Agency when the property has not 
been sold within 30 days of the expiration of the permissible marketing 
period. If the REO remains unsold at the end of the permissible 
marketing period, the lender will order a liquidation value appraisal 
and the Agency will apply an acquisition and management resale factor 
to estimate holding and disposition cost. Interest expenses accrued 
beyond 90 days of the foreclosure sale date or expiration of

[[Page 60300]]

any redemption period, whichever is later, will be the responsibility 
of the lender and not covered by the guarantee.
* * * * *

Subpart H--Collecting on the Guarantee

0
3. Section 3555.352 is amended by revising paragraph (e) to read as 
follows:


Sec.  3555.352  Loss covered by the guarantee.

* * * * *
    (e) Liquidation costs. Reasonable and customary liquidation costs, 
such as attorney fees, liquidation value appraisals, and foreclosure 
costs. Annual fees advanced by the lender to the Agency are ineligible 
for reimbursement when calculating the loss payment, as otherwise 
provided by the Agency.
0
4. Section 3555.353 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  3555.353  Net recovery value.

* * * * *
    (b) * * *
    (1) The value of the property as determined by a liquidation value 
appraisal. The value should be determined as if the property would be 
sold without the market exposure it would ordinarily receive in a 
normal transaction, or within 90 days, minus;
* * * * *
0
5. Section 3555.354 is amended by revising paragraphs (b)(1) and (2) to 
read as follows:


Sec.  3555.354  Loss claim procedures.

* * * * *
    (b) * * *
    (1) The lender must submit a loss claim request that includes a 
completed liquidation value appraisal within 30 calendar days of the 
period ending:
    (i) Nine (9) months after either foreclosure or the end of any 
applicable redemption period, whichever is later, if the property 
remains unsold and is not located on American Indian restricted land; 
or
    (ii) Twelve (12) months after either foreclosure or the end of any 
applicable redemption period, whichever is later, if the property 
remains unsold and is located on American Indian restricted land. Late 
claims made beyond this period of time, or submitted with a liquidation 
value appraisal not completed within the timeframes described in parts 
paragraphs (b)(1)(i) and (ii) of this section, will be rejected.
    (2) The lender must submit a loss claim that includes the completed 
liquidation value appraisal within 30 calendar days of receiving the 
appraisal. Late claims made beyond this period of time, or submitted 
with an appraisal not completed within the timeframes described in 
paragraphs (b)(1)(i) and (ii) of this section, will be rejected.
* * * * *

     Dated: September 3, 2015.
Tony Hernandez,
Administrator, Rural Housing Service.
[FR Doc. 2015-25324 Filed 10-5-15; 8:45 am]
 BILLING CODE 3410-XV-P