02-8528. Guaranteed Rural Rental Housing Program  

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    AGENCY:

    Rural Housing Service, USDA.

    ACTION:

    Final rule.

    SUMMARY:

    The Rural Housing Service (RHS) is amending its regulations for the Guaranteed Rural Rental Housing Program (GRRHP). The Housing Act of 1949, which authorizes RHS to administer GRRHP, was amended on December 27, 2000. The intended effect of this final rule change is limited to the implementation of five statutory changes. The revisions range from adding a definition of an “Indian tribe” to authorizing loans to be made for 25 years with an amortization of 40 years (i.e., balloon payments).

    EFFECTIVE DATE:

    May 9, 2002.

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    FOR FURTHER INFORMATION CONTACT:

    Douglas H. MacDowell, Senior Loan Specialist, Multi-Family Housing Processing Division, Rural Housing Service, U.S. Department of Agriculture, STOP 0781, 1400 Independence Avenue SW., Washington, DC 20250-0781, Telephone (202) 720-1604.

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    SUPPLEMENTARY INFORMATION:

    Classification

    This rule has been determined to be not significant for purposes of Executive Order 12866 and therefore has not been reviewed by the Office of Management and Budget (OMB).

    Paperwork Reduction Act

    The information collection requirements contained in this regulation have been previously approved by OMB under the provisions of 44 U.S.C. chapter 35 and this regulation has been assigned OMB control number 0575-0174, in accordance with the Paperwork Reduction Act of 1995. This rule does not impose any new information collection requirements from those approved by OMB.

    Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil Justice Start Printed Page 16970Reform. In accordance with this 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 7 CFR part 11 must be exhausted before bringing suit in court challenging action taken under this rule.

    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, 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.

    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 the 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.

    Programs Affected

    The affected program is listed in the Catalog of Federal Domestic Assistance under Number 10.438, section 538 Rural Rental Housing Guaranteed Loans.

    Intergovernmental Consultation

    For the reasons contained in the notice related to 7 CFR part 3015, subpart V this program is 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, Pub. L. 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 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 a large entity.

    Background

    GRRHP has been designed to increase the availability of affordable multifamily housing in rural areas. Qualified lenders are authorized to originate, underwrite, and close loans for multifamily housing projects guaranteed under this program. Projects may be for new construction or acquisition with substantial rehabilitation of at least $15,000 per unit. RHS guarantees such loans upon review of the lender's underwriting package, appraisal report, appropriate certifications, project information, and satisfactory completion of the appropriate level of environmental review by the Agency. Lenders are expected to provide servicing or contract for servicing of each loan it underwrites. Loans which are guaranteed may not exceed 90% of the total development cost of a project. This leaves 10% of the total development cost that must be provided from other sources. The guarantee itself is then limited to 90% of the loan amount.

    GRRHP is a relatively new program which was operated as a pilot program by RHS in 1996 and 1997 and as a permanent program since. During the early stages of the program, RHS identified barriers in the program's authorizing statute (section 538 of the Housing Act of 1949) that limited the success of the program.

    Congress subsequently addressed these barriers in the American Homeownership and Economic Act of 2000 (Pub. L. 106-569). This regulation incorporates those statutory changes by (1) defining “Indian tribe”, (2) outlining how to handle loan defaults on reservations, (3) authorizing guaranteed loans with repayment terms of not less than 25 nor greater than 40 years, and (4) removes the restriction on releasing borrowers from liability.

    Procedural Background

    This final rule is limited to the implementation of the statutory changes made on December 27, 2000. The Agency has no discretion implementing these changes. Notice and public comment, therefore, are impractical, unnecessary, and contrary to the public interest.

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    List of Subjects in 7 CFR Part 3565

    • Banks
    • Conflict of interests
    • Credit
    • Environmental impact statements
    • Fair housing
    • Hearing and appeal procedures
    • Low and moderate income housing
    • Mortgages
    • Real property acquisition
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    Therefore, chapter XXXV, title 7, Code of Federal Regulations, part 3565 is amended as follows:

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    PART 3565—GUARANTEED RURAL RENTAL HOUSING PROGRAM

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    1. The authority citation for part 3565 continues to read as follows:

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    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

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    Subpart A—General Provisions

    2. Section 3565.3 is amended by adding, in alphabetical order, a definition of “Indian tribe.”

    Definitions.
    * * * * *

    Indian tribe. Any Indian tribe, band, nation, or other organized group or community of Indians, including any Alaska Native village or regional or village corporation, as defined by or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians pursuant to the Indian Self-Determination and Education Assistance Act of 1975 (25 U.S.C. 450 et seq.); or any entity established by the governing body of an Indian tribe, as described in this definition, for the purpose of financing economic development.

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    Subpart E—Loan Requirements

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    3. Section 3565.209 is revised to read as follows:

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    Loan amortization.

    Each guaranteed loan shall be made for a period of not less than 25 nor greater than 40 years from the date the loan was made and may provide for amortization of the loan over a period of not to exceed 40 years with a final payment of the balance due at the end of the loan term.

    [Removed and Reserved]
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    4. Section 3565.214 is removed and reserved.

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    Subpart I—Servicing Requirements

    [Amended]
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    5. Section 3565.403(b)(2) is amended by removing the last sentence.

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    Subpart J—Assignment, Conveyance, and Claims

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    6. Section 3565.452 is revised to read as follows:

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    Decision to liquidate.

    (a) A decision to liquidate shall be made when it is determined that the default cannot be cured through actions contained in § 3565.403 of subpart I or it has been determined that it is in the best interest of the Agency and the lender to liquidate.

    (b) In the event of a default involving a loan to an Indian tribe or tribal corporation made under this section which is secured by an interest in land within such tribe's reservation (as determined by the Secretary of the Interior), including a community in Alaska incorporated by the Secretary of the Interior pursuant to the Indian Reorganization Act (25 U.S.C. 461 et seq.), the lender shall only pursue liquidation after offering to transfer the account to an eligible tribal member, the tribe, or the Indian housing authority serving the tribe. If the lender subsequently proceeds to liquidate the account, the lender shall not sell, transfer, or otherwise dispose of or alienate the property except to one of the entities described in the preceding sentence.

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    Dated: April 3, 2002.

    Arthur A. Garcia,

    Administrator, Rural Housing Service.

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    [FR Doc. 02-8528 Filed 4-8-02; 8:45 am]

    BILLING CODE 3410-XV-P

Document Information

Effective Date:
5/9/2002
Published:
04/09/2002
Department:
Rural Housing Service
Entry Type:
Rule
Action:
Final rule.
Document Number:
02-8528
Dates:
May 9, 2002.
Pages:
16969-16971 (3 pages)
RINs:
0575-AC26: 7 CFR 3565, Guaranteed Rural Rental Housing, Section 538 Statutory Changes
RIN Links:
https://www.federalregister.gov/regulations/0575-AC26/7-cfr-3565-guaranteed-rural-rental-housing-section-538-statutory-changes
Topics:
Administrative practice and procedure, Banks, banking, Conflict of interests, Credit, Environmental impact statements, Fair housing, Low and moderate income housing, Mortgages, Real property acquisition
PDF File:
02-8528.pdf
CFR: (5)
7 CFR 3565.3
7 CFR 3565.209
7 CFR 3565.214
7 CFR 3565.403
7 CFR 3565.452