82 FR 35902 - Loan Guaranty: Vendee Loan Fees

DEPARTMENT OF VETERANS AFFAIRS

Federal Register Volume 82, Issue 147 (August 2, 2017)

Page Range		35902-35905
FR Document		2017-16106
This document adopts as final a proposed rule of the Department of Veterans Affairs (VA) Loan Guaranty Service to amend its regulations to establish reasonable fees that VA may charge in connection with the origination and servicing of vendee loans made by VA. Fees mentioned in this rulemaking are consistent with those charged in the private mortgage industry, and such fees will help VA to ensure the sustainability of this vendee loan program. The loans that will be subject to the fees are not veterans' benefits. This rule will also ensure that all direct and vendee loans made by the Secretary are safe harbor qualified mortgages.
Federal Register, Volume 82 Issue 147 (Wednesday, August 2, 2017)
[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Rules and Regulations]
[Pages 35902-35905]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-16106]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 36

RIN 2900-AP32


Loan Guaranty: Vendee Loan Fees

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document adopts as final a proposed rule of the 
Department of

[[Page 35903]]

Veterans Affairs (VA) Loan Guaranty Service to amend its regulations to 
establish reasonable fees that VA may charge in connection with the 
origination and servicing of vendee loans made by VA. Fees mentioned in 
this rulemaking are consistent with those charged in the private 
mortgage industry, and such fees will help VA to ensure the 
sustainability of this vendee loan program. The loans that will be 
subject to the fees are not veterans' benefits. This rule will also 
ensure that all direct and vendee loans made by the Secretary are safe 
harbor qualified mortgages.

DATES: Effective Date: This rule is effective September 1, 2017.

FOR FURTHER INFORMATION CONTACT: Andrew Trevayne, Assistant Director 
for Loan and Property Management (261), Veterans Benefits 
Administration, Department of Veterans Affairs, 810 Vermont Ave. NW., 
Washington, DC 20420, (202) 632-8795 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION: On October 26, 2016, VA published a proposed 
rule in the Federal Register, at 81 FR 74382, to amend VA regulations 
to establish reasonable fees in connection with loans made by VA, 
commonly referred to as vendee loans. The fees associated with vendee 
loans are standard in the mortgage industry. The vendee loans that are 
subject to the fees are not veterans' benefits and are available to any 
purchasers, including investors, who qualify for the loan. 
Specifically, this rulemaking will permit VA to establish a fee to help 
cover costs associated with loan origination. The rule will also permit 
certain reasonable fees to be charged following loan origination, 
during loan servicing. Pursuant to this rulemaking, VA will begin 
charging fees for ad-hoc services performed at the borrower's request 
or for the borrower's benefit, as well as standard fees specified in 
loan instruments. Lastly, third-party fees, those not charged by VA, 
are included in this rule solely to clarify for borrowers the various 
costs that a borrower may incur when obtaining a vendee loan.
    The public comment period for the proposed rule closed on December 
27, 2016. VA received one comment. For the reasons explained below, VA 
adopts, with a change, the proposed rule that revises VA's authority to 
charge reasonable fees associated with vendee loans at 38 CFR 36.4500, 
36.4501, 36.4528, 36.4529, and 36.4530.
    VA received one comment on the proposed rule from an individual. 
The commenter was unclear regarding whether or not VA will use 
discretion in determining fees. The commenter questioned whether fees 
will be waived under the following circumstances: When a veteran is 
purchasing a home from another veteran, including circumstances where 
the purchaser is a disabled veteran in receipt of compensation; when a 
non-profit or non-veteran purchaser seeks a vendee loan to house 
homeless veterans; or when an individual in receipt of VA Family 
Caregiver Program benefits seeks to purchase a repossessed home to 
provide care for a veteran with a serious injury. The commenter also 
expressed concern that this was not a veterans' benefit program 
intended to keep a veteran in his or her home and that the Secretary's 
focus should essentially be on retention options. Lastly, the commenter 
requested veterans' benefits not be used to fund this program.
    In its proposed rule, VA discussed that the Secretary has the 
discretion to negotiate fees on a case-by-case basis (81 FR 74382, 
74383). The very nature of the Secretary's discretion might permit the 
waiver of fees in unique situations. Additionally, as stated in the 
preamble to the proposed rule, VA states that the Secretary may make 
vendee loans to certain entities pursuant to 38 U.S.C. 2041 for the 
purpose of assisting homeless veterans and their families in acquiring 
shelter (81 FR 74382). Specifically, 38 U.S.C. 2041(b)(2)(C) states 
that the Secretary may use discretion when determining whether or not 
to waive fees if appropriate in situations regarding homeless veterans.
    In regard to the commenter's concern regarding purchasers who are 
disabled veterans in receipt of compensation, VA notes that 38 U.S.C. 
3729(c) prohibits VA from charging a loan fee to ``a veteran who is 
receiving compensation (or who, but for the receipt of retirement pay 
or active service pay, would be entitled to receive compensation) or 
[to] a surviving spouse of any veteran (including a person who died in 
the active military, naval, or air service) who died from a service-
connected disability.'' In proposed Sec.  36.4528, VA stated that the 
Secretary may charge a loan origination fee ``[i]n addition to the loan 
fee required pursuant to 38 U.S.C. 3729.'' VA understands that this 
language may be interpreted as VA attempting to charge a loan fee to 
those veterans or surviving spouses who Congress exempted from loan 
fees in 38 U.S.C. 3729(c). In order to clarify that VA is not charging 
a fee prohibited by statute, VA is adding ``if any'' following ``[i]n 
addition to the loan fee required pursuant to 38 U.S.C. 3729'' to 
clarify that not all loans will carry the loan fee described in section 
3729.
    In regard to the commenter's concern that the vendee loan program 
is not a home retention option, VA notes that, prior to a holder 
foreclosing a VA-guaranteed loan, there are specific required actions 
the holder must take that emphasize loss mitigation and retention 
options for borrowers. All participating VA servicers adhere to these 
regulations prior to initiating foreclosure sales. VA also notes that 
the principal and interest resulting from the repayment of vendee loans 
are deposited into the Veterans Housing Benefit Program Fund (VHBPF) to 
help offset the housing operation costs of the Home Loan Guaranty 
Program. Lastly, in response to the commenter's statement asking VA not 
to use veterans' benefits to fund this program, VA notes that vendee 
loans are not classified as veterans' benefits and are available to any 
purchaser VA determines creditworthy and whose offer is awarded a sales 
contract. Vendee loans enable VA to sell more of its properties and to 
sell them at a faster rate, and as previously stated, the proceeds are 
deposited into the VHBPF. The fees are consistent with the private 
mortgage industry and will ensure the sustainability of the vendee loan 
program.
    Therefore, this rule finalizes the proposed rule with the change 
noted above.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by the Office of 
Management and Budget (OMB), unless OMB waives such review, as ``any 
regulatory action that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local,

[[Page 35904]]

or tribal governments or communities; (2) Create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) Materially alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) Raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at http://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site at http://www.va.gov/orpm/, by following the link for ``VA 
Regulations Published from FY 2004 Through Fiscal Year to Date.''

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This final rule contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Regulatory Flexibility Act

    This final rule will affect individuals and small businesses who 
choose to obtain a vendee loan from VA to finance the purchase of a VA-
owned property rather than alternate financing. A party who wants to 
purchase a VA-owned property may choose whatever source of financing he 
wishes. Presumably the purchaser would select the least expensive 
financing option available, which may or may not be a VA vendee loan. 
VA does not believe that this final rule will impose any significant 
economic impact for the following reasons. Should the purchaser decide 
that the VA vendee program was not the most economically advantageous 
to the purchaser then the purchaser would obtain alternate financing. 
Parties would have to choose to be subject to the impact, if any, 
imposed by this rule.
    Accordingly, the Secretary certifies that the adoption of this 
final rule will not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act, 5 U.S.C. 601-612. Therefore, under 5 U.S.C. 605(b), 
this rulemaking is exempt from the final regulatory flexibility 
analysis requirements of section 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.114, Veterans Housing--
Guaranteed and Insured Loans.

List of Subjects in 38 CFR Part 36

    Condominiums, Flood insurance, Housing, Indians, Individuals with 
disabilities, Loan programs--housing and community development, Loan 
programs--Indians, Loan programs--veterans, Manufactured homes, 
Mortgage insurance, Reporting and recordkeeping requirements, Veterans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, 
approved this document on July 25, 2017, for publication.

    Dated: July 26, 2017.
Michael Shores,
Director, Regulation Policy & Management, Office of the Secretary, 
Department of Veterans Affairs.
    For the reasons set out in the preamble, VA amends 38 CFR part 36, 
subpart D, as set forth below:

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

     Authority:  38 U.S.C. 501 and 3720.

Subpart D--Direct Loans

0
2. Amend Sec.  36.4500 by:
0
a. Revising paragraph (c)(2).
0
b. Removing the authority citation following paragraph (c)(2).
0
c. Adding paragraph (e).
0
d. Adding an authority citation at the end of the section.
    The revision and additions read as follows:


Sec.  36.4500  Applicability and qualified mortgage status.

* * * * *
    (c) * * *
    (2) Applicability of safe harbor qualified mortgage. Any VA direct 
loan made by the Secretary pursuant to chapter 20 or 37 of title 38, 
U.S.C., is a safe harbor qualified mortgage.
* * * * *
    (e) Sections 36.4528, 36.4529, and 36.4530, which concern vendee 
loans, shall be applicable to all vendee loans.

(Authority: 15 U.S.C. 1639C(b)(3)(B)(ii), 38 U.S.C. 2041, 3710, 
3711, 3720, 3733, and 3761)



0
3. Amend Sec.  36.4501 by:
0
a. Adding in alphabetical order a definition for ``Safe harbor 
qualified mortgage.''
0
b. Revising the definition ``Vendee loan.''
0
c. Removing the authority citation following the definition ``Vendee 
loan.''
    The addition and revision read as follows:


Sec.  36.4501   Definitions.

* * * * *
    Safe harbor qualified mortgage means a mortgage that meets the 
Ability-to-Repay requirements of sections 129B and 129C of the Truth-
in-Lending Act (TILA) regardless of whether the loan might be 
considered a high cost mortgage transaction as defined by section 103bb 
of TILA (15 U.S.C. 1602bb).
* * * * *
    Vendee loan means a loan made by the Secretary for the purpose of 
financing the purchase of a property acquired pursuant to chapter 37 of 
title 38, United States Code. The terms of a vendee loan (e.g., amount 
of down payment; amortization term; whether to escrow taxes, insurance 
premiums, or homeowners' association dues; fees, etc.) are negotiated 
between the Secretary and the borrower on a case-by-case basis, subject 
to the requirements of 38 U.S.C. 2041 or 3733. Terms related to 
allowable fees are also subject to Sec. Sec.  36.4528 through 36.4530.
* * * * *

0
4. Add Sec. Sec.  36.4528, 36.4529, and 36.4530 to read as follows:


Sec.  36.4528   Vendee loan origination fee.

    (a) In addition to the loan fee required pursuant to 38 U.S.C. 
3729, if any, the Secretary may, in connection with the origination of 
a vendee loan, charge a borrower a loan origination fee not to exceed 
one-and-a-half percent of the loan amount.
    (b) All or part of such fee may be paid in cash at loan closing or 
all or part may

[[Page 35905]]

be included in the loan. The Secretary will not increase the loan 
origination fee because the borrower chooses to include such fee in the 
loan amount financed.
    (c) In no event may the total fee agreed upon between the Secretary 
and the borrower result in an amount that will cause the loan to be 
designated as a high-cost mortgage as defined in 15 U.S.C. 1602(bb) and 
12 CFR part 1026.

(Authority: 38 U.S.C. 2041, 3720, 3733)

Sec.  36.4529  Vendee loan post-origination fees.

    (a) The Secretary may charge a borrower the following reasonable 
fees, per use, following origination, in connection with the servicing 
of any vendee loan:
    (1) Processing assumption fee for the transfer of legal liability 
of repaying the mortgage when the individual assuming the loan is 
approved. Such fee will not exceed $300, plus the actual cost of the 
credit report. If the assumption is denied, the fee will not exceed the 
actual cost of the credit report;
    (2) Processing subordination fee, not to exceed $350, to ensure 
that a modified vendee loan retains its first lien position;
    (3) Processing partial release fee, not to exceed $350, to exclude 
collateral from the mortgage contract once a certain amount of the 
mortgage loan has been paid;
    (4) Processing release of lien fee, not to exceed $15, for the 
release of an obligor from a mortgage loan in connection with a 
division of real property;
    (5) Processing payoff statement fee, not to exceed $30, for a 
payoff statement showing the itemized amount due to satisfy a mortgage 
loan as of a specific date;
    (6) Processing payment by phone fee, not to exceed $12, when a 
payment is made by phone and handled by a servicing representative; and
    (7) Processing payment by phone fee, not to exceed $10, when a 
payment is made by phone and handled through an interactive voice 
response system, without contacting a servicing representative.
    (b) The specific fees to be charged on each account may be 
negotiated between the Secretary and the borrower. The Secretary will 
review the maximum fees under paragraph (a) of this section bi-annually 
to determine that they remain reasonable.
    (c) The Secretary may charge a borrower reasonable fees established 
in the loan instrument, including but not limited to the following:
    (1) Property inspection fees;
    (2) Property preservation fees;
    (3) Appraisal fees;
    (4) Attorneys' fees;
    (5) Returned-check fees;
    (6) Late fees; and
    (7) Any other fee the Secretary determines reasonably necessary for 
the protection of the Secretary's investment.
    (d) Any fee included in the loan instrument and permitted under 
paragraph (c) of this section would be based on the amount customarily 
charged in the industry for the performance of the service in the 
particular area, the status of the loan, and the characteristics of the 
affected property.

(Authority: 38 U.S.C. 2041, 3720, 3733)

Sec.  36.4530   Vendee loan other fees.

    (a) In addition to the fees that may be charged pursuant to 
Sec. Sec.  36.4528 and 36.4529 and the statutory loan fee charged 
pursuant to 38 U.S.C. 3729, the borrower may be required to pay third-
party fees for services performed in connection with a vendee loan.
    (b) Examples of the third party fees that may be charged in 
connection with a vendee loan include, but are not limited to:
    (1) Termite inspections;
    (2) Hazard insurance premiums;
    (3) Force-placed insurance premiums;
    (4) Courier fees;
    (5) Tax certificates; and
    (6) Recorder's fees.

(Authority: 38 U.S.C. 2041, 3720, 3733)


[FR Doc. 2017-16106 Filed 8-1-17; 8:45 am]
 BILLING CODE 8320-01-P
35902 Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Rules and Regulations

understanding this rule. If the rule their discretionary regulatory actions. In Department of Homeland Security Delegation
would affect your small business, particular, the Act addresses actions No. 0170.1.
organization, or governmental that may result in the expenditure by a ■ 2. Add § 165.T09–0702 to read as
jurisdiction and you have questions State, local, or tribal government, in the follows:
concerning its provisions or options for aggregate, or by the private sector of
compliance, please contact the person $100,000,000 (adjusted for inflation) or § 165.T09–0702 Safety Zone; South Branch
listed in the FOR FURTHER INFORMATION more in any one year. Though this rule of the Chicago River, Chicago, IL.
CONTACT section. will not result in such an expenditure, (a) Location. All U.S. navigable waters
Small businesses may send comments we do discuss the effects of this rule of the South Branch of the Chicago
on the actions of Federal employees elsewhere in this preamble. River, within a 300 foot radius of the
who enforce, or otherwise determine Cermak Road Bridge in Chicago, IL.
compliance with, Federal regulations to F. Environment
(b) Enforcement period. This rule will
the Small Business and Agriculture We have analyzed this rule under be enforced on August 4, 2017 from 8
Regulatory Enforcement Ombudsman Department of Homeland Security p.m. to 11:59 p.m.
and the Regional Small Business Management Directive 023–01 and (c) Regulations. (1) In accordance with
Regulatory Fairness Boards. The Commandant Instruction M16475.lD, the general regulations in § 165.23, entry
Ombudsman evaluates these actions which guide the Coast Guard in into, transiting, or anchoring within this
annually and rates each agency’s complying with the National safety zone is prohibited unless
responsiveness to small business. If you Environmental Policy Act of 1969 (42 authorized by the Captain of the Port
wish to comment on actions by U.S.C. 4321–4370f), and have Lake Michigan or a designated on-scene
employees of the Coast Guard, call 1– determined that this action is one of a representative.
888–REG–FAIR (1–888–734–3247). The category of actions that do not (2) This safety zone is closed to all
Coast Guard will not retaliate against individually or cumulatively have a vessel traffic, except as may be
small entities that question or complain significant effect on the human permitted by the Captain of the Port
about this rule or any policy or action environment. This rule involves the Lake Michigan or a designated on-scene
of the Coast Guard. establishment of a safety zone for the representative.
filming of a scene for a television series, (3) The ‘‘on-scene representative’’ of
C. Collection of Information where objects will be thrown off the the Captain of the Port Lake Michigan
This rule will not call for a new bridge on the South Branch of the is any Coast Guard commissioned,
collection of information under the Chicago River in Chicago, IL. It is warrant or petty officer who has been
Paperwork Reduction Act of 1995 (44 categorically excluded from further designated by the Captain of the Port
U.S.C. 3501–3520). review under paragraph 34(g) of Figure Lake Michigan to act on his or her
D. Federalism and Indian Tribal 2–1 of the Commandant Instruction. A behalf.
Governments Record of Environmental Consideration (4) Vessel operators desiring to enter
(REC) supporting this determination is or operate within the safety zone shall
A rule has implications for federalism available in the docket where indicated contact the Captain of the Port Lake
under Executive Order 13132, in the ADDRESSES section of this Michigan or an on-scene representative
Federalism, if it has a substantial direct preamble. We seek any comments or to obtain permission to do so. The
effect on the States, on the relationship information that may lead to the Captain of the Port Lake Michigan or an
between the national government and discovery of a significant environmental on-scene representative may be
the States, or on the distribution of impact from this rule. contacted via VHF Channel 16 or at
power and responsibilities among the
G. Protest Activities (414) 747–7182. Vessel operators given
various levels of government. We have
permission to enter or operate in the
analyzed this rule under that Order and The Coast Guard respects the First safety zone must comply with all
have determined that it is consistent Amendment rights of protesters. directions given to them by the Captain
with the fundamental federalism Protesters are asked to contact the of the Port Lake Michigan, or an on-
principles and preemption requirements person listed in the FOR FURTHER scene representative.
described in Executive Order 13132. INFORMATION CONTACT section to
Also, this rule does not have tribal coordinate protest activities so that your Dated: July 27, 2017.
implications under Executive Order message can be received without Thomas J. Stuhlreyer,
13175, Consultation and Coordination jeopardizing the safety or security of Captain, U.S. Coast Guard, Captain of the
with Indian Tribal Governments, people, places or vessels. Port, Lake Michigan.
because it does not have a substantial [FR Doc. 2017–16253 Filed 8–1–17; 8:45 am]
direct effect on one or more Indian List of Subjects in 33 CFR Part 165
BILLING CODE 9110–04–P
tribes, on the relationship between the Harbors, Marine safety, Navigation
Federal Government and Indian tribes, (water), Reporting and recordkeeping
or on the distribution of power and requirements, Security measures, DEPARTMENT OF VETERANS
responsibilities between the Federal Waterways. AFFAIRS
Government and Indian tribes. If you For the reasons discussed in the
believe this rule has implications for preamble, the Coast Guard amends 33 38 CFR Part 36
federalism or Indian tribes, please CFR parts 165 as follows: RIN 2900–AP32
contact the person listed in the FOR
jstallworth on DSKBBY8HB2PROD with RULES

FURTHER INFORMATION CONTACT section PART 165—REGULATED NAVIGATION Loan Guaranty: Vendee Loan Fees
above. AREAS AND LIMITED ACCESS AREAS
AGENCY: Department of Veterans Affairs.
E. Unfunded Mandates Reform Act ■ 1. The authority citation for part 165
ACTION: Final rule.
The Unfunded Mandates Reform Act continues to read as follows:
of 1995 (2 U.S.C. 1531–1538) requires Authority: 33 U.S.C. 1231; 50 U.S.C. 191; SUMMARY: This document adopts as final
Federal agencies to assess the effects of 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; a proposed rule of the Department of

VerDate Sep<11>2014 15:35 Aug 01, 2017 Jkt 241001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\02AUR1.SGM 02AUR1
Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Rules and Regulations 35903

Veterans Affairs (VA) Loan Guaranty whether or not VA will use discretion that not all loans will carry the loan fee
Service to amend its regulations to in determining fees. The commenter described in section 3729.
establish reasonable fees that VA may questioned whether fees will be waived In regard to the commenter’s concern
charge in connection with the under the following circumstances: that the vendee loan program is not a
origination and servicing of vendee When a veteran is purchasing a home home retention option, VA notes that,
loans made by VA. Fees mentioned in from another veteran, including prior to a holder foreclosing a VA-
this rulemaking are consistent with circumstances where the purchaser is a guaranteed loan, there are specific
those charged in the private mortgage disabled veteran in receipt of required actions the holder must take
industry, and such fees will help VA to compensation; when a non-profit or that emphasize loss mitigation and
ensure the sustainability of this vendee non-veteran purchaser seeks a vendee retention options for borrowers. All
loan program. The loans that will be loan to house homeless veterans; or participating VA servicers adhere to
subject to the fees are not veterans’ when an individual in receipt of VA these regulations prior to initiating
benefits. This rule will also ensure that Family Caregiver Program benefits seeks foreclosure sales. VA also notes that the
all direct and vendee loans made by the to purchase a repossessed home to principal and interest resulting from the
Secretary are safe harbor qualified provide care for a veteran with a serious repayment of vendee loans are
mortgages. injury. The commenter also expressed deposited into the Veterans Housing
DATES: Effective Date: This rule is concern that this was not a veterans’ Benefit Program Fund (VHBPF) to help
effective September 1, 2017. benefit program intended to keep a offset the housing operation costs of the
veteran in his or her home and that the Home Loan Guaranty Program. Lastly,
FOR FURTHER INFORMATION CONTACT:
Secretary’s focus should essentially be in response to the commenter’s
Andrew Trevayne, Assistant Director for statement asking VA not to use veterans’
Loan and Property Management (261), on retention options. Lastly, the
commenter requested veterans’ benefits benefits to fund this program, VA notes
Veterans Benefits Administration, that vendee loans are not classified as
Department of Veterans Affairs, 810 not be used to fund this program.
In its proposed rule, VA discussed veterans’ benefits and are available to
Vermont Ave. NW., Washington, DC any purchaser VA determines
20420, (202) 632–8795 (this is not a toll- that the Secretary has the discretion to
negotiate fees on a case-by-case basis (81 creditworthy and whose offer is
free number). awarded a sales contract. Vendee loans
SUPPLEMENTARY INFORMATION: On FR 74382, 74383). The very nature of
the Secretary’s discretion might permit enable VA to sell more of its properties
October 26, 2016, VA published a and to sell them at a faster rate, and as
proposed rule in the Federal Register, at the waiver of fees in unique situations.
previously stated, the proceeds are
81 FR 74382, to amend VA regulations Additionally, as stated in the preamble
deposited into the VHBPF. The fees are
to establish reasonable fees in to the proposed rule, VA states that the
consistent with the private mortgage
connection with loans made by VA, Secretary may make vendee loans to
industry and will ensure the
commonly referred to as vendee loans. certain entities pursuant to 38 U.S.C.
sustainability of the vendee loan
The fees associated with vendee loans 2041 for the purpose of assisting
program.
are standard in the mortgage industry. homeless veterans and their families in Therefore, this rule finalizes the
The vendee loans that are subject to the acquiring shelter (81 FR 74382). proposed rule with the change noted
fees are not veterans’ benefits and are Specifically, 38 U.S.C. 2041(b)(2)(C) above.
available to any purchasers, including states that the Secretary may use
investors, who qualify for the loan. discretion when determining whether or Executive Orders 12866 and 13563
Specifically, this rulemaking will permit not to waive fees if appropriate in Executive Orders 12866 and 13563
VA to establish a fee to help cover costs situations regarding homeless veterans. direct agencies to assess the costs and
associated with loan origination. The In regard to the commenter’s concern benefits of available regulatory
rule will also permit certain reasonable regarding purchasers who are disabled alternatives and, when regulation is
fees to be charged following loan veterans in receipt of compensation, VA necessary, to select regulatory
origination, during loan servicing. notes that 38 U.S.C. 3729(c) prohibits approaches that maximize net benefits
Pursuant to this rulemaking, VA will VA from charging a loan fee to ‘‘a (including potential economic,
begin charging fees for ad-hoc services veteran who is receiving compensation environmental, public health and safety
performed at the borrower’s request or (or who, but for the receipt of retirement effects, and other advantages;
for the borrower’s benefit, as well as pay or active service pay, would be distributive impacts; and equity).
standard fees specified in loan entitled to receive compensation) or [to] Executive Order 13563 (Improving
instruments. Lastly, third-party fees, a surviving spouse of any veteran Regulation and Regulatory Review)
those not charged by VA, are included (including a person who died in the emphasizes the importance of
in this rule solely to clarify for active military, naval, or air service) quantifying both costs and benefits,
borrowers the various costs that a who died from a service-connected reducing costs, harmonizing rules, and
borrower may incur when obtaining a disability.’’ In proposed § 36.4528, VA promoting flexibility. Executive Order
vendee loan. stated that the Secretary may charge a 12866 (Regulatory Planning and
The public comment period for the loan origination fee ‘‘[i]n addition to the Review) defines a ‘‘significant
proposed rule closed on December 27, loan fee required pursuant to 38 U.S.C. regulatory action’’ requiring review by
2016. VA received one comment. For 3729.’’ VA understands that this the Office of Management and Budget
the reasons explained below, VA language may be interpreted as VA (OMB), unless OMB waives such
adopts, with a change, the proposed rule attempting to charge a loan fee to those review, as ‘‘any regulatory action that is
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that revises VA’s authority to charge veterans or surviving spouses who likely to result in a rule that may: (1)
reasonable fees associated with vendee Congress exempted from loan fees in 38 Have an annual effect on the economy
loans at 38 CFR 36.4500, 36.4501, U.S.C. 3729(c). In order to clarify that of $100 million or more or adversely
36.4528, 36.4529, and 36.4530. VA is not charging a fee prohibited by affect in a material way the economy, a
VA received one comment on the statute, VA is adding ‘‘if any’’ following sector of the economy, productivity,
proposed rule from an individual. The ‘‘[i]n addition to the loan fee required competition, jobs, the environment,
commenter was unclear regarding pursuant to 38 U.S.C. 3729’’ to clarify public health or safety, or State, local,

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35904 Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Rules and Regulations

or tribal governments or communities; obtain alternate financing. Parties would § 36.4500 Applicability and qualified
(2) Create a serious inconsistency or have to choose to be subject to the mortgage status.
otherwise interfere with an action taken impact, if any, imposed by this rule. * * * * *
or planned by another agency; (3) Accordingly, the Secretary certifies (c) * * *
Materially alter the budgetary impact of that the adoption of this final rule will (2) Applicability of safe harbor
entitlements, grants, user fees, or loan not have a significant economic impact qualified mortgage. Any VA direct loan
programs or the rights and obligations of on a substantial number of small entities made by the Secretary pursuant to
recipients thereof; or (4) Raise novel as they are defined in the Regulatory chapter 20 or 37 of title 38, U.S.C., is a
legal or policy issues arising out of legal Flexibility Act, 5 U.S.C. 601–612. safe harbor qualified mortgage.
mandates, the President’s priorities, or Therefore, under 5 U.S.C. 605(b), this * * * * *
the principles set forth in this Executive rulemaking is exempt from the final (e) Sections 36.4528, 36.4529, and
Order.’’ regulatory flexibility analysis 36.4530, which concern vendee loans,
The economic, interagency, requirements of section 604. shall be applicable to all vendee loans.
budgetary, legal, and policy
Catalog of Federal Domestic Assistance (Authority: 15 U.S.C. 1639C(b)(3)(B)(ii), 38
implications of this regulatory action U.S.C. 2041, 3710, 3711, 3720, 3733, and
have been examined, and it has been The Catalog of Federal Domestic 3761)
determined not to be a significant Assistance number and title for the
regulatory action under Executive Order program affected by this document is ■ 3. Amend § 36.4501 by:
12866. VA’s impact analysis can be 64.114, Veterans Housing—Guaranteed ■ a. Adding in alphabetical order a
found as a supporting document at and Insured Loans. definition for ‘‘Safe harbor qualified
http://www.regulations.gov, usually mortgage.’’
List of Subjects in 38 CFR Part 36 ■ b. Revising the definition ‘‘Vendee
within 48 hours after the rulemaking
document is published. Additionally, a Condominiums, Flood insurance, loan.’’
Housing, Indians, Individuals with ■ c. Removing the authority citation
copy of the rulemaking and its impact
analysis are available on VA’s Web site disabilities, Loan programs—housing following the definition ‘‘Vendee loan.’’
and community development, Loan The addition and revision read as
at http://www.va.gov/orpm/, by
programs—Indians, Loan programs— follows:
following the link for ‘‘VA Regulations
Published from FY 2004 Through Fiscal veterans, Manufactured homes, § 36.4501 Definitions.
Year to Date.’’ Mortgage insurance, Reporting and
* * * * *
recordkeeping requirements, Veterans. Safe harbor qualified mortgage means
Unfunded Mandates
Signing Authority a mortgage that meets the Ability-to-
The Unfunded Mandates Reform Act
Repay requirements of sections 129B
of 1995 requires, at 2 U.S.C. 1532, that The Secretary of Veterans Affairs, or
and 129C of the Truth-in-Lending Act
agencies prepare an assessment of designee, approved this document and
(TILA) regardless of whether the loan
anticipated costs and benefits before authorized the undersigned to sign and
might be considered a high cost
issuing any rule that may result in the submit the document to the Office of the
mortgage transaction as defined by
expenditure by State, local, and tribal Federal Register for publication
section 103bb of TILA (15 U.S.C.
governments, in the aggregate, or by the electronically as an official document of
1602bb).
private sector, of $100 million or more the Department of Veterans Affairs. Gina
(adjusted annually for inflation) in any S. Farrisee, Deputy Chief of Staff, * * * * *
one year. This final rule will have no Department of Veterans Affairs, Vendee loan means a loan made by
such effect on State, local, and tribal approved this document on July 25, the Secretary for the purpose of
governments, or on the private sector. 2017, for publication. financing the purchase of a property
acquired pursuant to chapter 37 of title
Paperwork Reduction Act Dated: July 26, 2017. 38, United States Code. The terms of a
Michael Shores, vendee loan (e.g., amount of down
This final rule contains no provisions
constituting a collection of information Director, Regulation Policy & Management, payment; amortization term; whether to
Office of the Secretary, Department of escrow taxes, insurance premiums, or
under the Paperwork Reduction Act of Veterans Affairs.
1995 (44 U.S.C. 3501–3521). homeowners’ association dues; fees,
For the reasons set out in the etc.) are negotiated between the
Regulatory Flexibility Act preamble, VA amends 38 CFR part 36, Secretary and the borrower on a case-by-
This final rule will affect individuals subpart D, as set forth below: case basis, subject to the requirements of
and small businesses who choose to 38 U.S.C. 2041 or 3733. Terms related
PART 36—LOAN GUARANTY
obtain a vendee loan from VA to finance to allowable fees are also subject to
the purchase of a VA-owned property ■ 1. The authority citation for part 36 §§ 36.4528 through 36.4530.
rather than alternate financing. A party continues to read as follows: * * * * *
who wants to purchase a VA-owned ■ 4. Add §§ 36.4528, 36.4529, and
Authority: 38 U.S.C. 501 and 3720.
property may choose whatever source of 36.4530 to read as follows:
financing he wishes. Presumably the Subpart D—Direct Loans
purchaser would select the least § 36.4528 Vendee loan origination fee.
expensive financing option available, ■ 2. Amend § 36.4500 by: (a) In addition to the loan fee required
which may or may not be a VA vendee ■ a. Revising paragraph (c)(2). pursuant to 38 U.S.C. 3729, if any, the
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loan. VA does not believe that this final ■ b. Removing the authority citation Secretary may, in connection with the
rule will impose any significant following paragraph (c)(2). origination of a vendee loan, charge a
economic impact for the following ■ c. Adding paragraph (e). borrower a loan origination fee not to
reasons. Should the purchaser decide ■ d. Adding an authority citation at the exceed one-and-a-half percent of the
that the VA vendee program was not the end of the section. loan amount.
most economically advantageous to the The revision and additions read as (b) All or part of such fee may be paid
purchaser then the purchaser would follows: in cash at loan closing or all or part may

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Document Created: 2017-08-02 07:09:53
Document Modified: 2017-08-02 07:09:53
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		Effective Date: This rule is effective September 1, 2017.
Contact		Andrew Trevayne, Assistant Director for Loan and Property Management (261), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 632-8795 (this is not a toll-free number).
FR Citation		82 FR 35902
RIN Number		2900-AP32
CFR Associated		Condominiums; Flood Insurance; Housing; Indians; Individuals with Disabilities; Loan Programs-Housing and Community Development; Loan Programs-Indians; Loan Programs-Veterans; Manufactured Homes; Mortgage Insurance; Reporting and Recordkeeping Requirements and Veterans