Single Family Housing Guaranteed Loan Program, 53369-53372 [2022-18626]

Download as PDF Federal Register / Vol. 87, No. 168 / Wednesday, August 31, 2022 / Rules and Regulations (c) * * * (3) Must comply with any closeout and post-closeout provisions specified in the agreement and 2 CFR 200.344 and 200.345. ■ 17. In § 1499.19, revise the first sentence to read as follows: § 1499.19 Paperwork Reduction Act. The information collection requirements contained in this part have been approved by OMB under the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, and have been assigned OMB control number 0551– 0035. * * * Zach Ducheneaux, Executive Vice President, Commodity Credit Corporation. In concurrence with: Clay Hamilton, Acting Administrator, Foreign Agricultural Service. [FR Doc. 2022–18743 Filed 8–30–22; 8:45 am] BILLING CODE 3410–10–P DEPARTMENT OF AGRICULTURE Rural Housing Service 7 CFR Part 3555 [Docket No. RHS–21–SFH–003] RIN 0575–AD22 Single Family Housing Guaranteed Loan Program Rural Housing Service, Agriculture Department (USDA). ACTION: Final rule. AGENCY: The Rural Housing Service (RHS or Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), is implementing changes to the SingleFamily Housing Guaranteed Loan Program (SFHGLP) to update the requirements for Federally supervised lenders, minimum net worth and experience for non-supervised lenders, approved lender participation requirements, handling of applicants with delinquent child support payments, and builder credit requirements. SUMMARY: This final rule is effective November 29, 2022. DATES: lotter on DSK11XQN23PROD with RULES1 FOR FURTHER INFORMATION CONTACT: Laurie Mohr, Finance and Loan Analyst, Single Family Housing Guaranteed Loan Division, Rural Development, U.S. Department of Agriculture, STOP 0784, Room 2250, South Agriculture Building, 1400 Independence Avenue SW, Washington, DC 20250–0784, telephone: VerDate Sep<11>2014 15:59 Aug 30, 2022 Jkt 256001 (314) 679–6917; or email: laurie.mohr@ usda.gov. SUPPLEMENTARY INFORMATION: I. Background The Rural Housing Service (RHS or Agency) is an agency of the United States Department of Agriculture (USDA) and offers a variety of programs to build or improve housing and essential community facilities in rural areas. RHS offers loans, grants, and loan guarantees for single- and multi-family housing, childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, housing for farm laborers and much more. RHS also provides technical assistance loans and grants in partnership with non-profit organizations, Indian tribes, State and Federal Government agencies, and local communities. The RHS is issuing a final rule to amend the Single-Family Housing Guaranteed Loan Program (SFHGLP) regulation, 7 CFR part 3555, subparts B, C and D which will reinforce oversight and management of the growing SFHGLP portfolio. These changes will promote an efficient and robust management and oversight structure of lenders in the SFHGLP by strengthening underwriting practices, providing guidance for processing loan guarantees for applicants who are subject to administrative offset to collect delinquent child support payments, and streamline requirements for screening builder-contractors by lenders. The updates align with the standards for managing credit programs recommended by the Office of Management and Budget (OMB) for Federally supervised lenders, minimum net worth, minimum line of credits, minimum experience, and approved lender participation requirements. These updates will also provide guidance for processing applications for individuals with delinquent child support payments and relaxes builder requirements to better align with the credit program requirements of other Federal agencies. II. Discussion of Public Comments RHS published a proposed rule on June 9, 2021 (86 FR 30555) to solicit comments on the proposed updated requirements for Federally supervised lenders, minimum net worth and experience for non-supervised lenders, approved lender participation requirements, treatment of applicants with delinquent child support payments, and builder credit requirements for SFHGLP (86 FR 30555). The Agency received comments PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 53369 from six respondents including individuals, mortgage companies, and interested parties. Three of the comments are not applicable to the contents of the rule. The following is a summary of the relevant comments: Comment 1: One respondent opposed eliminating the background checks for builders stating the builder’s integrity could not be thoroughly checked to avoid court appearances and rebuilding homes. Agency Response: The Agency still relies on the lender to review and approve construction contractors or builders. The Agency has determined that these credit requirements are not the industry standard. The buildercontractor’s ability to participate in such projects should be based on the applicant’s and lender’s review of the builder-contractor’s experience, reputation, and financial ability to complete the project in a timely, efficient, and competent manner. The Agency believes the stance is correctly stated and stands behind the rule changes. Comment 2: One respondent replied in favor of the proposed rule stating obtaining background checks for builders were difficult to obtain and could potentially hurt a builder’s reputation if, for some unforeseen reason, you could not obtain a builder approval. Agency Response: The Agency has determined no action is required. Comment 3: One respondent agreed with certain delinquent child support provisions in the rule, however, the respondent raised concerns that the proposed change would be unduly difficult for rural families and children who are already experiencing housing challenges. The respondent noted that employment in rural areas is limited and felt that there are other means to addressing delinquent child support. Agency Response: The Agency believes the stance is correctly stated and stands behind the rule changes. III. Summary of Rule Changes A summary of the changes includes amending 7 CFR 3555.51(a)(8) to eliminate items (a)(8)(iv) because it refers to the Office of Thrift Supervision (OTS), which no longer exists. Furthermore, the current § 3555.51(a)(9) and (10) is intended to provide a path for lenders that are not regulated by state or federal agencies and do not meet the requirements of (a)(1) through (8) an opportunity to participate in the SFHGLP. Therefore, the introductory paragraph of § 3555.51(a)(9) and (10) will be amended to clarify that when E:\FR\FM\31AUR1.SGM 31AUR1 53370 Federal Register / Vol. 87, No. 168 / Wednesday, August 31, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 lenders cannot meet the demonstrated ability criteria outlined under § 3555.51(a)(1) through (8), those lenders must submit additional documentation to demonstrate their ability to originate loans. The final rule will amend § 3555.51 by adding paragraph (a)(11) (i) and (ii) to reflect Financial Requirements for Non-Supervised Lenders. All lenders not supervised by federal entities listed in § 3555.51 (a)(8) must have: (i) A minimum adjusted net worth of $250,000, or at least $50,000 in working capital plus one percent of the total volume in excess of $25 million in guaranteed loans originated, serviced, or purchased during the lender’s prior fiscal year, up to a maximum required adjusted net worth of $2.5 million and, (ii) one or more lines of credit with a minimum aggregate of $1 million. The proposed financial thresholds are based on recommendations analysis of participating lenders. § 3555.51(a). Establishing minimum financial requirements for non-supervised lenders would potentially reduce the Agency’s risk of doing business with entities that have insufficient financial resources. Lenders that meet these minimum financial requirements demonstrate trustworthiness that would contribute to the success of the SFHGLP. The Agency took a combination approach when developing the minimum requirements, including the Veterans Administration (VA) base requirement and adding a volume component to it. This is structured and capped following the FHA standard. By taking this action, the Agency will align lender approval requirements with those of other Federal credit programs and incorporate 1 the best practice recommendations outlined in Office of Management and Budget (OMB) Circular A–129.2 Federally supervised lenders that meet the criteria of § 3555.51(a)(8) have demonstrated ability and will not be required to provide additional documentation. The Agency will require less documentation from the lender and make the process more efficient for Federally supervised lenders. This final rule clarifies that lenders must meet applicable requirements in order to begin and continue participation in the SFHGLP. The 2 Available at: https://fiscal.treasury.gov/files/ dms/circ-a129-upd-0113.pdf. OMB requires credit granting agencies to establish and publish in the Federal Register specific eligibility criteria for lender or servicer participation in Federal credit programs, including qualification requirements for principal officers and staff of the lender or servicer. OMB Circular A–129, p. 12. VerDate Sep<11>2014 15:59 Aug 30, 2022 Jkt 256001 Agency generally reviews each lender every two years to ensure compliance. The Agency will amend § 3555.51 (b), SFHGLP participation requirements, to clarify by adding subparagraph (23) that lender eligibility will be reviewed every two years for continued participation in the SFHGLP. In addition, the Agency will clarify by adding subparagraph (24) that principal officers must have a minimum of two years of experience in originating or servicing mortgage loans as recommended in OMB Circular A– 129. In order to be deemed eligible for continued lender participation in the SFHGLP, the lender and its principal officers must continue to meet all the criteria as outlined in § 3555.51, which, as amended, will include specific experience in underwriting and servicing loans, financial requirements for non-supervised lenders, and SFHGLP participation requirements. The Agency has determined that obtaining builder-contractors credit and background checks is not an industry standard. The builder-contractor’s ability to participate in such projects should be based on the applicant’s and lender’s review of the buildercontractor’s experience, reputation, and financial ability to complete the project in a timely, efficient, and competent manner. The Agency will remove § 3555.105(b)(4) and (5) and thus streamline screening requirements, reduce administrative burden on the lender, and align with other Federal programs, including the agency’s Direct Section 502 loan program, which does not have such requirements for buildercontractors. Additionally, the Agency considers delinquent child support payments subject to administrative offset a significant derogatory obligation and an indication that an applicant does not have the reasonable ability or willingness to meet their obligations. It would be against the federal government’s interest to guarantee a loan for an applicant from whom the federal government is simultaneously pursuing collection for a delinquent debt. This final rule will amend § 3555.151(i) (9) to specify that borrowers with delinquent child support payments, subject to collection by administrative offset, are ineligible unless the payments are brought current, the debt is paid in full, or otherwise satisfied. IV. Regulatory Information Statutory Authority Section 510(k) of Title V the Housing Act of 1949 (42 U.S.C. 1480(k)), as amended, authorizes the Secretary of PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. Executive Order 12866, Classification This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB). Executive Order 12988, Civil Justice Reform This rule has been reviewed under Executive Order 12988. In accordance with this rule: (1) Unless otherwise specifically provided, all state and local laws that 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 Department of Agriculture (7 CFR part 11) must be exhausted before bringing suit in court that challenges action taken under this rule. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104–4, establishes requirements for Federal agencies to assess the effect of their regulatory actions on State, local, and tribal governments, and the private sector. Under section 202 of the UMRA, the Agency generally must prepare a written statement, including a costbenefit 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 the Agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most 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. National Environmental Policy Act This document has been reviewed in accordance with 7 CFR part 1970, subpart A, ‘‘Environmental Policies.’’ RHS determined that this action does not constitute a major Federal action significantly affecting the quality of the environment. In accordance with the E:\FR\FM\31AUR1.SGM 31AUR1 Federal Register / Vol. 87, No. 168 / Wednesday, August 31, 2022 / Rules and Regulations National Environmental Policy Act of 1969, Public Law 91–190, an Environmental Impact Statement is not required. 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 States, or on the distribution of power and responsibilities among the various levels of government. Nor does this final rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the States is not required. 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 final rule will not have a significant economic impact on a substantial number of small entities since this rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity. lotter on DSK11XQN23PROD with RULES1 Executive Order 12372, Intergovernmental Review of Federal Programs This program is not subject to the requirements of Executive Order 12372, ‘‘Intergovernmental Review of Federal Programs,’’ as implemented under USDA’s regulations at 7 CFR part 3015. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments This Executive order imposes requirements on RHS in the development of regulatory policies that have tribal implications or preempt tribal laws. RHS 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 tribal leaders are interested in consulting with RHS on this final rule, they are encouraged to contact USDA’s Office of Tribal Relations or RD’s Native American Coordinator at: AIAN@ usda.gov to request such a consultation. Programs Affected The program affected by this final rule is listed in the Assistance Listing (AL) (formerly Catalog of Federal Domestic VerDate Sep<11>2014 15:59 Aug 30, 2022 Jkt 256001 Assistance) under number 10.410, Very Low to Moderate Income Housing Loans (Section 502 Rural Housing Loans). Paperwork Reduction Act This final rule contains no new reporting or recordkeeping burdens under OMB control number 0575–0179 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). Civil Rights Impact Analysis Rural Development has reviewed this final rule in accordance with USDA Regulation 4300–4, ‘‘Civil Rights Impact Analysis,’’ to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex, disability, marital or familial status. Based on the review and analysis of the rule and all available data, issuance of this final rule is not likely to negatively impact low and moderate-income populations, minority populations, women, Indian tribes, or persons with disability, by virtue of their age, race, color, national origin, sex, disability, or marital or familial status. E-Government Act Compliance Rural Development is committed to the E-Government Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. USDA Non-Discrimination Policy In accordance with Federal civil rights laws and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident. Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (e.g., Braille, large print, audiotape, American Sign Language) PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 53371 should contact the responsible Mission Area, agency, or staff office; the USDA TARGET Center at (202) 720–2600 (voice and TTY); or the Federal Relay Service at (800) 877–8339. To file a program discrimination complaint, a complainant should complete a Form AD–3027, USDA Program Discrimination Complaint Form, which can be obtained online at https://www.ocio.usda.gov/document/ ad-3027, from any USDA office, by calling (866) 632–9992, or by writing a letter addressed to USDA. The letter must contain the complainant’s name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD–3027 form or letter must be submitted to USDA by: (1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250–9410; or (2) Fax: (833) 256–1665 or (202) 690– 7442; or (3) Email: Program.Intake@usda.gov. USDA is an equal opportunity provider, employer, and lender. List of Subjects in 7 CFR Part 3555 Construction, Eligible loan purpose, Home improvement, Loan programs— housing and community development, Loan terms, Mortgage insurance, Mortgages, and Rural areas. For the reasons discussed in the preamble, the Agency is proposing to amend 7 CFR part 3555 as follows: PART 3555—GUARANTEED RURAL HOUSING PROGRAM 1. The authority citation for part 3555 continues to read as follows: ■ Authority: 5 U.S.C. 301; 42 U.S.C. 1471 et seq. Subpart B—Lender Participation 2. Amend § 3555.51 by: (a) Revising paragraph (a)(8), the introductory text of paragraph (a)(9) and the introductory text of paragraph(10). ■ (b) Adding paragraph (a)(11); and ■ (c) Adding paragraphs (b)(23) and (24). The additions and revisions read as follows: ■ ■ § 3555.51 Lender eligibility. * * * * * (a) * * * (8) A Federally supervised lender that provides documentation of its ability to E:\FR\FM\31AUR1.SGM 31AUR1 53372 Federal Register / Vol. 87, No. 168 / Wednesday, August 31, 2022 / Rules and Regulations originate, underwrite, and service single-family loans. Acceptable sources of supervision include: (i) Being a member of the Federal Reserve System. (ii) The Federal Deposit Insurance Corporation (FDIC). (iii) The National Credit Union Administration (NCUA). (iv) The Office of the Comptroller of the Currency (OCC). (v) The Federal Housing Finance Board regulating lenders within the Federal Home-Loan Bank (FHLB) system. (9) If lenders cannot meet the requirements under paragraphs (a)(1) through (8) of this section, they may demonstrate its ability to originate and underwrite loans by submitting appropriate documentation, examples of which include, but are not limited to: * * * * * (10) A lender that proposes to service loans that cannot meet paragraphs (a)(1) through (8) of this section must demonstrate its ability by submitting appropriate documentation, examples of which include but are not limited to: * * * * * (11) The financial requirements for non-supervised lenders not covered in paragraph (a)(8), must have: (i) A minimum adjusted net worth of $250,000, or $50,000 in working capital plus one percent of the total volume in excess of $25 million in guaranteed loans originated, serviced, or purchased during the lender’s prior fiscal year, up to a maximum required adjusted net worth of $2.5 million, and (ii) One or more lines of credit with a minimum aggregate of one million dollars. (b) * * * * * * * * (23) Provide documentation as required by the Agency to be reviewed every two years for lender participation and, (24) Provide evidence that principal officers have a minimum of two years of experience in originating or servicing guaranteed mortgage loans as recommended in OMB Circular A–129. Subpart C—Loan Requirements § 3555.105 [Amended] 3. Amend § 3555.105 paragraph (b) by removing paragraphs (b)(4) and (5) and redesignating paragraph (b)(6) as (b)(4). lotter on DSK11XQN23PROD with RULES1 ■ Subpart D—Underwriting the Applicant 4. Amend § 3555.151 by adding paragraph (i)(9) to read as follows: ■ § 3555.151 Eligibility Requirements. * * * VerDate Sep<11>2014 * * 15:59 Aug 30, 2022 Jkt 256001 (i) * * * (9) Applicants with delinquent child support payments subject to collection by administrative offset are ineligible unless the payments are brought current, the debt is paid in full, or otherwise satisfied. * * * * * Joaquin Altoro, Administrator, Rural Housing Service. [FR Doc. 2022–18626 Filed 8–30–22; 8:45 am] BILLING CODE 3410–XV–P FEDERAL TRADE COMMISSION 16 CFR Part 310 RIN 3084–AA98 Telemarketing Sales Rule Fees Federal Trade Commission. Final rule. AGENCY: ACTION: The Federal Trade Commission (the ‘‘Commission’’) is amending its Telemarketing Sales Rule (‘‘TSR’’) by updating the fees charged to entities accessing the National Do Not Call Registry (the ‘‘Registry’’) as required by the Do-Not-Call Registry Fee Extension Act of 2007. DATES: This final rule is effective October 1, 2022. ADDRESSES: Copies of this document are available on the internet at the Commission’s website: https:// www.ftc.gov. FOR FURTHER INFORMATION CONTACT: Ami Joy Dziekan (202–326–2648), Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room CC–9225, Washington, DC 20580. SUPPLEMENTARY INFORMATION: To comply with the Do-Not-Call Registry Fee Extension Act of 2007 (15 U.S.C. 6152) (the ‘‘Act’’), the Commission is amending the TSR by updating the fees entities are charged for accessing the Registry as follows: the revised rule increases the annual fee for access to the Registry for each area code of data from $69 to $75 per area code; and increases the maximum amount that will be charged to any single entity for accessing area codes of data from $19,017 to $20,740. Entities may add area codes during the second six months of their annual subscription period and the fee for those additional area codes increases from $35 to $38. These increases are in accordance with the Act, which specifies that beginning after fiscal year 2009, the dollar amounts charged shall be increased by an amount equal to the SUMMARY: PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 amounts specified in the Act, multiplied by the percentage (if any) by which the average of the monthly consumer price index (for all urban consumers published by the Department of Labor) (‘‘CPI’’) for the most recently ended 12month period ending on June 30 exceeds the CPI for the 12-month period ending June 30, 2008. The Act also states any increase shall be rounded to the nearest dollar and there shall be no increase in the dollar amounts if the change in the CPI since the last fee increase is less than one percent. For fiscal year 2009, the Act specified that the original annual fee for access to the Registry for each area code of data was $54 per area code, or $27 per area code of data during the second six months of an entity’s annual subscription period, and that the maximum amount that would be charged to any single entity for accessing area codes of data would be $14,850. The determination whether a fee change is required and the amount of the fee change involves a two-step process. First, to determine whether a fee change is required, we measure the change in the CPI from the time of the previous increase in fees. There was an increase in the fees for fiscal year 2022. Accordingly, we calculated the change in the CPI since last year, and the increase was 9.10 percent. Because this change is over the one percent threshold, the fees will change for fiscal year 2023. Second, to determine how much the fees should increase this fiscal year, we use the calculation specified by the Act set forth above: the percentage change in the baseline CPI applied to the original fees for fiscal year 2009. The average value of the CPI for July 1, 2007, to June 30, 2008y, was 211.702; the average value for July 1, 2021, to June 30, 2022, was 296.311, an increase of 39.97 percent. Applying the 39.97 percent increase to the base amount from fiscal year 2009 leads to a $75 fee for access to a single area code of data for a full year for fiscal year 2023, an increase of $6 from last year. The actual amount is $75.42 but when rounded, pursuant to the Act, $75 is the appropriate fee. The fee for accessing an additional area code for a half year increases by three dollars to $38 (rounded from $37.71). The maximum amount charged increases to $20,740 (rounded from $20,739.95). Administrative Procedure Act; Regulatory Flexibility Act; Paperwork Reduction Act. The revisions to the Fee Rule are technical in nature and merely incorporate statutory changes to the TSR. These statutory changes have been adopted without change or interpretation, making public comment E:\FR\FM\31AUR1.SGM 31AUR1

Agencies

[Federal Register Volume 87, Number 168 (Wednesday, August 31, 2022)]
[Rules and Regulations]
[Pages 53369-53372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18626]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3555

[Docket No. RHS-21-SFH-003]
RIN 0575-AD22


Single Family Housing Guaranteed Loan Program

AGENCY: Rural Housing Service, Agriculture Department (USDA).

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (RHS or Agency), a Rural Development 
(RD) agency of the United States Department of Agriculture (USDA), is 
implementing changes to the Single-Family Housing Guaranteed Loan 
Program (SFHGLP) to update the requirements for Federally supervised 
lenders, minimum net worth and experience for non-supervised lenders, 
approved lender participation requirements, handling of applicants with 
delinquent child support payments, and builder credit requirements.

DATES: This final rule is effective November 29, 2022.

FOR FURTHER INFORMATION CONTACT: Laurie Mohr, Finance and Loan Analyst, 
Single Family Housing Guaranteed Loan Division, Rural Development, U.S. 
Department of Agriculture, STOP 0784, Room 2250, South Agriculture 
Building, 1400 Independence Avenue SW, Washington, DC 20250-0784, 
telephone: (314) 679-6917; or email: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Rural Housing Service (RHS or Agency) is an agency of the 
United States Department of Agriculture (USDA) and offers a variety of 
programs to build or improve housing and essential community facilities 
in rural areas. RHS offers loans, grants, and loan guarantees for 
single- and multi-family housing, childcare centers, fire and police 
stations, hospitals, libraries, nursing homes, schools, first responder 
vehicles and equipment, housing for farm laborers and much more. RHS 
also provides technical assistance loans and grants in partnership with 
non-profit organizations, Indian tribes, State and Federal Government 
agencies, and local communities.
    The RHS is issuing a final rule to amend the Single-Family Housing 
Guaranteed Loan Program (SFHGLP) regulation, 7 CFR part 3555, subparts 
B, C and D which will reinforce oversight and management of the growing 
SFHGLP portfolio. These changes will promote an efficient and robust 
management and oversight structure of lenders in the SFHGLP by 
strengthening underwriting practices, providing guidance for processing 
loan guarantees for applicants who are subject to administrative offset 
to collect delinquent child support payments, and streamline 
requirements for screening builder-contractors by lenders.
    The updates align with the standards for managing credit programs 
recommended by the Office of Management and Budget (OMB) for Federally 
supervised lenders, minimum net worth, minimum line of credits, minimum 
experience, and approved lender participation requirements. These 
updates will also provide guidance for processing applications for 
individuals with delinquent child support payments and relaxes builder 
requirements to better align with the credit program requirements of 
other Federal agencies.

II. Discussion of Public Comments

    RHS published a proposed rule on June 9, 2021 (86 FR 30555) to 
solicit comments on the proposed updated requirements for Federally 
supervised lenders, minimum net worth and experience for non-supervised 
lenders, approved lender participation requirements, treatment of 
applicants with delinquent child support payments, and builder credit 
requirements for SFHGLP (86 FR 30555). The Agency received comments 
from six respondents including individuals, mortgage companies, and 
interested parties. Three of the comments are not applicable to the 
contents of the rule.
    The following is a summary of the relevant comments:
    Comment 1: One respondent opposed eliminating the background checks 
for builders stating the builder's integrity could not be thoroughly 
checked to avoid court appearances and rebuilding homes.
    Agency Response: The Agency still relies on the lender to review 
and approve construction contractors or builders. The Agency has 
determined that these credit requirements are not the industry 
standard. The builder-contractor's ability to participate in such 
projects should be based on the applicant's and lender's review of the 
builder-contractor's experience, reputation, and financial ability to 
complete the project in a timely, efficient, and competent manner. The 
Agency believes the stance is correctly stated and stands behind the 
rule changes.
    Comment 2: One respondent replied in favor of the proposed rule 
stating obtaining background checks for builders were difficult to 
obtain and could potentially hurt a builder's reputation if, for some 
unforeseen reason, you could not obtain a builder approval.
    Agency Response: The Agency has determined no action is required.
    Comment 3: One respondent agreed with certain delinquent child 
support provisions in the rule, however, the respondent raised concerns 
that the proposed change would be unduly difficult for rural families 
and children who are already experiencing housing challenges. The 
respondent noted that employment in rural areas is limited and felt 
that there are other means to addressing delinquent child support.
    Agency Response: The Agency believes the stance is correctly stated 
and stands behind the rule changes.

III. Summary of Rule Changes

    A summary of the changes includes amending 7 CFR 3555.51(a)(8) to 
eliminate items (a)(8)(iv) because it refers to the Office of Thrift 
Supervision (OTS), which no longer exists. Furthermore, the current 
Sec.  3555.51(a)(9) and (10) is intended to provide a path for lenders 
that are not regulated by state or federal agencies and do not meet the 
requirements of (a)(1) through (8) an opportunity to participate in the 
SFHGLP. Therefore, the introductory paragraph of Sec.  3555.51(a)(9) 
and (10) will be amended to clarify that when

[[Page 53370]]

lenders cannot meet the demonstrated ability criteria outlined under 
Sec.  3555.51(a)(1) through (8), those lenders must submit additional 
documentation to demonstrate their ability to originate loans.
    The final rule will amend Sec.  3555.51 by adding paragraph (a)(11) 
(i) and (ii) to reflect Financial Requirements for Non-Supervised 
Lenders. All lenders not supervised by federal entities listed in Sec.  
3555.51 (a)(8) must have: (i) A minimum adjusted net worth of $250,000, 
or at least $50,000 in working capital plus one percent of the total 
volume in excess of $25 million in guaranteed loans originated, 
serviced, or purchased during the lender's prior fiscal year, up to a 
maximum required adjusted net worth of $2.5 million and, (ii) one or 
more lines of credit with a minimum aggregate of $1 million. The 
proposed financial thresholds are based on recommendations analysis of 
participating lenders. Sec.  3555.51(a). Establishing minimum financial 
requirements for non-supervised lenders would potentially reduce the 
Agency's risk of doing business with entities that have insufficient 
financial resources. Lenders that meet these minimum financial 
requirements demonstrate trustworthiness that would contribute to the 
success of the SFHGLP. The Agency took a combination approach when 
developing the minimum requirements, including the Veterans 
Administration (VA) base requirement and adding a volume component to 
it. This is structured and capped following the FHA standard. By taking 
this action, the Agency will align lender approval requirements with 
those of other Federal credit programs and incorporate \1\ the best 
practice recommendations outlined in Office of Management and Budget 
(OMB) Circular A-129.\2\
---------------------------------------------------------------------------

    \2\ Available at: https://fiscal.treasury.gov/files/dms/circ-a129-upd-0113.pdf. OMB requires credit granting agencies to 
establish and publish in the Federal Register specific eligibility 
criteria for lender or servicer participation in Federal credit 
programs, including qualification requirements for principal 
officers and staff of the lender or servicer. OMB Circular A-129, p. 
12.
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    Federally supervised lenders that meet the criteria of Sec.  
3555.51(a)(8) have demonstrated ability and will not be required to 
provide additional documentation. The Agency will require less 
documentation from the lender and make the process more efficient for 
Federally supervised lenders.
    This final rule clarifies that lenders must meet applicable 
requirements in order to begin and continue participation in the 
SFHGLP. The Agency generally reviews each lender every two years to 
ensure compliance.
    The Agency will amend Sec.  3555.51 (b), SFHGLP participation 
requirements, to clarify by adding subparagraph (23) that lender 
eligibility will be reviewed every two years for continued 
participation in the SFHGLP. In addition, the Agency will clarify by 
adding subparagraph (24) that principal officers must have a minimum of 
two years of experience in originating or servicing mortgage loans as 
recommended in OMB Circular A-129. In order to be deemed eligible for 
continued lender participation in the SFHGLP, the lender and its 
principal officers must continue to meet all the criteria as outlined 
in Sec.  3555.51, which, as amended, will include specific experience 
in underwriting and servicing loans, financial requirements for non-
supervised lenders, and SFHGLP participation requirements.
    The Agency has determined that obtaining builder-contractors credit 
and background checks is not an industry standard. The builder-
contractor's ability to participate in such projects should be based on 
the applicant's and lender's review of the builder-contractor's 
experience, reputation, and financial ability to complete the project 
in a timely, efficient, and competent manner. The Agency will remove 
Sec.  3555.105(b)(4) and (5) and thus streamline screening 
requirements, reduce administrative burden on the lender, and align 
with other Federal programs, including the agency's Direct Section 502 
loan program, which does not have such requirements for builder-
contractors.
    Additionally, the Agency considers delinquent child support 
payments subject to administrative offset a significant derogatory 
obligation and an indication that an applicant does not have the 
reasonable ability or willingness to meet their obligations. It would 
be against the federal government's interest to guarantee a loan for an 
applicant from whom the federal government is simultaneously pursuing 
collection for a delinquent debt. This final rule will amend Sec.  
3555.151(i) (9) to specify that borrowers with delinquent child support 
payments, subject to collection by administrative offset, are 
ineligible unless the payments are brought current, the debt is paid in 
full, or otherwise satisfied.

IV. Regulatory Information

Statutory Authority

    Section 510(k) of Title V the Housing Act of 1949 (42 U.S.C. 
1480(k)), as amended, authorizes the Secretary of the Department of 
Agriculture to promulgate rules and regulations as deemed necessary to 
carry out the purpose of that title.

Executive Order 12866, Classification

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

Executive Order 12988, Civil Justice Reform

    This rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) Unless otherwise specifically provided, 
all state and local laws that 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 Department of 
Agriculture (7 CFR part 11) must be exhausted before bringing suit in 
court that challenges action taken under this rule.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effect of their regulatory actions on State, local, and tribal 
governments, and the private sector. Under section 202 of the UMRA, the 
Agency 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 the Agency to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most 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.

National Environmental Policy Act

    This document has been reviewed in accordance with 7 CFR part 1970, 
subpart A, ``Environmental Policies.'' RHS determined that this action 
does not constitute a major Federal action significantly affecting the 
quality of the environment. In accordance with the

[[Page 53371]]

National Environmental Policy Act of 1969, Public Law 91-190, an 
Environmental Impact Statement is not required.

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 States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
final rule impose substantial direct compliance costs on state and 
local governments. Therefore, consultation with the States is not 
required.

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

Executive Order 12372, Intergovernmental Review of Federal Programs

    This program is not subject to the requirements of Executive Order 
12372, ``Intergovernmental Review of Federal Programs,'' as implemented 
under USDA's regulations at 7 CFR part 3015.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This Executive order imposes requirements on RHS in the development 
of regulatory policies that have tribal implications or preempt tribal 
laws. RHS 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 tribal 
leaders are interested in consulting with RHS on this final rule, they 
are encouraged to contact USDA's Office of Tribal Relations or RD's 
Native American Coordinator at: [email protected] to request such a 
consultation.

Programs Affected

    The program affected by this final rule is listed in the Assistance 
Listing (AL) (formerly Catalog of Federal Domestic Assistance) under 
number 10.410, Very Low to Moderate Income Housing Loans (Section 502 
Rural Housing Loans).

Paperwork Reduction Act

    This final rule contains no new reporting or recordkeeping burdens 
under OMB control number 0575-0179 that would require approval under 
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

Civil Rights Impact Analysis

    Rural Development has reviewed this final rule in accordance with 
USDA Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify 
any major civil rights impacts the rule might have on program 
participants on the basis of age, race, color, national origin, sex, 
disability, marital or familial status. Based on the review and 
analysis of the rule and all available data, issuance of this final 
rule is not likely to negatively impact low and moderate-income 
populations, minority populations, women, Indian tribes, or persons 
with disability, by virtue of their age, race, color, national origin, 
sex, disability, or marital or familial status.

E-Government Act Compliance

    Rural Development is committed to the E-Government Act, which 
requires Government agencies in general to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible.

USDA Non-Discrimination Policy

    In accordance with Federal civil rights laws and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Mission Areas, agencies, staff offices, employees, and institutions 
participating in or administering USDA programs are prohibited from 
discriminating based on race, color, national origin, religion, sex, 
gender identity (including gender expression), sexual orientation, 
disability, age, marital status, family/parental status, income derived 
from a public assistance program, political beliefs, or reprisal or 
retaliation for prior civil rights activity, in any program or activity 
conducted or funded by USDA (not all bases apply to all programs). 
Remedies and complaint filing deadlines vary by program or incident.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; the USDA TARGET 
Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service 
at (800) 877-8339.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at https://www.ocio.usda.gov/document/ad-3027, from any USDA office, by calling (866) 632-9992, or by writing a 
letter addressed to USDA. The letter must contain the complainant's 
name, address, telephone number, and a written description of the 
alleged discriminatory action in sufficient detail to inform the 
Assistant Secretary for Civil Rights (ASCR) about the nature and date 
of an alleged civil rights violation. The completed AD-3027 form or 
letter must be submitted to USDA by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: [email protected].
    USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR Part 3555

    Construction, Eligible loan purpose, Home improvement, Loan 
programs--housing and community development, Loan terms, Mortgage 
insurance, Mortgages, and Rural areas.

    For the reasons discussed in the preamble, the Agency is proposing 
to amend 7 CFR part 3555 as follows:

PART 3555--GUARANTEED RURAL HOUSING PROGRAM

0
1. The authority citation for part 3555 continues to read as follows:

    Authority: 5 U.S.C. 301; 42 U.S.C. 1471 et seq.

Subpart B--Lender Participation

0
2. Amend Sec.  3555.51 by:
0
(a) Revising paragraph (a)(8), the introductory text of paragraph 
(a)(9) and the introductory text of paragraph(10).
0
(b) Adding paragraph (a)(11); and
0
(c) Adding paragraphs (b)(23) and (24).
    The additions and revisions read as follows:


Sec.  3555.51   Lender eligibility.

* * * * *
    (a) * * *
    (8) A Federally supervised lender that provides documentation of 
its ability to

[[Page 53372]]

originate, underwrite, and service single-family loans. Acceptable 
sources of supervision include:
    (i) Being a member of the Federal Reserve System.
    (ii) The Federal Deposit Insurance Corporation (FDIC).
    (iii) The National Credit Union Administration (NCUA).
    (iv) The Office of the Comptroller of the Currency (OCC).
    (v) The Federal Housing Finance Board regulating lenders within the 
Federal Home-Loan Bank (FHLB) system.
    (9) If lenders cannot meet the requirements under paragraphs (a)(1) 
through (8) of this section, they may demonstrate its ability to 
originate and underwrite loans by submitting appropriate documentation, 
examples of which include, but are not limited to:
* * * * *
    (10) A lender that proposes to service loans that cannot meet 
paragraphs (a)(1) through (8) of this section must demonstrate its 
ability by submitting appropriate documentation, examples of which 
include but are not limited to:
* * * * *
    (11) The financial requirements for non-supervised lenders not 
covered in paragraph (a)(8), must have:
    (i) A minimum adjusted net worth of $250,000, or $50,000 in working 
capital plus one percent of the total volume in excess of $25 million 
in guaranteed loans originated, serviced, or purchased during the 
lender's prior fiscal year, up to a maximum required adjusted net worth 
of $2.5 million, and
    (ii) One or more lines of credit with a minimum aggregate of one 
million dollars.
    (b) * * *
* * * * *
    (23) Provide documentation as required by the Agency to be reviewed 
every two years for lender participation and,
    (24) Provide evidence that principal officers have a minimum of two 
years of experience in originating or servicing guaranteed mortgage 
loans as recommended in OMB Circular A-129.

Subpart C--Loan Requirements


Sec.  3555.105  [Amended]

0
3. Amend Sec.  3555.105 paragraph (b) by removing paragraphs (b)(4) and 
(5) and redesignating paragraph (b)(6) as (b)(4).

Subpart D--Underwriting the Applicant

0
4. Amend Sec.  3555.151 by adding paragraph (i)(9) to read as follows:


Sec.  3555.151  Eligibility Requirements.

* * * * *
    (i) * * *
    (9) Applicants with delinquent child support payments subject to 
collection by administrative offset are ineligible unless the payments 
are brought current, the debt is paid in full, or otherwise satisfied.
* * * * *

Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2022-18626 Filed 8-30-22; 8:45 am]
BILLING CODE 3410-XV-P
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