Direct Single Family Housing Loans and Grants, 5153-5157 [E7-1817]

Download as PDF mstockstill on PROD1PC66 with RULES Federal Register / Vol. 72, No. 23 / Monday, February 5, 2007 / Rules and Regulations compensation must submit an amount equal to the uncollected employee contributions and any applicable agency contributions to OPM for deposit in the Employees Health Benefits Fund. (2) The agency must make the deposit to OPM as soon as possible, but no later than 60 calendar days after it determines the amount of an underdeduction that has occurred, regardless of whether or when the agency recovers the under-deduction. A subsequent agency decision on whether to waive collection of the overpayment of pay caused by failure to properly withhold employee health benefits contributions will be made under 5 U.S.C. 5584 as implemented by 4 CFR chapter I, subchapter G, unless the agency involved is excluded from 5 U.S.C. 5584, in which case any applicable authority to waive the collection may be used. (d) Direct premium payments for annuitants. (1) If an annuity, excluding an annuity under subchapter III of chapter 84 (Thrift Savings Plan), is too low to cover the health benefits premium, or if a surviving spouse receives a basic employee death benefit, the retirement system must provide written information to the annuitant or surviving spouse. The information must describe the health benefits plans available, and include the opportunity to either: (i) Enroll in a health benefits plan in which the enrollee’s share of the premium is less than the annuity amount; or (ii) Pay the premium directly to the retirement system. (2) The retirement system must accept direct payment for health benefits premiums in these circumstances. The annuitant or surviving spouse must continue direct payment of the premium even if the annuity increases to the extent that it covers the premium. (3) The annuitant or surviving spouse must pay the retirement system his or her share of the premium for the enrollment for every pay period during which the enrollment continues, except for the 31-day temporary extension of coverage. The individual must make the payment after each pay period in which he or she is covered using a schedule set up by the retirement system. If the retirement system does not receive payment by the due date, it must notify the individual in writing that continued coverage depends upon payment being made within 15 days (45 days for annuitants or surviving spouses residing overseas) after the notice is received. If no subsequent payments are made, the retirement system terminates the enrollment 60 days after the date of the VerDate Aug<31>2005 14:24 Feb 02, 2007 Jkt 211001 notice (90 days for annuitants or surviving spouses residing overseas). An annuitant or surviving spouse whose enrollment terminated due to nonpayment of premium may not reenroll or reinstate coverage unless there are circumstances beyond his or her control as provided in paragraph (d)(4) of this section. (4) If the annuitant or surviving spouse is prevented by circumstances beyond his or her control from paying the premium within 15 days after receiving the notice, he or she may ask the retirement system to reinstate the enrollment by writing the retirement system. The individual must describe the circumstances and send the request within 30 calendar days from the termination date. The retirement system will determine if the annuitant or surviving spouse is eligible for reinstatement of coverage. When the determination is affirmative, the retirement system will reinstate the coverage retroactive to the date of termination. If the determination is negative, then the individual may request a review of the decision from the retirement system, as described in § 890.104. (5) Termination of enrollment for failure to pay premiums within the time frame described in paragraph (d)(3) of this section is retroactive to the end of the last pay period for which payment was timely received. (6) The retirement system will submit all direct premium payments along with its regular health benefits premiums to OPM according to procedures established by OPM. (e) Procedures for direct payment of premiums during LWOP after 365 days. (1) An employee who is granted leave without pay (LWOP) under subpart L of part 630 of this chapter (Family and Medical Leave) after 365 days of continued coverage under § 890.303(e) must pay the employee contributions directly to the employing office and keep payments current. (2) The employee must make payments after the pay period in which the employee is covered according to a schedule set up by the employing office. If the employing office does not receive the payment by the date due, it must notify the employee in writing that continued coverage depends upon payment being made within 15 days (45 days for employees residing overseas) after the notice is received. If no subsequent payments are made, the employing office terminates the enrollment 60 days after the date of the notice (90 days for enrollees residing overseas). PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 5153 (3) If the enrollee was prevented by circumstances beyond his or her control from making payment within the timeframe in paragraph (e)(2) of this section, he or she may ask the employing office to reinstate the enrollment by writing to the employing office. The employee must file the request within 30 calendar days from the date of termination and must include supporting documentation. (4) The employing office determines whether the employee is eligible for reinstatement of coverage. When the determination is affirmative, the employing office will reinstate the coverage of the employee retroactive to the date of termination. If the determination is negative, the employee may request the employing agency to review the decision as provided under § 890.104. (5) An employee whose coverage is terminated under paragraph (e)(2) of this section may enroll if he or she returns to duty in a pay status in a position in which the employee is eligible for coverage under this part. * * * * * [FR Doc. E7–1754 Filed 2–2–07; 8:45 am] BILLING CODE 6329–39–P DEPARTMENT OF AGRICULTURE Rural Housing Service 7 CFR Part 3550 RIN 0575–AC54 Direct Single Family Housing Loans and Grants Rural Housing Service, USDA. Final rule. AGENCY: ACTION: SUMMARY: Through this action, the Rural Housing Service (RHS) is adopting homeownership education requirements. The lack of homeownership education is a wellknown barrier to successful homeownership for many families. The intended effect of this action is to assure that first time homeowners financed under the Section 502 Direct program are well prepared for homeownership by assuring that they receive homeownership education. DATES: This rule is effective on May 7, 2007. FOR FURTHER INFORMATION CONTACT: Janet L. Carter, Senior Loan Specialist, Rural Housing Service, Stop 0783, 1400 Independence Avenue, SW., Washington, DC 20250–0783, Telephone: 202–720–1489; e-mail: Janet.Carter@wdc.usda.gov. E:\FR\FM\05FER1.SGM 05FER1 5154 Federal Register / Vol. 72, No. 23 / Monday, February 5, 2007 / Rules and Regulations SUPPLEMENTARY INFORMATION: Classification This rule has been determined to be not significant and was not reviewed by the Office of Management and Budget (OMB) under Executive Order 12866. Paperwork Reduction Act of 1995 In accordance with the Paperwork Reduction of 1995, the information collection requirements contained in this regulation have been approved by OMB under control number 0575–0172. E-Government Act Compliance The Agency is committed to complying with the E-Government Act, to promote the use of Internet and other information technologies to provided increased opportunities for citizen access to Government information and services, and for other purposes. mstockstill on PROD1PC66 with RULES Civil Justice Reform This rule has been reviewed under Executive Order 12988, Civil Justice Reform. In accordance with that 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 the regulations of the National Appeals Division of USDA at 7 CFR part 11 must be exhausted before bringing suit in court challenging action taken under this rule unless those regulations specifically allow bringing suit at an earlier time. 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, 2 U.S.C. 1532, 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 VerDate Aug<31>2005 14:24 Feb 02, 2007 Jkt 211001 not subject to the requirements of sections 202 and 205 of the UMRA. Programs Affected The programs affected by this proposed rule are 10.410, Low to Moderate Income Housing Loans and 10.417, Very Low-Income Housing Repair Loans and Grants. Intergovernmental Consultation For the reasons set forth in the final rule related Notice to 7 CFR part 3015, subpart V, these programs are 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, Public Law 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. This rule imposes a new requirement on Agency applicants and borrowers; however, the new requirement of homeownership education will apply solely to the individual applicants and borrowers of Section 502 Direct Single Family Housing financing, not to small entities. There will be no significant information collection, or regulatory requirements imposed on small entities under this proposed rule. 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 a substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required. Background On March 6, 2006 the Agency published a proposed rule (71 FR 11167–9) with a 60 day comment period PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 that would add homeowner education as a requirement for first time homebuyers that use Section 502 Direct loan funds to purchase a home. We received a total of 52 comments in response to the proposed rule. Overall the comments expressed support for the addition of the homeownership education requirement and generally agreed that homeowner education was necessary and beneficial. Many comments did have a recommendation or suggest a revision to the proposed rule. The comments are highlighted into significant issue areas and discussed below. A. Homeowner Education as a Requirement Will Be a Barrier for LowIncome Families and Should Not Be Mandatory The Agency received 5 comments stating that mandating homeowner education would create a barrier for families to access Section 502 loans for home purchase. The comments suggested the following as possible barriers for families: • Availability of homeowner education classes; • Perception of an additional requirement that could discourage applicants, realtors and sellers from participating in the program, • The travel time, distance and cost to the applicant(s), and • Lack of certified counselors in some areas. The Agency does not believe that these are insurmountable barriers. In fact, based on the overall comments received, the Agency has determined that the general consensus is that making homeowner education a requirement results in greater benefit to the borrowers than any perceived detrimental effect to the home buying process. While the agency has established some preferences under § 3550.11 for formats in training based on their effectiveness, adequate flexibility has been included to address the possible barriers raised. In addition, although the Agency does not expect the exception provision to be liberally used, it will be available. The State Director may grant an exception to borrowers on a case-by-case basis where the applicant documents a special need, such as a disability, that would impede completing the homeownership course, or where homeownership education is not reasonably available in the local area as further discussed below. Therefore, these comments have not been adopted. E:\FR\FM\05FER1.SGM 05FER1 Federal Register / Vol. 72, No. 23 / Monday, February 5, 2007 / Rules and Regulations mstockstill on PROD1PC66 with RULES B. Waiver of Homeowner Education by State Directors Should Not Be Routinely Exercised—RD Should Use Its Resources To Have Homeowner Education Services Delivered in Underserved Areas The Agency received 9 comments indicating that the waiver provision should not be routinely exercised, and 3 comments indicating the waiver provision was needed but that flexibility should be built into the rule in exercising the waiver. The State/Local RD office will do an area by area assessment of the availability of homeowner education in the following forms, before requesting an exception for an individual from the State Director: Classroom, one-on-one counseling, interactive video conference, interactive home-study, interactive telephone counseling, and on-line counseling. Exception requests will be reviewed and granted on an individual case-by-case basis. The State Director will consider whether access to such homeownership counseling is ‘‘reasonably available’’ before granting an exception to the homeowner education requirement to an individual. Factors that will be taken into consideration regarding availability of homeowner education to borrowers in areas served by field offices include, but are not limited to: Distance, travel time, geographic obstacles and cost. The intent of the exception provision is to ensure that the homeowner education requirement is not a barrier to an applicant in securing a loan; however, it is not the intent of the Agency to have liberal use of the exception provision. The exception provision is intended to be used only in those rare instances where it is demonstrated that a borrower would not be able to access any form of homeowner education without undue hardship[m1]. C. Readily Available Counseling Should Be Defined The Agency received 1 comment stating that readily available counseling should be defined in the rule. Informal investigation indicated that in some states applicants traveled up to one hour to attend a homeowner education class, after work and on the weekends, if necessary. Other comments were received that indicated an applicant would have to travel to another county to receive counseling. Distances vary from state to state and the willingness of an applicant to attend a class will vary. Given the many differences from state to state, what is ‘‘ readily available’’ in this rule is better addressed by the State Director during the assessment of available homeowner VerDate Aug<31>2005 14:24 Feb 02, 2007 Jkt 211001 education resources in the respective States. Factors that will be taken into consideration regarding availability of homeowner education to borrowers in areas served by field offices include, but are not limited to: distance, travel time, geographic obstacles and cost. D. Lack of funds to pay for homeownership education training/who will pay for the homeowner education if the borrower cannot afford it? The Agency received 7 comments regarding sources of funds to pay for homeowner education on behalf of verylow and low-income borrowers. Some commenters believe that the Agency should assist in paying for the required homeowner education. This issue will be addressed, in part, by the RD State Offices when they assess the availability of homeowner education throughout their respective states and compile, an annually updated resource list of certified organizations and trainers that provide homeowner education. Where there is a fee charged to the borrower for homeowner education, the States will also assess sources of funding for the borrower to pay for their homeowner education, for example, organizations that provide free homeowner education will be identified, and borrowers will be referred to the free training first in all states. The Agency research revealed that many organizations charge only a nominal fee to cover the cost of materials for homeowner education. If qualified, these providers will be identified, and borrowers will be referred to these classes if free classes are unavailable. In addition, the borrower will have the option of financing reasonable costs of the training, as determined by the State Director, by including the amount in the loan amount at loan closing. Inclusion of such costs will not substantially increase the monthly Section 502 borrower loan payments. The Agency believes that the overall benefit of homeownership education outweighs the burdens involved. The cost of homeowner education will be another allowed expense that can be added to the cost of home purchase, if requested. E. What is a reasonable fee to charge? Who decides? The Agency received 10 comments regarding reasonable fees to charge for homeowner education and suggesting that the Agency to set parameters for homeownership education fees as a guideline for the RD State Directors. RD does not believe it is appropriate to set or regulate the appropriate fee for providers. This should be determined PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 5155 based on local market conditions. Based on the comments received, the Agency will allow the State Directors to determine what is a reasonable fee to be charged for homeowner education based on the results of statewide assessments within their respective states. The Agency anticipates fees charged to borrowers based on the comments received to range from free to $400. F. Homeowner Education Training Fees Should Be Allowed to the Homebuyer in Excess of the Appraised Amount of the House The Agency received 3 comments indicating that the fee for homeowner education counseling should be allowed in the loan amount in excess of the appraised value of the house. In response, the Agency will allow reasonable homeowner education fees to be added to the loan amount in excess of the appraised value of the house and area loan limits under § 3550.63 in cases where the borrower requests to pay for the cost of the homeowner education by adding it to the loan amount. The Agency anticipates that such amounts will be insignificant portions of the loan. G. Should RD staff deliver the homeowner education? The Agency received 4 comments stating that RD staff should deliver the homeowner education training. Staff capacity and, qualification to deliver training vary from state to state. State Directors have the flexibility within their States to determine the feasibility of offering this training using staff resources given other program demands. RD staff would have to be trained and certified to provide homeowner education as required under this rule. H. Certification of Counselors: Should Include Certification From State Housing Finance Authorities or Other State Level Certification and Should Include Certification of Training That Is Culturally Appropriate for Native American Communities The Agency received 18 comments stating that certification of housing counselors should be allowed on the state-level, either by the State Housing Financing Agencies or other state-level certification processes, 4 comments stating the certification should model the HUD standard or one of the national organizations referenced in the proposed rule, and 1 commenting regarding certification of culturally appropriate training for Native American communities, especially Native Americans that reside on rural reservations. The Agency agrees that E:\FR\FM\05FER1.SGM 05FER1 5156 Federal Register / Vol. 72, No. 23 / Monday, February 5, 2007 / Rules and Regulations state-level certification and certification of culturally appropriate training for Native Americans should be included. It is addressed in the final rule by § 3550.11 permitting state-level certification by the State Housing Finance Agency or other state-level certification approved by the State Director, and certification by the National American Indian Housing Council, provided the required topics are included in their curriculum. The State Director will confirm that the housing counseling agencies that are not certified by a national agency identified in the final rule are certified by an approved state agency during the RD State Office assessment of available certified housing counseling agencies in their respective states. I. What process should applicants undergo to receive a certificate of completion? The Agency received 4 comments regarding the requirement for the borrower to have a certificate of completion or letter of completion from the housing counseling provider to document that the course was successfully completed. The main concern of these comments was that there should not be a testing component in order for the provider to issue a letter or certificate of completion to the participants. Since the language in the proposed rule lets the provider determine successful completion of their course, the Agency has determined that there is sufficient flexibility for each provider to make an appropriate individual assessment and; therefore, the language will remain the same in the final rule. mstockstill on PROD1PC66 with RULES J. At what point during the home purchase process should the Homeowner Education be required? The Agency received 8 comments regarding when during the home purchase process should the borrower complete homeowner education. Homeowner education must be completed by the borrower prior to closing their loan. When the borrowers receive their certificate of eligibility for a loan they will be advised that by accepting the certificate of eligibility they agree to submit documentation of homeowner education completion before loan closing and that they understand that it is a condition of loan closing. Language to this effect will be added to the Agency’s certificate of eligibility document. At that time, the Agency will provide referrals to certified housing counselors to the borrower and discuss with the borrower VerDate Aug<31>2005 14:24 Feb 02, 2007 Jkt 211001 where and when they will complete the homeowner education class. Generally, the comments stated that the earlier in the process the homeownership education is taken the greater it would benefit the borrower. It would be ideal if the borrowers would complete an homeowner education course before submitting a loan application and certainly before signing a purchase and sale agreement; however, realistically, as some comments indicated this may not be practicable in all cases. Many borrowers are unlikely to incur the expense of taking a homeowner education course if they have no confidence that they will be approved for a loan to buy a house. In recognition of these realities, the Agency also will offer some flexibility to providers in tailoring the curriculum to the attendee. For example, when the attendee has already located a dwelling to purchase, they need not be required to take that portion of the training dealing with shopping for a home. The provider could determine that the applicant already has satisfactory knowledge in this area. K. Will the requirement be the same for Self-Help families who apply for Section 502 Direct loans? The Agency received 2 comments regarding whether Self-Help families would have to comply with the homeowner education requirement. If the Self-Help families are applying for Section 502 loans, then this rule requiring homeowner education as set forth would apply. L. Suggestions for Adding Educational Components to Homeowner Education Course The Agency received 8 comments regarding additional topics that should be included in the required homeowner education. The Agency recognizes the value of these additional topics, therefore, the final rule will add them as recommended: Budgeting—Pre-& PostPurchase; Credit Counseling; Lender Differences—especially predatory lending; and Post-Occupancy Education to include delinquency and foreclosure prevention. List of Subjects in 7 CFR Part 3550 Administrative practice and procedure, Conflict of interests, Environmental impact statements, Equal credit opportunity, Fair housing, Accounting, Housing, Loan programs— Housing and community development, Low and moderate income housing, Manufactured homes, Reporting and recordkeeping requirements, Rural areas, Subsidies. PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 For the reasons stated in the preamble, chapter XXXV, Title 7 of the Code of Federal Regulations, is amended as follows: I PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS 1. The authority citation for part 3550 continues to read as follows: I Authority: 5 U.S.C. 301; 42 U.S.C. 1480. Subpart A—General 2. Section 3550.11 is added to read as follows: I § 3550.11 State Director assessment of homeowner education. (a) State Director’s will make an assessment of the availability of certified homeowner education in their respective states and maintain an annually updated listing of providers and their reasonable costs. (b) The order of preference for homeowner education formats is as follows: (1) Classroom; one-on-one counseling; or interactive video conference. (2) If none of the formats in paragraph (b)(1) of this section is reasonably available; as determined under § 3550.53(i), then the applicant may use interactive home-study or interactive telephone counseling of at least four hours duration. (3) If none of the formats in paragraphs (b)(1) and (b)(2) of this section is reasonably available as determined under § 3550.53(i), then the applicant may use on-line counseling to meet the homeownership education requirement. (c) Homeownership education must include a letter or certificate of completion and be provided by homeownership education counselors that are certified by any of the following: (1) The Department of Housing and Urban Development (HUD); (2) NeighborWorks America (NWA); (3) The National Federation of Housing Counselors (NFHC); (4) National American Indian Housing Council (NAIHC); or (5) The State Housing Finance Agency or other qualified organization approved by the State Director. (d) The provider will issue a letter or certificate of completion to document that the borrower has satisfactory knowledge of these minimum topics: (1) Preparing for homeownership (evaluate readiness to go from rental to homeownership), (2) Budgeting (pre and post-purchase), (3) Credit counseling, (4) Shopping for a home, E:\FR\FM\05FER1.SGM 05FER1 Federal Register / Vol. 72, No. 23 / Monday, February 5, 2007 / Rules and Regulations (5) Lender differences (predatory lending), (6) Obtaining a mortgage (mortgage process, different types of mortgages), (7) Loan closing (closing process, documentation, closing costs), (8) Post-occupancy counseling (delinquency and foreclosure prevention), (9) Life as a homeowner (homeowner warranties, maintenance and repairs), (e) The provider may tailor the homeownership education training to the needs of the borrower to ensure satisfactory knowledge of the topics listed in paragraph (d) of this section. would unduly impede completing a homeownership course in a reasonably available format. Dated: January 5, 2007. Russell T. Davis, Administrator, Rural Housing Service. [FR Doc. E7–1817 Filed 2–2–07; 8:45 am] BILLING CODE 3410–XV–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 Subpart B—Section 502 Origination [Docket No. 2003–NM–123–AD; Amendment 39–14920; AD 2007–03–09] 3. Section 3550.52 (d)(10) is added to read as follows: RIN 2120–AA64 I § 3550.52 Loan purposes. * * * * * (d) * * * (10) Reasonable fees for homeownership education as determined by the State Director under § 3550.11 of this subpart. Such fees may be added to the loan amount in excess of the area loan limit and appraised value of the house. * * * * * I 4. Section 3550.53(i) is added to read as follows: § 3550.53 Eligibility requirements. mstockstill on PROD1PC66 with RULES * * * * * (i) Homeownership education. Applicants who are first-time homebuyers must agree to provide documentation, in the form of a completion certificate or letter from the provider, that a homeownership education course from a certified provider under § 3550.11 has been successfully completed as defined by the provider prior to loan closing. Requests for exceptions to the homeowner education requirement will be reviewed and granted on an individual case-by-case basis. The State Director may grant an exception the homeownership education requirement for individuals in geographic areas within the State where the State Director verifies that certified homeownership education is not reasonably available in the local area in any of the formats listed in § 3550.11(b). Whether such homeownership education is reasonably available will be determined based on factors including, but not limited to: Distance, travel time, geographic obstacles, and cost. On a case-by-case basis, the State Director also may grant an exception, provided the applicant borrower documents a special need, such as a disability, that VerDate Aug<31>2005 14:24 Feb 02, 2007 Jkt 211001 Airworthiness Directives; Airbus Model A300 Airplanes; Model A300 B4–601, B4–603, B4–620, B4–622, B4–605R, B4–622R, F4–605R, F4–622R, and C4– 605R Variant F Airplanes (Collectively Called A300–600 Series Airplanes); and Model A310 Airplanes Federal Aviation Administration, DOT. ACTION: Final rule. AGENCY: SUMMARY: This amendment adopts a new airworthiness directive (AD), applicable to all of the airplanes identified above, that requires revising the FAA-approved maintenance program to include a new airplane maintenance manual task that specifies a detailed inspection after each ram air turbine (RAT) retraction. This AD also requires, for certain airplanes, a onetime inspection to detect breaks in the bottom flange fitting of the RAT and corrective actions, if necessary; for certain airplanes, an adjustment of the ejection jack; and, for certain other airplanes, replacement of the aluminum part with an improved steel part. The actions specified by this AD are intended to prevent failure of the RAT yoke fitting, which could result in the loss of RAT function and possible loss of critical flight control in the event of certain emergency situations. This action is intended to address the identified unsafe condition. DATES: Effective March 12, 2007. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 12, 2007. ADDRESSES: The service information referenced in this AD may be obtained from Airbus, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France. This information may be examined at PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 5157 the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington. FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer, International Branch, ANM–116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057–3356; telephone (425) 227–2797; fax (425) 227–1149. SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to Airbus Model A300 airplanes; Model A300 B4–601, B4–603, B4–620, B4–622, B4–605R, B4–622R, F4–605R, F4–622R, and C4–605R Variant F series airplanes (collectively called A300–600 series airplanes); and Model A310 airplanes was published as a supplemental notice of proposed rulemaking (NPRM) in the Federal Register on May 9, 2006 (71 FR 26884). That action proposed to require revising the FAA-approved maintenance program to include a new airplane maintenance manual task that specifies a detailed inspection after each ram air turbine (RAT) extension. That action also proposed to require a one-time inspection to detect breaks in the bottom flange fitting of the RAT and corrective actions, if necessary; for certain airplanes, an adjustment of the ejection jack; and, for certain other airplanes, replacement of the aluminum part with an improved steel part. Comments Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received. Request To Remove Airplanes From Requirement To Do Detailed Inspection Airbus requests that we remove Model A300 airplanes from the ‘‘effectivity’’ of paragraph (a) of the supplemental NPRM, which specifies a detailed inspection for breaks of the bottom flange fitting of the yoke fitting for the RAT swivel coupling, and replacement if necessary. Airbus states that all Model A300-B2 and -B4 airplanes are equipped with Dowty RATs that have swivel coupling yoke fittings. The Dowty fittings are to be replaced in accordance with Airbus Service Bulletin A300–57–0244, dated March 4, 2005. That action is specified in paragraph (b) of the Supplemental NPRM. Airbus states that the FAA should specify that these airplanes are to use the up-to-date requirements of E:\FR\FM\05FER1.SGM 05FER1

Agencies

[Federal Register Volume 72, Number 23 (Monday, February 5, 2007)]
[Rules and Regulations]
[Pages 5153-5157]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1817]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3550

RIN 0575-AC54


Direct Single Family Housing Loans and Grants

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: Through this action, the Rural Housing Service (RHS) is 
adopting homeownership education requirements. The lack of 
homeownership education is a well-known barrier to successful 
homeownership for many families. The intended effect of this action is 
to assure that first time homeowners financed under the Section 502 
Direct program are well prepared for homeownership by assuring that 
they receive homeownership education.

DATES: This rule is effective on May 7, 2007.

FOR FURTHER INFORMATION CONTACT: Janet L. Carter, Senior Loan 
Specialist, Rural Housing Service, Stop 0783, 1400 Independence Avenue, 
SW., Washington, DC 20250-0783, Telephone: 202-720-1489; e-mail: 
Janet.Carter@wdc.usda.gov.

[[Page 5154]]


SUPPLEMENTARY INFORMATION:

Classification

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

Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction of 1995, the information 
collection requirements contained in this regulation have been approved 
by OMB under control number 0575-0172.

E-Government Act Compliance

    The Agency is committed to complying with the E-Government Act, to 
promote the use of Internet and other information technologies to 
provided increased opportunities for citizen access to Government 
information and services, and for other purposes.

Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. In accordance with that 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 the regulations of 
the National Appeals Division of USDA at 7 CFR part 11 must be 
exhausted before bringing suit in court challenging action taken under 
this rule unless those regulations specifically allow bringing suit at 
an earlier time.

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, 2 
U.S.C. 1532, 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.

Programs Affected

    The programs affected by this proposed rule are 10.410, Low to 
Moderate Income Housing Loans and 10.417, Very Low-Income Housing 
Repair Loans and Grants.

Intergovernmental Consultation

    For the reasons set forth in the final rule related Notice to 7 CFR 
part 3015, subpart V, these programs are 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, Public 
Law 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. This rule imposes a new requirement on Agency 
applicants and borrowers; however, the new requirement of homeownership 
education will apply solely to the individual applicants and borrowers 
of Section 502 Direct Single Family Housing financing, not to small 
entities. There will be no significant information collection, or 
regulatory requirements imposed on small entities under this proposed 
rule.

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 a substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Background

    On March 6, 2006 the Agency published a proposed rule (71 FR 11167-
9) with a 60 day comment period that would add homeowner education as a 
requirement for first time homebuyers that use Section 502 Direct loan 
funds to purchase a home. We received a total of 52 comments in 
response to the proposed rule. Overall the comments expressed support 
for the addition of the homeownership education requirement and 
generally agreed that homeowner education was necessary and beneficial. 
Many comments did have a recommendation or suggest a revision to the 
proposed rule. The comments are highlighted into significant issue 
areas and discussed below.

A. Homeowner Education as a Requirement Will Be a Barrier for Low-
Income Families and Should Not Be Mandatory

    The Agency received 5 comments stating that mandating homeowner 
education would create a barrier for families to access Section 502 
loans for home purchase. The comments suggested the following as 
possible barriers for families:
     Availability of homeowner education classes;
     Perception of an additional requirement that could 
discourage applicants, realtors and sellers from participating in the 
program,
     The travel time, distance and cost to the applicant(s), 
and
     Lack of certified counselors in some areas.
    The Agency does not believe that these are insurmountable barriers. 
In fact, based on the overall comments received, the Agency has 
determined that the general consensus is that making homeowner 
education a requirement results in greater benefit to the borrowers 
than any perceived detrimental effect to the home buying process. While 
the agency has established some preferences under Sec.  3550.11 for 
formats in training based on their effectiveness, adequate flexibility 
has been included to address the possible barriers raised.
    In addition, although the Agency does not expect the exception 
provision to be liberally used, it will be available. The State 
Director may grant an exception to borrowers on a case-by-case basis 
where the applicant documents a special need, such as a disability, 
that would impede completing the homeownership course, or where 
homeownership education is not reasonably available in the local area 
as further discussed below. Therefore, these comments have not been 
adopted.

[[Page 5155]]

B. Waiver of Homeowner Education by State Directors Should Not Be 
Routinely Exercised--RD Should Use Its Resources To Have Homeowner 
Education Services Delivered in Underserved Areas

    The Agency received 9 comments indicating that the waiver provision 
should not be routinely exercised, and 3 comments indicating the waiver 
provision was needed but that flexibility should be built into the rule 
in exercising the waiver. The State/Local RD office will do an area by 
area assessment of the availability of homeowner education in the 
following forms, before requesting an exception for an individual from 
the State Director: Classroom, one-on-one counseling, interactive video 
conference, interactive home-study, interactive telephone counseling, 
and on-line counseling. Exception requests will be reviewed and granted 
on an individual case-by-case basis. The State Director will consider 
whether access to such homeownership counseling is ``reasonably 
available'' before granting an exception to the homeowner education 
requirement to an individual. Factors that will be taken into 
consideration regarding availability of homeowner education to 
borrowers in areas served by field offices include, but are not limited 
to: Distance, travel time, geographic obstacles and cost. The intent of 
the exception provision is to ensure that the homeowner education 
requirement is not a barrier to an applicant in securing a loan; 
however, it is not the intent of the Agency to have liberal use of the 
exception provision. The exception provision is intended to be used 
only in those rare instances where it is demonstrated that a borrower 
would not be able to access any form of homeowner education without 
undue hardship[m1].

C. Readily Available Counseling Should Be Defined

    The Agency received 1 comment stating that readily available 
counseling should be defined in the rule. Informal investigation 
indicated that in some states applicants traveled up to one hour to 
attend a homeowner education class, after work and on the weekends, if 
necessary. Other comments were received that indicated an applicant 
would have to travel to another county to receive counseling. Distances 
vary from state to state and the willingness of an applicant to attend 
a class will vary. Given the many differences from state to state, what 
is `` readily available'' in this rule is better addressed by the State 
Director during the assessment of available homeowner education 
resources in the respective States. Factors that will be taken into 
consideration regarding availability of homeowner education to 
borrowers in areas served by field offices include, but are not limited 
to: distance, travel time, geographic obstacles and cost.

D. Lack of funds to pay for homeownership education training/who will 
pay for the homeowner education if the borrower cannot afford it?

    The Agency received 7 comments regarding sources of funds to pay 
for homeowner education on behalf of very-low and low-income borrowers. 
Some commenters believe that the Agency should assist in paying for the 
required homeowner education. This issue will be addressed, in part, by 
the RD State Offices when they assess the availability of homeowner 
education throughout their respective states and compile, an annually 
updated resource list of certified organizations and trainers that 
provide homeowner education. Where there is a fee charged to the 
borrower for homeowner education, the States will also assess sources 
of funding for the borrower to pay for their homeowner education, for 
example, organizations that provide free homeowner education will be 
identified, and borrowers will be referred to the free training first 
in all states. The Agency research revealed that many organizations 
charge only a nominal fee to cover the cost of materials for homeowner 
education. If qualified, these providers will be identified, and 
borrowers will be referred to these classes if free classes are 
unavailable. In addition, the borrower will have the option of 
financing reasonable costs of the training, as determined by the State 
Director, by including the amount in the loan amount at loan closing. 
Inclusion of such costs will not substantially increase the monthly 
Section 502 borrower loan payments.
    The Agency believes that the overall benefit of homeownership 
education outweighs the burdens involved. The cost of homeowner 
education will be another allowed expense that can be added to the cost 
of home purchase, if requested.

E. What is a reasonable fee to charge? Who decides?

    The Agency received 10 comments regarding reasonable fees to charge 
for homeowner education and suggesting that the Agency to set 
parameters for homeownership education fees as a guideline for the RD 
State Directors. RD does not believe it is appropriate to set or 
regulate the appropriate fee for providers. This should be determined 
based on local market conditions. Based on the comments received, the 
Agency will allow the State Directors to determine what is a reasonable 
fee to be charged for homeowner education based on the results of 
statewide assessments within their respective states. The Agency 
anticipates fees charged to borrowers based on the comments received to 
range from free to $400.

F. Homeowner Education Training Fees Should Be Allowed to the Homebuyer 
in Excess of the Appraised Amount of the House

    The Agency received 3 comments indicating that the fee for 
homeowner education counseling should be allowed in the loan amount in 
excess of the appraised value of the house. In response, the Agency 
will allow reasonable homeowner education fees to be added to the loan 
amount in excess of the appraised value of the house and area loan 
limits under Sec.  3550.63 in cases where the borrower requests to pay 
for the cost of the homeowner education by adding it to the loan 
amount. The Agency anticipates that such amounts will be insignificant 
portions of the loan.

G. Should RD staff deliver the homeowner education?

    The Agency received 4 comments stating that RD staff should deliver 
the homeowner education training. Staff capacity and, qualification to 
deliver training vary from state to state. State Directors have the 
flexibility within their States to determine the feasibility of 
offering this training using staff resources given other program 
demands. RD staff would have to be trained and certified to provide 
homeowner education as required under this rule.

H. Certification of Counselors: Should Include Certification From State 
Housing Finance Authorities or Other State Level Certification and 
Should Include Certification of Training That Is Culturally Appropriate 
for Native American Communities

    The Agency received 18 comments stating that certification of 
housing counselors should be allowed on the state-level, either by the 
State Housing Financing Agencies or other state-level certification 
processes, 4 comments stating the certification should model the HUD 
standard or one of the national organizations referenced in the 
proposed rule, and 1 commenting regarding certification of culturally 
appropriate training for Native American communities, especially Native 
Americans that reside on rural reservations. The Agency agrees that

[[Page 5156]]

state-level certification and certification of culturally appropriate 
training for Native Americans should be included. It is addressed in 
the final rule by Sec.  3550.11 permitting state-level certification by 
the State Housing Finance Agency or other state-level certification 
approved by the State Director, and certification by the National 
American Indian Housing Council, provided the required topics are 
included in their curriculum. The State Director will confirm that the 
housing counseling agencies that are not certified by a national agency 
identified in the final rule are certified by an approved state agency 
during the RD State Office assessment of available certified housing 
counseling agencies in their respective states.

I. What process should applicants undergo to receive a certificate of 
completion?

    The Agency received 4 comments regarding the requirement for the 
borrower to have a certificate of completion or letter of completion 
from the housing counseling provider to document that the course was 
successfully completed. The main concern of these comments was that 
there should not be a testing component in order for the provider to 
issue a letter or certificate of completion to the participants. Since 
the language in the proposed rule lets the provider determine 
successful completion of their course, the Agency has determined that 
there is sufficient flexibility for each provider to make an 
appropriate individual assessment and; therefore, the language will 
remain the same in the final rule.

J. At what point during the home purchase process should the Homeowner 
Education be required?

    The Agency received 8 comments regarding when during the home 
purchase process should the borrower complete homeowner education. 
Homeowner education must be completed by the borrower prior to closing 
their loan. When the borrowers receive their certificate of eligibility 
for a loan they will be advised that by accepting the certificate of 
eligibility they agree to submit documentation of homeowner education 
completion before loan closing and that they understand that it is a 
condition of loan closing. Language to this effect will be added to the 
Agency's certificate of eligibility document. At that time, the Agency 
will provide referrals to certified housing counselors to the borrower 
and discuss with the borrower where and when they will complete the 
homeowner education class.
    Generally, the comments stated that the earlier in the process the 
homeownership education is taken the greater it would benefit the 
borrower. It would be ideal if the borrowers would complete an 
homeowner education course before submitting a loan application and 
certainly before signing a purchase and sale agreement; however, 
realistically, as some comments indicated this may not be practicable 
in all cases. Many borrowers are unlikely to incur the expense of 
taking a homeowner education course if they have no confidence that 
they will be approved for a loan to buy a house. In recognition of 
these realities, the Agency also will offer some flexibility to 
providers in tailoring the curriculum to the attendee. For example, 
when the attendee has already located a dwelling to purchase, they need 
not be required to take that portion of the training dealing with 
shopping for a home. The provider could determine that the applicant 
already has satisfactory knowledge in this area.

K. Will the requirement be the same for Self-Help families who apply 
for Section 502 Direct loans?

    The Agency received 2 comments regarding whether Self-Help families 
would have to comply with the homeowner education requirement. If the 
Self-Help families are applying for Section 502 loans, then this rule 
requiring homeowner education as set forth would apply.

L. Suggestions for Adding Educational Components to Homeowner Education 
Course

    The Agency received 8 comments regarding additional topics that 
should be included in the required homeowner education. The Agency 
recognizes the value of these additional topics, therefore, the final 
rule will add them as recommended: Budgeting--Pre-& Post-Purchase; 
Credit Counseling; Lender Differences--especially predatory lending; 
and Post-Occupancy Education to include delinquency and foreclosure 
prevention.

List of Subjects in 7 CFR Part 3550

    Administrative practice and procedure, Conflict of interests, 
Environmental impact statements, Equal credit opportunity, Fair 
housing, Accounting, Housing, Loan programs--Housing and community 
development, Low and moderate income housing, Manufactured homes, 
Reporting and recordkeeping requirements, Rural areas, Subsidies.


0
For the reasons stated in the preamble, chapter XXXV, Title 7 of the 
Code of Federal Regulations, is amended as follows:

PART 3550--DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS

0
1. The authority citation for part 3550 continues to read as follows:

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

Subpart A--General

0
2. Section 3550.11 is added to read as follows:


Sec.  3550.11  State Director assessment of homeowner education.

    (a) State Director's will make an assessment of the availability of 
certified homeowner education in their respective states and maintain 
an annually updated listing of providers and their reasonable costs.
    (b) The order of preference for homeowner education formats is as 
follows:
    (1) Classroom; one-on-one counseling; or interactive video 
conference.
    (2) If none of the formats in paragraph (b)(1) of this section is 
reasonably available; as determined under Sec.  3550.53(i), then the 
applicant may use interactive home-study or interactive telephone 
counseling of at least four hours duration.
    (3) If none of the formats in paragraphs (b)(1) and (b)(2) of this 
section is reasonably available as determined under Sec.  3550.53(i), 
then the applicant may use on-line counseling to meet the homeownership 
education requirement.
    (c) Homeownership education must include a letter or certificate of 
completion and be provided by homeownership education counselors that 
are certified by any of the following:
    (1) The Department of Housing and Urban Development (HUD);
    (2) NeighborWorks America (NWA);
    (3) The National Federation of Housing Counselors (NFHC);
    (4) National American Indian Housing Council (NAIHC); or
    (5) The State Housing Finance Agency or other qualified 
organization approved by the State Director.
    (d) The provider will issue a letter or certificate of completion 
to document that the borrower has satisfactory knowledge of these 
minimum topics:
    (1) Preparing for homeownership (evaluate readiness to go from 
rental to homeownership),
    (2) Budgeting (pre and post-purchase),
    (3) Credit counseling,
    (4) Shopping for a home,

[[Page 5157]]

    (5) Lender differences (predatory lending),
    (6) Obtaining a mortgage (mortgage process, different types of 
mortgages),
    (7) Loan closing (closing process, documentation, closing costs),
    (8) Post-occupancy counseling (delinquency and foreclosure 
prevention),
    (9) Life as a homeowner (homeowner warranties, maintenance and 
repairs),
    (e) The provider may tailor the homeownership education training to 
the needs of the borrower to ensure satisfactory knowledge of the 
topics listed in paragraph (d) of this section.

Subpart B--Section 502 Origination

0
3. Section 3550.52 (d)(10) is added to read as follows:


Sec.  3550.52  Loan purposes.

* * * * *
    (d) * * *
    (10) Reasonable fees for homeownership education as determined by 
the State Director under Sec.  3550.11 of this subpart. Such fees may 
be added to the loan amount in excess of the area loan limit and 
appraised value of the house.
* * * * *

0
4. Section 3550.53(i) is added to read as follows:


Sec.  3550.53  Eligibility requirements.

* * * * *
    (i) Homeownership education. Applicants who are first-time 
homebuyers must agree to provide documentation, in the form of a 
completion certificate or letter from the provider, that a 
homeownership education course from a certified provider under Sec.  
3550.11 has been successfully completed as defined by the provider 
prior to loan closing. Requests for exceptions to the homeowner 
education requirement will be reviewed and granted on an individual 
case-by-case basis. The State Director may grant an exception the 
homeownership education requirement for individuals in geographic areas 
within the State where the State Director verifies that certified 
homeownership education is not reasonably available in the local area 
in any of the formats listed in Sec.  3550.11(b). Whether such 
homeownership education is reasonably available will be determined 
based on factors including, but not limited to: Distance, travel time, 
geographic obstacles, and cost. On a case-by-case basis, the State 
Director also may grant an exception, provided the applicant borrower 
documents a special need, such as a disability, that would unduly 
impede completing a homeownership course in a reasonably available 
format.

    Dated: January 5, 2007.
Russell T. Davis,
Administrator, Rural Housing Service.
 [FR Doc. E7-1817 Filed 2-2-07; 8:45 am]
BILLING CODE 3410-XV-P