Loans to Members and Lines of Credit to Members, 8921-8923 [05-3477]
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8921
Rules and Regulations
Federal Register
Vol. 70, No. 36
Thursday, February 24, 2005
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
NUCLEAR REGULATORY
COMMISSION
10 CFR Parts 25 and 95
RIN 3150–AH52
Broadening Scope of Access
Authorization and Facility Security
Clearance Regulations: Withdrawal of
Direct Final Rule
Nuclear Regulatory
Commission.
ACTION: Direct final rule; withdrawal.
AGENCY:
SUMMARY: The Nuclear Regulatory
Commission (NRC) is withdrawing a
direct final rule that would have
broadened the scope of the regulations
to include persons who may need access
to classified information in connection
with licensing and regulatory activities
under the regulations that govern the
disposal of high-level radioactive waste
in geologic repositories, and persons
who may need access to classified
information in connection with other
activities as the Commission may
determine, such as vendors of advanced
reactor designs. In addition, this direct
final rule would have broadened the
scope of the regulations applicable to
procedures for obtaining facility
security clearances. The NRC is
withdrawing this direct final rule
because it has received significant
adverse comments in response to an
identical proposed rule which was
published concurrently with the direct
final rule.
FOR FURTHER INFORMATION CONTACT: Dr.
Anthony N. Tse, Office of Nuclear
Material Safety and Safeguards, U.S.
Nuclear Regulatory Commission,
Washington, DC 20555, telephone (301)
415–6233 (e-mail ant@nrc.gov).
SUPPLEMENTARY INFORMATION: On
December 15, 2004 (69 FR 74949), the
NRC published in the Federal Register
a direct final rule that would have
amended NRC’s regulations to broaden
VerDate jul<14>2003
18:17 Feb 23, 2005
Jkt 205001
the scope of the regulations (10 CFR Part
25) applicable to persons who may
require access to classified information,
to include persons who may need access
in connection with licensing and
regulatory activities under the
regulations that govern the disposal of
high-level radioactive waste in geologic
repositories, and persons who may need
access in connection with other
activities as the Commission may
determine, such as vendors of advanced
reactor designs. This direct final rule
would also have broadened the scope of
the regulations applicable to procedures
for obtaining facility security clearances
(10 CFR Part 95). The direct final rule
was to become effective on February 28,
2005. The NRC concurrently published
an identical proposed rule on December
15, 2004 (69 FR 75007).
In the direct final rule, NRC stated
that if any significant adverse comments
were received, a notice of timely
withdrawal of the direct final rule
would be published in the Federal
Register. As a result, the direct final rule
would not take effect.
The NRC received significant adverse
comments on the direct final rule;
therefore, the NRC is withdrawing the
direct final rule. As stated in the
December 15, 2004, direct final rule,
NRC will address the comments
received on the companion proposed
rule in a subsequent final rule. The NRC
will not initiate a second comment
period on this action.
Dated at Rockville, Maryland, this 17th day
of February, 2005.
For the Nuclear Regulatory Commission.
Luis A. Reyes,
Executive Director for Operations.
[FR Doc. 05–3489 Filed 2–23–05; 8:45 am]
BILLING CODE 7590–01–P
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 701
Loans to Members and Lines of Credit
to Members
National Credit Union
Administration (NCUA).
ACTION: Final rule.
AGENCY:
SUMMARY: NCUA is amending three
subsections of its lending rule and this
final rule clarifies: the conditions for
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applying the rule to loans secured by
mobile homes, recreational vehicles,
house trailers and boats; that loans
secured by manufactured homes may be
considered residential real estate loans;
and that loans with a partial government
guarantee, insurance, or advance
commitment to purchase a portion of a
loan fall within the rule. The changes
incorporate legal interpretations
previously issued by its Office of
General Counsel (OGC) regarding
permissible maturities for certain types
of loans and the effect of partial
government guarantees. The NCUA
Board is making these changes because
it believes it is helpful to federal credit
unions (FCUs) and others that may
consult NCUA regulations to
incorporate these interpretations as part
of the rule itself rather than having them
stated separately in OGC legal opinions.
DATES: Effective Date: This rule is
effective March 28, 2005.
FOR FURTHER INFORMATION CONTACT:
Dianne M. Salva, Staff Attorney,
Division of Operations, Office of
General Counsel, at the above address or
telephone: (703) 518–6540.
SUPPLEMENTARY INFORMATION:
Background
The Federal Credit Union Act (the
FCU Act) generally limits an FCU’s
authority on matters of loan maturity,
rates of interest, security and
prepayment penalties. 12 U.S.C.
1757(5). As permitted under the FCU
Act, the NCUA Board (the Board) has
promulgated lending regulations
allowing loan maturities of 20 years for
mobile home loans and up to 40 years,
or more with specific Board approval,
on residential real estate loans. 12 CFR
701.21(f) and (g). NCUA’s lending
regulations also address loans secured
by a state or federal government
insurance or guarantee. 12 CFR
701.21(e). The OGC had recently issued
several legal opinions addressing loan
guarantees and loan maturities. In the
course of the agency’s annual review of
regulations, the Board determined that
the rules on loan guarantees and
maturities should be updated to reflect
the OGC opinions. Accordingly, on
November 18, 2004, the Board issued a
proposal to amend the lending
regulations to incorporate the recent
OGC opinions. 69 FR 68829, Nov. 26,
2004.
E:\FR\FM\24FER1.SGM
24FER1
8922
Federal Register / Vol. 70, No. 36 / Thursday, February 24, 2005 / Rules and Regulations
Summary of Comments
NCUA received eleven comments:
five from state credit union leagues, two
from national credit union trade
organizations, three from individual
credit unions, and one from a banking
trade association. The comments were
generally positive and supported the
proposal to amend the regulation.
All of the comments that specifically
addressed the proposed changes to
§ 701.21(e) of the rule regarding loan
guarantees were favorable and
supported the change. The final
amendment to the rule, which is
unchanged from the proposed, clarifies
that a partial government guarantee,
insurance, or commitment to purchase a
loan is sufficient to effect the
application of the regulation.
The majority of comments supported
the proposed changes to § 701.21(f) and
(g) regarding loan maturities for mobile
homes, recreational vehicles and boats,
and loan maturities for manufactured
homes.
The banking trade association
opposed the changes regarding loan
maturities in whole, describing them as
inconsistent with the credit union
industry’s specified mission of meeting
the credit and savings needs of persons
of modest means and arguing that they
encourage unsafe lending practices. The
Board disagrees. Rather, the Board finds
that these amendments to the lending
rule enhance an FCU’s ability to meet
the credit needs of its members. This
rule allows FCUs to offer credit
products that are more affordable to
lower income members. Improvements
in the quality and standards of
construction of manufactured housing,
for example, have resulted in increased
values that may put the cost of shorter
term loans out of the financial reach of
individuals of modest means. The Board
also disagrees that the longer maturities
will encourage unsafe lending practices.
To the contrary, as stated in the
preamble to the proposed rule, NCUA
encourages FCUs to take appropriate
steps to ensure their liens are fully
protected. Further, these changes to the
regulation merely codify what OGC
opinions have permitted for several
years, and the Board is unaware of any
evidence that the longer loan maturities
have resulted in unsafe lending
practices.
Two commenters raised issues
revealing some confusion about the
difference between mobile homes,
which may have loan maturities up to
20 years, and manufactured homes,
which are eligible for longer maturities.
One FCU commented about a particular
state law and local practices regarding
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18:17 Feb 23, 2005
Jkt 205001
the titling of manufactured housing as
real or personal property, groundleasing, and what constitutes
‘‘permanently affixed,’’ which, the
commenter contended, could cause
confusion and result in risks to FCUs
making manufactured housing loans. In
part, some confusion may result if the
terms manufactured home and mobile
home have a different meaning under a
state law. In reviewing the FCU’s letter,
it became apparent that there may be
issues under a state law that FCUs will
need to address in their lending
agreements with borrowers to ensure
compliance with NCUA’s lending
regulation. One trade association
suggested clarifying that manufactured
housing that is not permanently affixed
to the land constitutes a mobile home.
The Board notes that, while this will
generally be correct because a mobile
home does not have to be permanently
affixed to land, which is required for a
manufactured home loan, a mobile
home still must meet certain regulatory
criteria to qualify for a maturity of up
to 20 years.
The regulation distinguishes between
mobile homes and manufactured homes.
First, in using the term ‘‘permanently
affixed’’ to describe manufactured
homes as a type of manufactured
housing distinguished from mobile
homes, the Board intends to limit longterm loans to manufactured homes that
are intended to remain in place
permanently. In its opinion letter on
this topic, the OGC stated:
Most significantly, we note that a
manufactured home, although constructed at
a factory and not built on-site, is designed
and intended to be permanently affixed to
the land. Unlike a mobile home, which is
also constructed at a factory, a manufactured
home is not intended to be moved once it has
reached its ultimate destination.
Legal Opinion OGC 03–0934, dated
November 17, 2003. In order for a loan
to qualify for the longer maturities of
residential mortgage loans under
§ 701.21(g), a manufactured home must
be designed and intended to remain in
place permanently.
The same FCU noted above also
commented about two issues regarding
manufactured home loans discussed in
the preamble to the proposed rule.
Regarding the statement in the preamble
that a manufactured home must qualify
as real property and be titled as real
property, the FCU contends the
requirement is unnecessary and that
state law and local titling practices
could cause problems. The Board notes
that, for a loan to be eligible for a 30year or more maturity term, the FCU Act
requires that it be a ‘‘residential real
estate loan.’’ 12 U.S.C. 1757(5)(A)(i)
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Fmt 4700
Sfmt 4700
(emphasis added). Loans secured by
some type of manufactured housing that
is titled as personal property are not
eligible for 30-year mortgages under the
FCU Act but may be able to qualify as
20-year mobile home loans, assuming
the criteria of § 701.21(f) are met. To the
extent that a particular state law raises
questions of how an FCU can ensure its
loans comply with NCUA’s lending
regulation, an FCU may seek
interpretive guidance from OGC.
Second, the FCU commented about
the Board’s suggestion that, for safety
and soundness reasons, FCUs engaging
in long-term loans for manufactured
homes under § 701.21(g) should ensure,
if the member is leasing the land where
the manufactured home is located, that
the term of the lease should be at least
as long as the term of the loan. The FCU
commented that this requirement is
unnecessary and unreasonable, stating
that, in practice, most manufactured
housing communities permit leases of
no longer duration than six months.
First, the Board notes its statement in
the preamble is not a regulatory
requirement but is a statement of
guidance. Second, the FCU’s reference
to a local practice of having short term
leases of six months or less is a practice
associated with mobile home parks
rather than manufactured home
locations. A manufactured home, as
opposed to a mobile home, is designed
and intended to stay in place
permanently rather than be moved. The
Board’s understanding is that, in
purchases of manufactured homes, the
manufactured home is most often
located on land the borrower already
owns or is purchasing in conjunction
with the purchase of the manufactured
home. As noted in the preamble for the
proposed rule, as a matter of safety and
soundness, an FCU making a
manufactured home loan where the land
is leased should ensure that the lease is
as long as the term of the loan. There
may be some rare set of circumstances
that would support an FCU making a
30-year loan on a manufactured home
located on property that is leased for
some lesser period of time. However,
where the lease on land is of such a
short duration that it places the loan
security at a high risk of loss or waste,
safety and soundness considerations
would weigh against making a 30-year
or more loan.
For these reasons, the Board has
determined to adopt the proposed rule
as a final rule with no changes.
E:\FR\FM\24FER1.SGM
24FER1
Federal Register / Vol. 70, No. 36 / Thursday, February 24, 2005 / Rules and Regulations
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires NCUA to prepare an analysis to
describe any significant economic
impact any regulation may have on a
substantial number of small entities.
NCUA considers credit unions having
less than ten million in assets to be
small for purposes of RFA. Interpretive
Ruling and Policy Statement (IRPS) 87–
2 as amended by IRPS 03–2. The rule
clarifies and expands the lending rules
to incorporate recent OGC opinions.
NCUA has determined and certifies that
this rule will not have a significant
economic impact on a substantial
number of small credit unions.
Accordingly, NCUA has determined that
a Regulatory Flexibility Analysis is not
required.
NCUA has determined that the rule
would not increase paperwork
requirements under the Paperwork
Reduction Act of 1995 and regulations
of the Office of Management and Budget
(OMB). NCUA currently has OMB
clearance for § 701.21’s collection
requirements (OMB No. 3133–0139).
Executive Order 12612
Executive Order 12612 requires
NCUA to consider the effect of its
actions on state interests. This rule
applies to only federally chartered
credit unions. NCUA has determined
that the final rule does not constitute a
‘‘significant regulatory action’’ for
purposes of the Executive Order.
Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles,
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive
order. The rule applies only to federal
credit unions. NCUA has determined
that the amendments to the rule will not
have a substantial direct effect on the
states, on the connection between the
national government and the states, or
on the distribution of power and
responsibilities among the various
levels of government. NCUA has
determined that this rule does not
constitute a policy that has federalism
implications for purposes of the
executive order.
18:17 Feb 23, 2005
List of Subjects in 12 CFR Part 701
Credit unions, loans.
By the National Credit Union
Administration Board on February 17, 2005.
Mary Rupp,
Secretary of the Board.
Accordingly, the National Credit
Union Administration amends 12 CFR
part 701 as follows:
I
Paperwork Reduction Act
VerDate jul<14>2003
Small Business Regulatory Enforcement
Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 (Pub.
L. 104–121) provides generally for
congressional review of agency rules. A
reporting requirement is triggered in
instances where NCUA issues a final
rule as defined by Section 551 of the
Administrative Procedures Act. 5 U.S.C.
551. NCUA submitted the rule to the
Office of Management and Budget,
which has determined that it is not
major for purposes of the Small
Business Regulatory Enforcement
Fairness Act of 1996.
Jkt 205001
8923
(ii) a second mortgage loan (or a
nonpurchase money first mortgage loan
in the case of a residence on which
there is no existing first mortgage) if the
loan is secured by a residential dwelling
which is the residence of the memberborrower, and
(iii) a loan to finance the repair,
alteration, or improvement of a
residential dwelling which is the
residence of the member-borrower.
(2) For purposes of this paragraph (f),
mobile home may include a recreational
vehicle, house trailer or boat.
(g) Long-Term Mortgage Loans. (1)
Authority. A federal credit union may
make residential real estate loans to
members, including loans secured by
manufactured homes permanently
affixed to the land, with maturities of up
to 40 years, or such longer period as
may be permitted by the NCUA Board
on a case-by-case basis, subject to the
conditions of this paragraph (g).
*
*
*
*
*
[FR Doc. 05–3477 Filed 2–23–05; 8:45 am]
BILLING CODE 7535–01–U
PART 701—ORGANIZATION AND
OPERATIONS OF FEDERAL CREDIT
UNIONS
1. The authority citation for part 701
continues to read as follows:
I
Authority: 12 U.S.C. 1752(5), 1755, 1756,
1757, 1759, 1761a, 1761b, 1766, 1767, 1782,
1784, 1787, 1789.
2. Amend § 701.21 by revising
paragraphs (e), (f) and (g)(1) to read as
follows:
I
§ 701.21 Loans to members and lines of
credit to members.
*
*
*
*
*
(e) Insured, Guaranteed and Advance
Commitment Loans. A loan secured, in
full or in part, by the insurance or
guarantee of, or with an advance
commitment to purchase the loan, in
full or in part, by the Federal
Government, a State government or any
agency of either, may be made for the
maturity and under the terms and
conditions, including rate of interest,
specified in the law, regulations or
program under which the insurance,
guarantee or commitment is provided.
(f) 20-Year Loans. (1) Notwithstanding
the general 12-year maturity limit on
loans to members, a federal credit union
may make loans with maturities of up
to 20 years in the case of:
(i) a loan to finance the purchase of
a mobile home if the mobile home will
be used as the member-borrower’s
residence and the loan is secured by a
first lien on the mobile home, and the
mobile home meets the requirements for
the home mortgage interest deduction
under the Internal Revenue Code,
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 134
RIN 3245–AF25
Rules of Procedure Governing Cases
Before the Office of Hearings and
Appeals
Small Business Administration.
Interim final rule with request
for comments.
AGENCY:
ACTION:
SUMMARY: This interim final rule
amends the interim final regulations
governing the Service-Disabled Veteran
Owned Small Business Concern (SDVO
SBC) Program. In particular, this rule
clarifies the appeal procedures to the
Office of Hearings and Appeals (OHA).
DATES: This rule is effective February
24, 2005. Comments must be received
on or before March 28, 2005.
ADDRESSES: You may submit comments,
identified by the RIN number, by any of
the following methods: through the
Federal rulemaking portal at https://
www.regulations.gov (follow the
instructions for submitting comments);
through e-mail at
SDVOSBCProgram@sba.gov (include
RIN number in the subject line of the
message); or by mail to Dean Koppel,
Assistant Administrator, Office of Policy
and Research, 409 3rd Street, SW.,
Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
Dean Koppel, Assistant Administrator,
Office of Policy and Research, (202)
E:\FR\FM\24FER1.SGM
24FER1
]]>Agencies
[Federal Register Volume 70, Number 36 (Thursday, February 24, 2005)]
[Rules and Regulations]
[Pages 8921-8923]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-3477]
=======================================================================
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
Loans to Members and Lines of Credit to Members
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: NCUA is amending three subsections of its lending rule and
this final rule clarifies: the conditions for applying the rule to
loans secured by mobile homes, recreational vehicles, house trailers
and boats; that loans secured by manufactured homes may be considered
residential real estate loans; and that loans with a partial government
guarantee, insurance, or advance commitment to purchase a portion of a
loan fall within the rule. The changes incorporate legal
interpretations previously issued by its Office of General Counsel
(OGC) regarding permissible maturities for certain types of loans and
the effect of partial government guarantees. The NCUA Board is making
these changes because it believes it is helpful to federal credit
unions (FCUs) and others that may consult NCUA regulations to
incorporate these interpretations as part of the rule itself rather
than having them stated separately in OGC legal opinions.
DATES: Effective Date: This rule is effective March 28, 2005.
FOR FURTHER INFORMATION CONTACT: Dianne M. Salva, Staff Attorney,
Division of Operations, Office of General Counsel, at the above address
or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
Background
The Federal Credit Union Act (the FCU Act) generally limits an
FCU's authority on matters of loan maturity, rates of interest,
security and prepayment penalties. 12 U.S.C. 1757(5). As permitted
under the FCU Act, the NCUA Board (the Board) has promulgated lending
regulations allowing loan maturities of 20 years for mobile home loans
and up to 40 years, or more with specific Board approval, on
residential real estate loans. 12 CFR 701.21(f) and (g). NCUA's lending
regulations also address loans secured by a state or federal government
insurance or guarantee. 12 CFR 701.21(e). The OGC had recently issued
several legal opinions addressing loan guarantees and loan maturities.
In the course of the agency's annual review of regulations, the Board
determined that the rules on loan guarantees and maturities should be
updated to reflect the OGC opinions. Accordingly, on November 18, 2004,
the Board issued a proposal to amend the lending regulations to
incorporate the recent OGC opinions. 69 FR 68829, Nov. 26, 2004.
[[Page 8922]]
Summary of Comments
NCUA received eleven comments: five from state credit union
leagues, two from national credit union trade organizations, three from
individual credit unions, and one from a banking trade association. The
comments were generally positive and supported the proposal to amend
the regulation.
All of the comments that specifically addressed the proposed
changes to Sec. 701.21(e) of the rule regarding loan guarantees were
favorable and supported the change. The final amendment to the rule,
which is unchanged from the proposed, clarifies that a partial
government guarantee, insurance, or commitment to purchase a loan is
sufficient to effect the application of the regulation.
The majority of comments supported the proposed changes to Sec.
701.21(f) and (g) regarding loan maturities for mobile homes,
recreational vehicles and boats, and loan maturities for manufactured
homes.
The banking trade association opposed the changes regarding loan
maturities in whole, describing them as inconsistent with the credit
union industry's specified mission of meeting the credit and savings
needs of persons of modest means and arguing that they encourage unsafe
lending practices. The Board disagrees. Rather, the Board finds that
these amendments to the lending rule enhance an FCU's ability to meet
the credit needs of its members. This rule allows FCUs to offer credit
products that are more affordable to lower income members. Improvements
in the quality and standards of construction of manufactured housing,
for example, have resulted in increased values that may put the cost of
shorter term loans out of the financial reach of individuals of modest
means. The Board also disagrees that the longer maturities will
encourage unsafe lending practices. To the contrary, as stated in the
preamble to the proposed rule, NCUA encourages FCUs to take appropriate
steps to ensure their liens are fully protected. Further, these changes
to the regulation merely codify what OGC opinions have permitted for
several years, and the Board is unaware of any evidence that the longer
loan maturities have resulted in unsafe lending practices.
Two commenters raised issues revealing some confusion about the
difference between mobile homes, which may have loan maturities up to
20 years, and manufactured homes, which are eligible for longer
maturities. One FCU commented about a particular state law and local
practices regarding the titling of manufactured housing as real or
personal property, ground-leasing, and what constitutes ``permanently
affixed,'' which, the commenter contended, could cause confusion and
result in risks to FCUs making manufactured housing loans. In part,
some confusion may result if the terms manufactured home and mobile
home have a different meaning under a state law. In reviewing the FCU's
letter, it became apparent that there may be issues under a state law
that FCUs will need to address in their lending agreements with
borrowers to ensure compliance with NCUA's lending regulation. One
trade association suggested clarifying that manufactured housing that
is not permanently affixed to the land constitutes a mobile home. The
Board notes that, while this will generally be correct because a mobile
home does not have to be permanently affixed to land, which is required
for a manufactured home loan, a mobile home still must meet certain
regulatory criteria to qualify for a maturity of up to 20 years.
The regulation distinguishes between mobile homes and manufactured
homes. First, in using the term ``permanently affixed'' to describe
manufactured homes as a type of manufactured housing distinguished from
mobile homes, the Board intends to limit long-term loans to
manufactured homes that are intended to remain in place permanently. In
its opinion letter on this topic, the OGC stated:
Most significantly, we note that a manufactured home, although
constructed at a factory and not built on-site, is designed and
intended to be permanently affixed to the land. Unlike a mobile
home, which is also constructed at a factory, a manufactured home is
not intended to be moved once it has reached its ultimate
destination.
Legal Opinion OGC 03-0934, dated November 17, 2003. In order for a
loan to qualify for the longer maturities of residential mortgage loans
under Sec. 701.21(g), a manufactured home must be designed and
intended to remain in place permanently.
The same FCU noted above also commented about two issues regarding
manufactured home loans discussed in the preamble to the proposed rule.
Regarding the statement in the preamble that a manufactured home must
qualify as real property and be titled as real property, the FCU
contends the requirement is unnecessary and that state law and local
titling practices could cause problems. The Board notes that, for a
loan to be eligible for a 30-year or more maturity term, the FCU Act
requires that it be a ``residential real estate loan.'' 12 U.S.C.
1757(5)(A)(i) (emphasis added). Loans secured by some type of
manufactured housing that is titled as personal property are not
eligible for 30-year mortgages under the FCU Act but may be able to
qualify as 20-year mobile home loans, assuming the criteria of Sec.
701.21(f) are met. To the extent that a particular state law raises
questions of how an FCU can ensure its loans comply with NCUA's lending
regulation, an FCU may seek interpretive guidance from OGC.
Second, the FCU commented about the Board's suggestion that, for
safety and soundness reasons, FCUs engaging in long-term loans for
manufactured homes under Sec. 701.21(g) should ensure, if the member
is leasing the land where the manufactured home is located, that the
term of the lease should be at least as long as the term of the loan.
The FCU commented that this requirement is unnecessary and
unreasonable, stating that, in practice, most manufactured housing
communities permit leases of no longer duration than six months. First,
the Board notes its statement in the preamble is not a regulatory
requirement but is a statement of guidance. Second, the FCU's reference
to a local practice of having short term leases of six months or less
is a practice associated with mobile home parks rather than
manufactured home locations. A manufactured home, as opposed to a
mobile home, is designed and intended to stay in place permanently
rather than be moved. The Board's understanding is that, in purchases
of manufactured homes, the manufactured home is most often located on
land the borrower already owns or is purchasing in conjunction with the
purchase of the manufactured home. As noted in the preamble for the
proposed rule, as a matter of safety and soundness, an FCU making a
manufactured home loan where the land is leased should ensure that the
lease is as long as the term of the loan. There may be some rare set of
circumstances that would support an FCU making a 30-year loan on a
manufactured home located on property that is leased for some lesser
period of time. However, where the lease on land is of such a short
duration that it places the loan security at a high risk of loss or
waste, safety and soundness considerations would weigh against making a
30-year or more loan.
For these reasons, the Board has determined to adopt the proposed
rule as a final rule with no changes.
[[Page 8923]]
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires NCUA to prepare an
analysis to describe any significant economic impact any regulation may
have on a substantial number of small entities. NCUA considers credit
unions having less than ten million in assets to be small for purposes
of RFA. Interpretive Ruling and Policy Statement (IRPS) 87-2 as amended
by IRPS 03-2. The rule clarifies and expands the lending rules to
incorporate recent OGC opinions. NCUA has determined and certifies that
this rule will not have a significant economic impact on a substantial
number of small credit unions. Accordingly, NCUA has determined that a
Regulatory Flexibility Analysis is not required.
Paperwork Reduction Act
NCUA has determined that the rule would not increase paperwork
requirements under the Paperwork Reduction Act of 1995 and regulations
of the Office of Management and Budget (OMB). NCUA currently has OMB
clearance for Sec. 701.21's collection requirements (OMB No. 3133-
0139).
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. This rule applies to only federally
chartered credit unions. NCUA has determined that the final rule does
not constitute a ``significant regulatory action'' for purposes of the
Executive Order.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The rule applies only to federal credit
unions. NCUA has determined that the amendments to the rule will not
have a substantial direct effect on the states, on the connection
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government.
NCUA has determined that this rule does not constitute a policy that
has federalism implications for purposes of the executive order.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996
(Pub. L. 104-121) provides generally for congressional review of agency
rules. A reporting requirement is triggered in instances where NCUA
issues a final rule as defined by Section 551 of the Administrative
Procedures Act. 5 U.S.C. 551. NCUA submitted the rule to the Office of
Management and Budget, which has determined that it is not major for
purposes of the Small Business Regulatory Enforcement Fairness Act of
1996.
List of Subjects in 12 CFR Part 701
Credit unions, loans.
By the National Credit Union Administration Board on February
17, 2005.
Mary Rupp,
Secretary of the Board.
0
Accordingly, the National Credit Union Administration amends 12 CFR
part 701 as follows:
PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a,
1761b, 1766, 1767, 1782, 1784, 1787, 1789.
0
2. Amend Sec. 701.21 by revising paragraphs (e), (f) and (g)(1) to
read as follows:
Sec. 701.21 Loans to members and lines of credit to members.
* * * * *
(e) Insured, Guaranteed and Advance Commitment Loans. A loan
secured, in full or in part, by the insurance or guarantee of, or with
an advance commitment to purchase the loan, in full or in part, by the
Federal Government, a State government or any agency of either, may be
made for the maturity and under the terms and conditions, including
rate of interest, specified in the law, regulations or program under
which the insurance, guarantee or commitment is provided.
(f) 20-Year Loans. (1) Notwithstanding the general 12-year maturity
limit on loans to members, a federal credit union may make loans with
maturities of up to 20 years in the case of:
(i) a loan to finance the purchase of a mobile home if the mobile
home will be used as the member-borrower's residence and the loan is
secured by a first lien on the mobile home, and the mobile home meets
the requirements for the home mortgage interest deduction under the
Internal Revenue Code,
(ii) a second mortgage loan (or a nonpurchase money first mortgage
loan in the case of a residence on which there is no existing first
mortgage) if the loan is secured by a residential dwelling which is the
residence of the member-borrower, and
(iii) a loan to finance the repair, alteration, or improvement of a
residential dwelling which is the residence of the member-borrower.
(2) For purposes of this paragraph (f), mobile home may include a
recreational vehicle, house trailer or boat.
(g) Long-Term Mortgage Loans. (1) Authority. A federal credit union
may make residential real estate loans to members, including loans
secured by manufactured homes permanently affixed to the land, with
maturities of up to 40 years, or such longer period as may be permitted
by the NCUA Board on a case-by-case basis, subject to the conditions of
this paragraph (g).
* * * * *
[FR Doc. 05-3477 Filed 2-23-05; 8:45 am]
BILLING CODE 7535-01-U
