Reserve Account, 34531-34533 [2015-14783]

Download as PDF 34531 Rules and Regulations Federal Register Vol. 80, No. 116 Wednesday, June 17, 2015 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. DEPARTMENT OF AGRICULTURE Rural Housing Service 7 CFR Part 3560 Executive Order 12988—Civil Justice Reform This rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this rule is adopted: (1) Unless otherwise specifically provided, all State and local laws that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule except as specifically prescribed in the rule; and (3) administrative proceedings of the National Appeals Division of the U.S. Department of Agriculture (7 CFR part 11) must be exhausted before bringing suit. Executive Order 13132—Federalism RIN 0575–AC99 Reserve Account AGENCY: ACTION: Rural Housing Service, USDA. Final rule. The Rural Housing Service (RHS or ‘‘Agency’’) is amending its regulation to change the requirements of the reserve account for direct Multifamily Housing (MFH) loans. The intended effect of this action is to address the reserve account requirement of the Agency to countersign with the borrower when a Section 538 guaranteed loan is involved, and to also clarify that reserve account funds cannot be used to pay for fees associated with the Section 538 guaranteed loan program. SUMMARY: The effective date for this final rule is August 17, 2015. DATES: FOR FURTHER INFORMATION CONTACT: srobinson on DSK5SPTVN1PROD with RULES Tammy S. Daniels, Financial and Loan Analyst, Multi-Family Housing Guaranteed Loan Division, Rural Housing Service, U.S. Department of Agriculture, STOP 0781, 1400 Independence Avenue SW., Washington, DC 20250–0781, Telephone: (202) 720–0021 (this is not a toll-free number); email: tammy.daniels@wdc.usda.gov. SUPPLEMENTARY INFORMATION: Executive Order 12866—Classification This rule has been determined to be not significant and, therefore, was not reviewed by the Office of Management and Budget under Executive Order 12866. VerDate Sep<11>2014 15:57 Jun 16, 2015 Jkt 235001 The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with States is not required. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments This executive order imposes requirements on Rural Development (RD) in the development of regulatory policies that have tribal implications or preempt tribal laws. RD has determined that the final rule does not have a substantial direct effect on one or more Indian tribe(s) or on either the relationship or the distribution of powers and responsibilities between the Federal Government and Indian tribes. Thus, this final rule is not subject to the requirements of Executive Order 13175. If a tribe determines that this rule has implications of which RD is not aware and would like to engage with RD on this rule, please contact RD’s Native American Coordinator at: AIAN@ wdc.usda.gov. Regulatory Flexibility Act The 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 on this document that this rule will not have a significant economic impact on a substantial number of small entities. PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 This rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity. Paperwork Reduction Act The information collection requirements contained in this regulation have been approved by OMB and have been assigned OMB control number 0575–0189. There are no new reporting and recordkeeping requirements associated with this regulatory action. E-Government Act Compliance RHS is committed to complying with the E-Government Act by promoting the use of the Internet and other information technologies in order to provide increased opportunities for citizen access to Government information, services, and other purposes. Unfunded Mandate Reform Act (UMRA) 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. Environmental Impact Statement This document has been reviewed in accordance with 7 CFR part 1940, subpart G, ‘‘Environmental Program.’’ RHS determined that the action does not constitute a major Federal action significantly affecting the quality of the environment. Therefore, in accordance with the National Environmental Policy Act of 1969, Pub. L. 91–190, an Environmental Impact Statement is not required. Programs Affected The programs affected by this regulation are listed in the Catalog of Federal Domestic Assistance under numbers 10.405—Farm Labor Housing Loans and Grants; 10.415—RRH Loans; and 10.427—Rural Rental Assistance Payments. Executive Order 12372— Intergovernmental Consultation These loans are subject to the provisions of Executive Order 12372, which require intergovernmental E:\FR\FM\17JNR1.SGM 17JNR1 34532 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Rules and Regulations srobinson on DSK5SPTVN1PROD with RULES consultation with State and local officials. RHS conducts intergovernmental consultations for each loan in accordance with 2 CFR part 415, subpart C. I. Background Information Reserve accounts are established by the recipient of direct MFH loans (the ‘‘borrower’’) to meet the major capital expenses of a housing project. The amount of the payments to the reserve account is established in the loan documents, beginning with the first loan payment or the date specified in the loan documents. The current requirement at 7 CFR 3560.306(e)(2) states that reserve accounts require the Agency to countersign with the borrower on all withdrawals. The Section 538 Guaranteed Rural Rental Housing (GRRH) program often provides funding to an existing direct MFH loan property. Loan funds provided by the lender and guaranteed by the GRRH program are critical to the rehabilitation and preservation of older existing direct MFH loan properties. The GRRH program regulation at 7 CFR 3565.402(a) requires that all property reserve accounts be held by the lender, which eliminates the unauthorized use of these funds by the borrower since the borrower does not have access to the funds. When an approved Section 538 lender lends funds to an existing direct MFH loan-financed property, this brings 7 CFR 3560.306 and 3565.402 into conflict, pitting the requirement for the Agency to countersign for funds pursuant to 7 CFR 3560.306, against the requirement that lenders have unfettered control of funds consistent with 7 CFR 3565.402. The GRRH program loan guarantees are sold on the secondary market as long as the loan is closed and is not in default. In most cases, the Section 538 loans on direct MFH loan-financed properties are transferred to Ginnie Mae. Ginnie Mae requires that property reserve accounts be pledged as collateral for the loan and that it has unfettered access to those accounts. In order to meet this secondary market requirement, the reserve accounts must be titled exclusively in the lender’s name. In order to meet Ginnie Mae’s requirements, the reserve accounts cannot be countersigned with any other party. Requiring the Agency’s signature on all withdrawals ensures that the borrower does not have uncontrolled use of the funds and this requirement will remain unchanged for properties that only have direct MFH loans. However, this amendment would relieve the Agency of its countersignature responsibility for VerDate Sep<11>2014 15:57 Jun 16, 2015 Jkt 235001 properties with Section 538 funding, and thereby comply with Ginnie Mae’s requirements, described above. The Agency’s interest in the reserve accounts would still be protected by the change being made in the regulation, since the lender is required to get prior Agency approval before funds disbursement. Therefore, funds from the lender-controlled reserve account cannot be used for items not agreed to by the Agency. Additionally, RHS is amending 7 CFR 3560.306(g) to clarify that reserve account funds cannot be used to pay fees associated with the loan guarantee. Lenders are currently using the replacement reserve account to pay fees associated with the loan guarantee, i.e., the annual renewal fee. These fees are considered a project expense and must be paid from the operating account, not the replacement reserve account. II. Discussion of the Comments Received The Agency received three responses to the proposed rule published in the Federal Register on August 13, 2014, (79 FR 47383). The comments came from RD employees who work with the RD Multi-Family Housing programs. The topics of discussion included: Putting in language regarding the Section 514/516 Farm Labor Housing program; including all lenders in the amendment, not just Section 538 lenders; and, providing additional guidance on how to implement the new requirements involving direct MFH/538 transactions. The comments were as follows: 1. One commenter wanted the Agency to address how the release of the reserves will be internally implemented. The Agency will address this in our internal guidance, HB–1–3565, on how to implement reserve requirements on direct MFH loan transactions. 2. One commenter requested that the proposed rule change include language to reflect that the Section 514/516 Farm Labor Housing loan and grant program transactions be included in the final rule. The rule has been changed to reflect that it pertains to all direct Multifamily housing loans; therefore, references to Section 515 loans have been replaced with ‘‘direct MFH loans.’’ 3. One commenter requested that the amendment address all lenders, not just Section 538 lenders, when loan funds are leveraged for the construction and/ or rehabilitation of project involving direct MFH loans. The agency will not make a change to address all lenders through this regulation change because the change is only intended to resolve the conflict between 7 CFR parts 3560 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 and 3565. In other words, the Agency will only address transactions involving an approved Section 538 lender. In a direct MFH loan transaction involving lenders other than a Section 538 lender, the rules in 7 CFR 3560.306 will prevail so that the direct MFH loan borrower will maintain control of the reserve account through supervised bank accounts. List of Subjects in 7 CFR Part 3560 Accounting, Administrative practice and procedure, Aged, Farm labor housing, Foreclosure, Grant programs— Housing and community development, Government property management, Handicapped, Insurance, Loan programs—Agriculture, Loan programs—Housing and community development, Low and moderate income housing, Migrant labor, Mortgages, Nonprofit organizations, Public housing, Rent subsidies, Reporting and recordkeeping requirements, Rural housing. Therefore, chapter XXXV, title 7 of the Code of Federal Regulations, is amended as follows: PART 3560—DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS 1. The authority citation for part 3560 continues to read as follows: ■ Authority: 42 U.S.C. 1480. Subpart G—Financial Management 2. Amend § 3560.306 by revising paragraph (e)(2) and adding paragraph (g)(5) to read as follows: ■ § 3560.306 Reserve account. * * * * * (e) * * * (2) Reserve accounts must be supervised accounts that require the Agency to countersign on all withdrawals; except, this requirement is not applicable when loan funds guaranteed by the Section 538 GRRH program are used for the construction and/or rehabilitation of a direct MFH loan project. Direct MFH loan borrowers, who are exempted from the supervised account and countersigned requirement, as described above, must follow Section 538 GRRH program regulatory requirements pertaining to reserve accounts. In all cases, Section 538 lenders must get prior written approval from the Agency before reserve account funds involving a direct MFH loan project can be disbursed to the borrower. * * * * * (g) * * * E:\FR\FM\17JNR1.SGM 17JNR1 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Rules and Regulations (5) Funds from the replacement reserve account cannot be used to pay any fees associated with the Section 538 GRRH loan guarantee, as determined by the Agency. * * * * * Dated: May 18, 2015. Tony Hernandez, Administrator, Rural Housing Service. [FR Doc. 2015–14783 Filed 6–16–15; 8:45 am] BILLING CODE 3410–XV–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. FAA–2014–1079; Special Conditions No. 25–585–SC] Special Conditions: Gulfstream Model GVII Series Airplanes; Limit Pilot Forces for Side-Stick Controller Federal Aviation Administration (FAA), DOT. ACTION: Final special conditions. AGENCY: These special conditions are issued for the Gulfstream Model GVII– G500 (GVII series) airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transportcategory airplanes. This design feature is associated with side-stick controllers that require limited pilot force because they are operated by one hand only. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: Effective July 17, 2015. FOR FURTHER INFORMATION CONTACT: Todd Martin, FAA, Airframe and Cabin Safety Branch, ANM–115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057–3356; telephone 425–227–1178; facsimile 425–227–1320. SUPPLEMENTARY INFORMATION: srobinson on DSK5SPTVN1PROD with RULES SUMMARY: Background On March 29, 2012, Gulfstream Aerospace applied for a type certificate for their new Model GVII–G500 airplane. The Model GVII series airplanes are large-cabin business jets capable of VerDate Sep<11>2014 15:57 Jun 16, 2015 Jkt 235001 accommodating up to 19 passengers. The GVII series will certify a base configuration GVII–G500, which incorporates a low, swept-wing design with winglets and a T-tail. The airplanes have two aft-fuselage-mounted Pratt & Whitney turbofan engines. Avionics include four primary display units and multiple touchscreen controllers. The flight-control system is a three-axis, flyby-wire system using active control/ coupled side sticks. The GVII–G500 has a wingspan of 87 ft. and a length of 91 ft. Maximum takeoff weight is 76,850 lbs. Maximum takeoff thrust is 15,135 lbs., maximum range is 5,000 nautical miles (nm), and maximum operating altitude is 51,000 ft. The Model GVII series airplanes are equipped with two side-stick controllers instead of the conventional control columns and wheels. This side-stick controller is designed for one-hand operation. The requirement of Title 14, Code of Federal Regulations (14 CFR) 25.397(c), which defines limit pilot forces and torques for conventional wheel or stick controls, is not adequate for a side-stick controller. Special conditions are necessary to specify the appropriate loading conditions for this controller design. Type-Certification Basis Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.17, Gulfstream must show that the Model GVII–G500 airplane meets the applicable provisions of 14 CFR part 25, as amended by Amendments 25–1 through 25–137. The certification basis of the GVII– G500 airplane is 14 CFR part 25, effective February 1, 1965, including Amendments 25–1 through 25–137; 14 CFR part 34, as amended by Amendments 34–1 through the most current amendment at the time of design approval; and 14 CFR part 36, Amendment 36–29. In addition, the certification basis includes special conditions and equivalent-safety findings related to the flight-control system. If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Model GVII series airplanes because of a novel or unusual design feature, special conditions are prescribed under § 21.16. Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 34533 or unusual design feature, these special conditions would also apply to the other model under § 21.101. In addition to the applicable airworthiness regulations and special conditions, the Model GVII series airplanes must comply with the fuelvent and exhaust-emission requirements of 14 CFR part 34, and the noisecertification requirements of 14 CFR part 36. The FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92–574, the ‘‘Noise Control Act of 1972.’’ The FAA issues special conditions, as defined in 14 CFR 11.19, under § 11.38, and they become part of the typecertification basis under § 21.17(a)(2) for new type certificates, and § 21.101 for amended type certificates. Novel or Unusual Design Features The Gulfstream Model GVII series airplanes will incorporate the following novel or unusual design feature: A side-stick controller for one-hand operation requiring wrist motion only, not arms. Discussion Current regulations reference piloteffort loads for the flight deck pitch-androll controls that are based on twohanded effort. Special conditions are required for the Gulfstream Model GVII series airplanes based on similar airplane programs that include sidestick controllers. These special conditions are also appropriate for the Model GVII series airplane’s side-stick controller. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. Discussion of Comments Notice of proposed special conditions no. 25–15–01–SC for the Gulfstream Model GVII series airplanes was published in the Federal Register on February 26, 2015 (80 FR 10422). No substantive comments were received, and the special conditions are adopted as proposed. Applicability As discussed above, these special conditions apply to Gulfstream Model GVII series airplanes. Should Gulfstream apply later for a change to the type certificate to include another model incorporating the same or similar novel or unusual design feature, these special conditions would apply to that model as well. E:\FR\FM\17JNR1.SGM 17JNR1

Agencies

[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)]
[Rules and Regulations]
[Pages 34531-34533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14783]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

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.

========================================================================


Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / 
Rules and Regulations

[[Page 34531]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3560

RIN 0575-AC99


Reserve Account

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Rural Housing Service (RHS or ``Agency'') is amending its 
regulation to change the requirements of the reserve account for direct 
Multifamily Housing (MFH) loans. The intended effect of this action is 
to address the reserve account requirement of the Agency to countersign 
with the borrower when a Section 538 guaranteed loan is involved, and 
to also clarify that reserve account funds cannot be used to pay for 
fees associated with the Section 538 guaranteed loan program.

DATES: The effective date for this final rule is August 17, 2015.

FOR FURTHER INFORMATION CONTACT: Tammy S. Daniels, Financial and Loan 
Analyst, Multi-Family Housing Guaranteed Loan Division, Rural Housing 
Service, U.S. Department of Agriculture, STOP 0781, 1400 Independence 
Avenue SW., Washington, DC 20250-0781, Telephone: (202) 720-0021 (this 
is not a toll-free number); email: tammy.daniels@wdc.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866--Classification

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

Executive Order 12988--Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. If this rule is adopted: (1) Unless otherwise 
specifically provided, all State and local laws that are in conflict 
with this rule will be preempted; (2) no retroactive effect will be 
given to this rule except as specifically prescribed in the rule; and 
(3) administrative proceedings of the National Appeals Division of the 
U.S. Department of Agriculture (7 CFR part 11) must be exhausted before 
bringing suit.

Executive Order 13132--Federalism

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with States is not required.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on Rural Development (RD) 
in the development of regulatory policies that have tribal implications 
or preempt tribal laws. RD has determined that the final rule does not 
have a substantial direct effect on one or more Indian tribe(s) or on 
either the relationship or the distribution of powers and 
responsibilities between the Federal Government and Indian tribes. 
Thus, this final rule is not subject to the requirements of Executive 
Order 13175. If a tribe determines that this rule has implications of 
which RD is not aware and would like to engage with RD on this rule, 
please contact RD's Native American Coordinator at: AIAN@wdc.usda.gov.

Regulatory Flexibility Act

    The 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 on this document that this rule 
will not have a significant economic impact on a substantial number of 
small entities. This rulemaking action does not involve a new or 
expanded program nor does it require any more action on the part of a 
small business than required of a large entity.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. There are no new reporting and recordkeeping 
requirements associated with this regulatory action.

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act by 
promoting the use of the Internet and other information technologies in 
order to provide increased opportunities for citizen access to 
Government information, services, and other purposes.

Unfunded Mandate Reform Act (UMRA)

    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.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' RHS determined that the action 
does not constitute a major Federal action significantly affecting the 
quality of the environment. Therefore, in accordance with the National 
Environmental Policy Act of 1969, Pub. L. 91-190, an Environmental 
Impact Statement is not required.

Programs Affected

    The programs affected by this regulation are listed in the Catalog 
of Federal Domestic Assistance under numbers 10.405--Farm Labor Housing 
Loans and Grants; 10.415--RRH Loans; and 10.427--Rural Rental 
Assistance Payments.

Executive Order 12372--Intergovernmental Consultation

    These loans are subject to the provisions of Executive Order 12372, 
which require intergovernmental

[[Page 34532]]

consultation with State and local officials. RHS conducts 
intergovernmental consultations for each loan in accordance with 2 CFR 
part 415, subpart C.

I. Background Information

    Reserve accounts are established by the recipient of direct MFH 
loans (the ``borrower'') to meet the major capital expenses of a 
housing project. The amount of the payments to the reserve account is 
established in the loan documents, beginning with the first loan 
payment or the date specified in the loan documents. The current 
requirement at 7 CFR 3560.306(e)(2) states that reserve accounts 
require the Agency to countersign with the borrower on all withdrawals. 
The Section 538 Guaranteed Rural Rental Housing (GRRH) program often 
provides funding to an existing direct MFH loan property. Loan funds 
provided by the lender and guaranteed by the GRRH program are critical 
to the rehabilitation and preservation of older existing direct MFH 
loan properties. The GRRH program regulation at 7 CFR 3565.402(a) 
requires that all property reserve accounts be held by the lender, 
which eliminates the unauthorized use of these funds by the borrower 
since the borrower does not have access to the funds. When an approved 
Section 538 lender lends funds to an existing direct MFH loan-financed 
property, this brings 7 CFR 3560.306 and 3565.402 into conflict, 
pitting the requirement for the Agency to countersign for funds 
pursuant to 7 CFR 3560.306, against the requirement that lenders have 
unfettered control of funds consistent with 7 CFR 3565.402. The GRRH 
program loan guarantees are sold on the secondary market as long as the 
loan is closed and is not in default. In most cases, the Section 538 
loans on direct MFH loan-financed properties are transferred to Ginnie 
Mae. Ginnie Mae requires that property reserve accounts be pledged as 
collateral for the loan and that it has unfettered access to those 
accounts. In order to meet this secondary market requirement, the 
reserve accounts must be titled exclusively in the lender's name. In 
order to meet Ginnie Mae's requirements, the reserve accounts cannot be 
countersigned with any other party. Requiring the Agency's signature on 
all withdrawals ensures that the borrower does not have uncontrolled 
use of the funds and this requirement will remain unchanged for 
properties that only have direct MFH loans. However, this amendment 
would relieve the Agency of its countersignature responsibility for 
properties with Section 538 funding, and thereby comply with Ginnie 
Mae's requirements, described above. The Agency's interest in the 
reserve accounts would still be protected by the change being made in 
the regulation, since the lender is required to get prior Agency 
approval before funds disbursement. Therefore, funds from the lender-
controlled reserve account cannot be used for items not agreed to by 
the Agency.
    Additionally, RHS is amending 7 CFR 3560.306(g) to clarify that 
reserve account funds cannot be used to pay fees associated with the 
loan guarantee. Lenders are currently using the replacement reserve 
account to pay fees associated with the loan guarantee, i.e., the 
annual renewal fee. These fees are considered a project expense and 
must be paid from the operating account, not the replacement reserve 
account.

II. Discussion of the Comments Received

    The Agency received three responses to the proposed rule published 
in the Federal Register on August 13, 2014, (79 FR 47383). The comments 
came from RD employees who work with the RD Multi-Family Housing 
programs. The topics of discussion included: Putting in language 
regarding the Section 514/516 Farm Labor Housing program; including all 
lenders in the amendment, not just Section 538 lenders; and, providing 
additional guidance on how to implement the new requirements involving 
direct MFH/538 transactions.
    The comments were as follows:
    1. One commenter wanted the Agency to address how the release of 
the reserves will be internally implemented. The Agency will address 
this in our internal guidance, HB-1-3565, on how to implement reserve 
requirements on direct MFH loan transactions.
    2. One commenter requested that the proposed rule change include 
language to reflect that the Section 514/516 Farm Labor Housing loan 
and grant program transactions be included in the final rule. The rule 
has been changed to reflect that it pertains to all direct Multi-family 
housing loans; therefore, references to Section 515 loans have been 
replaced with ``direct MFH loans.''
    3. One commenter requested that the amendment address all lenders, 
not just Section 538 lenders, when loan funds are leveraged for the 
construction and/or rehabilitation of project involving direct MFH 
loans. The agency will not make a change to address all lenders through 
this regulation change because the change is only intended to resolve 
the conflict between 7 CFR parts 3560 and 3565. In other words, the 
Agency will only address transactions involving an approved Section 538 
lender. In a direct MFH loan transaction involving lenders other than a 
Section 538 lender, the rules in 7 CFR 3560.306 will prevail so that 
the direct MFH loan borrower will maintain control of the reserve 
account through supervised bank accounts.

List of Subjects in 7 CFR Part 3560

    Accounting, Administrative practice and procedure, Aged, Farm labor 
housing, Foreclosure, Grant programs--Housing and community 
development, Government property management, Handicapped, Insurance, 
Loan programs--Agriculture, Loan programs--Housing and community 
development, Low and moderate income housing, Migrant labor, Mortgages, 
Nonprofit organizations, Public housing, Rent subsidies, Reporting and 
recordkeeping requirements, Rural housing.


    Therefore, chapter XXXV, title 7 of the Code of Federal 
Regulations, is amended as follows:

PART 3560--DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS

0
1. The authority citation for part 3560 continues to read as follows:

    Authority: 42 U.S.C. 1480.

Subpart G--Financial Management

0
2. Amend Sec.  3560.306 by revising paragraph (e)(2) and adding 
paragraph (g)(5) to read as follows:


Sec.  3560.306  Reserve account.

* * * * *
    (e) * * *
    (2) Reserve accounts must be supervised accounts that require the 
Agency to countersign on all withdrawals; except, this requirement is 
not applicable when loan funds guaranteed by the Section 538 GRRH 
program are used for the construction and/or rehabilitation of a direct 
MFH loan project. Direct MFH loan borrowers, who are exempted from the 
supervised account and countersigned requirement, as described above, 
must follow Section 538 GRRH program regulatory requirements pertaining 
to reserve accounts. In all cases, Section 538 lenders must get prior 
written approval from the Agency before reserve account funds involving 
a direct MFH loan project can be disbursed to the borrower.
* * * * *
    (g) * * *

[[Page 34533]]

    (5) Funds from the replacement reserve account cannot be used to 
pay any fees associated with the Section 538 GRRH loan guarantee, as 
determined by the Agency.
* * * * *

    Dated: May 18, 2015.
Tony Hernandez,
Administrator, Rural Housing Service.
[FR Doc. 2015-14783 Filed 6-16-15; 8:45 am]
 BILLING CODE 3410-XV-P
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