81 FR 54477 - Guaranteed Loanmaking and Servicing Regulations; Correction

DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
Rural Utilities Service

Federal Register Volume 81, Issue 158 (August 16, 2016)

This document contains corrections to the final rule published in the Federal Register of June 3, 2016, entitled ``Guaranteed Loanmaking and Servicing Regulations.''

[Federal Register Volume 81, Number 158 (Tuesday, August 16, 2016)]
[Rules and Regulations]
[Page 54477]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19430]



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Federal Register / Vol. 81, No. 158 / Tuesday, August 16, 2016 / 
Rules and Regulations

[[Page 54477]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Parts 4279 and 4287

RIN 0570-AA85


Guaranteed Loanmaking and Servicing Regulations; Correction

AGENCY: Rural Business-Cooperative Service and Rural Utilities Service; 
USDA.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to the final rule published 
in the Federal Register of June 3, 2016, entitled ``Guaranteed 
Loanmaking and Servicing Regulations.''

DATES: Effective August 16, 2016.

FOR FURTHER INFORMATION CONTACT: Brenda Griffin, Rural Development, 
Business Programs, U.S. Department of Agriculture, 1400 Independence 
Ave. SW., Stop 3224, Washington, DC, 20250-3224; email: 
[email protected]; telephone number: (202) 720-6802.

SUPPLEMENTARY INFORMATION

Need for Correction

    On June 3, 2016, the Agency published a final rule for the Business 
and Industry (B&I) Guaranteed Loan Program (81 FR 35984). Since then, 
the Agency has discovered three necessary technical corrections.
    First. The Agency is clarifying that the list of eligible regulated 
lenders, which are identified in Sec.  4279.29(a), can include ``other 
financial institutions'' that are, like the other entities already 
listed in said paragraph, ``subject to credit examination and 
supervision by an agency of the United States or a State.'' This 
clarification implements the intent of the Agency to offer eligibility 
to all regulated lenders. As currently written, an unintended 
consequence is that some of the program's historically highest 
performing lenders may be excluded from eligibility.
    Second. The Agency is correcting an inconsistency between a 
provision in Sec.  4279.131(b)(1)(ii), associated with how the value of 
collateral is calculated for newly acquired equipment and a provision 
in Sec.  4279.144, identifying when an appraisal of collateral is 
required. Briefly, the first provision allows the value of the 
collateral to be based on the purchase price of the newly acquired 
equipment without the need for an appraisal regardless of the purchase 
price, while the second provision as currently written, requires an 
appraisal for such newly acquired equipment when the purchase price 
exceeds $250,000. This poses a contradiction for newly acquired 
equipment whose collateral value, based on purchase price, is greater 
than $250,000--is an appraisal required or not? The intent of the 
Agency is found in the first provision and the correction being made is 
to modify the second provision to indicate that an appraisal is not 
required for newly acquired equipment whose collateral value is based 
on the purchase price. This correction provides clarity to the 
regulation as well as saves borrowers the added processing time and 
expense of obtaining an appraisal when purchasing new equipment in 
excess of $250,000.
    Third. One of the changes that the final rule put into effect was 
to limit interest accrual associated with guaranteed loans ``closed on 
or after'' the effective date of the rule (i.e., August 2, 2016). This 
provision was supposed to have been addressed consistently throughout 
the provisions. The Agency identified two places in bankruptcy 
provisions (Sec.  4287.170(b)(3)(i) and (ii)) where this change was 
unintentionally not made. This notice corrects those oversights.

List of Subjects for 7 CFR Parts 4279 and 4287

    Loan programs--Business and industry, Direct loan programs, 
Economic development, Energy, Energy efficiency improvements, Grant 
programs, Guaranteed loan programs, Renewable energy systems, Rural 
areas, and Rural development assistance.

    Accordingly, 7 CFR chapter XLII is amended by making the following 
correcting amendments:

PART 4279--GUARANTEED LOAN MAKING

0
1. The authority citation for part 4279 continues to read as follows:

    Authority: 5 U.S.C. 301; and 7 U.S.C. 1989.

Subpart A--General


Sec.  4279.29  [Amended]

0
2. Amend the first sentence of Sec.  4279.29(a) by adding ``or other 
financial institution'' after ``State chartered bank''.

Subpart B--Business and Industry Loans

0
3. Revise the first sentence of Sec.  4279.144 introductory text to to 
read as follows:


Sec.  4279.144  Appraisals

* * * * *
    Lenders must obtain appraisals for real estate and chattel 
collateral when the value of the collateral exceeds $250,000, unless 
the chattel is newly-acquired equipment and the value is supported by a 
bill of sale. * * *
* * * * *

PART--SERVICING

0
4. The authority citation for part 4287 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1932(a); 7 U.S.C. 1989.

Subpart B--Servicing Business and Industry Guaranteed Loans


Sec.  4287.170  [Amended]

0
5. Amend Sec.  4287.170(b)(3)(i) introductory text and (b)(3)(ii) by 
removing ``approved'' and adding ``closed'' in its place.

    Dated: August 9, 2016.
Samuel H. Rikkers,
Administrator, Rural Business-Cooperative Service.
    Dated: August 10, 2016.
Brandon McBride,
Administrator, Rural Utilities Service.
[FR Doc. 2016-19430 Filed 8-15-16; 8:45 am]
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