Clarification on the Requirement To Record the Guaranteed Rural Rental Housing Program Deed Restriction, 87801-87803 [2024-25713]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Housing Service

[Federal Register Volume 89, Number 214 (Tuesday, November 5, 2024)]
[Proposed Rules]
[Pages 87801-87803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25713]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 89, No. 214 / Tuesday, November 5, 2024 / 
Proposed Rules

[[Page 87801]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

[Docket No. RHS-24-MFH-0016]
RIN 0575-AD34


Clarification on the Requirement To Record the Guaranteed Rural 
Rental Housing Program Deed Restriction

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

ACTION: Proposed rule.

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SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural 
Development agency of the United States Department of Agriculture 
(USDA), proposes to amend the current regulation for the Multifamily 
Housing (MFH) Guaranteed Rural Rental Housing Program (GRRHP). The 
intent of this proposed rule is to codify the restrictive use language 
within the GRRHP regulation to clarify that a separate deed restriction 
must be recorded. This change will allow the Agency to maintain and 
preserve affordable housing for low- and moderate-income households.

DATES: Comments on the proposed rule must be received on or before 
January 6, 2025.

ADDRESSES: Comments may be submitted electronically by the Federal 
eRulemaking Portal: Go to regulations.gov and, in the ``Search Field'' 
box, labeled ``Search for dockets and documents on agency actions,'' 
enter the following docket number: RHS-24-MFH-0016) or RIN# 0575-AD34, 
then click search. To submit or view public comments, select the 
following document title: (MFH Rural Rental Housing Deed Restriction 
Proposed Rule) from the ``Search Results,'' and select the ``Comment'' 
button. Before inputting your comments, you may also review the 
``Commenter's Checklist'' (optional). Insert your comments under the 
``Comment'' title, click ``Browse'' to attach files (if available). 
Input your email address and select ``Submit Comment.'' Information on 
using Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``FAQ'' link.
    Other Information: Additional information about Rural Development 
and its programs is available on the internet at rd.usda.gov.
    All comments will be available for public inspection online at the 
Federal eRulemaking Portal (regulations.gov).

FOR FURTHER INFORMATION CONTACT: Tammy Daniels, Finance and Loan 
Analyst, Multi-Family Housing Production and Preservation Division, 
Rural Housing Service, United States 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: 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The RHS 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 multifamily housing, 
childcare centers, fire and police stations, hospitals, libraries, 
nursing homes, schools, first responder vehicles and equipment, and 
housing for farm laborers. RHS also provides technical assistance loans 
and grants in partnership with non-profit organizations, Indian tribes, 
state and Federal government agencies, and local communities.
    RHS administers the Section 538 Guaranteed Rural Rental Housing 
Program (GRRHP) under the authority of the Housing Act of 1949, as 
amended (42 U.S.C. 1490p-2) and operates under 7 CFR part 3565. Under 
the GRRHP, RHS guarantees loans for the development of housing and 
related facilities in rural areas. To preserve affordable housing, the 
GRRHP regulation requires properties that are financed with a Section 
538 GRRHP loan be used for occupancy by low- and moderate-income 
households and remain as affordable rental housing for the original 
term of the loan. The Agency is proposing to require a separate deed 
restriction containing restrictive use language, stating that the 
housing must remain available for occupancy by low- and moderate-income 
households for the original term of the guaranteed loan, and be 
recorded along with other legally recorded documents. For the 
restriction to remain in place upon prepayment of the mortgage, the 
deed restriction must be recorded. The current regulation does not 
specify that the deed restriction be recorded.

II. Purpose of the Proposed Rule

    The purpose of this proposed rule is to clarify that the deed 
restriction must be recorded to ensure affordable rural rental housing 
is preserved after prepayment of the mortgage. The current regulation 
does not specify that a separate deed restriction is to be recorded. 
Restrictive use provisions contained in the mortgage or deed of trust 
may be released along with the mortgage or deed of trust upon 
prepayment of the loan. However, documents recorded separately from the 
mortgage or deed of trust will survive if the loan is prepaid. If the 
deed is not recorded, the Agency will be at risk of not being able to 
enforce the restrictive use requirement and fulfill the need for 
affordable housing in rural areas. The proposed rule will require that 
applicants record a separate deed restriction.

III. Summary of Changes

    The proposed changes would amend 7 CFR 3565.352(b) by adding 
language requiring that a separate deed restriction (containing the 
restrictive use language) be recorded before other documentation 
related to the transaction. This change would allow the Agency to 
enforce the restrictive use requirement to maintain affordable housing 
if the loan guaranteed by the Section 538 GRRHP is prepaid.

IV. Regulatory Information

Statutory Authority

    The RHS administers the Section 538 Guaranteed Rural Rental Housing 
Program (GRRHP) loans under the authority of the Housing Act of 1949, 
as amended (42 U.S.C. 1490p-2) and operates under 7 CFR part 3565.

[[Page 87802]]

Executive Order 12372, Intergovernmental Review of Federal Programs

    These loans are subject to the provisions of Executive Order 12372, 
which require intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each loan 
in accordance with 2 CFR part 415, subpart C.

Executive Order 12866, Regulatory Planning and Review

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

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.

Executive Order 13132, Federalism

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

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This proposed rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. Executive Order 13175 requires Federal 
agencies to consult and coordinate with tribes on a government-to-
government basis on policies that have tribal implications, including 
regulations, legislative comments or proposed legislation, and other 
policy statements or actions that have substantial direct effects on 
one or more Indian tribes, on the relationship between the Federal 
government and Indian tribes or on the distribution of power and 
responsibilities between the Federal government and Indian tribes. 
Consultation is also required for any regulation that preempts tribal 
law or that imposes substantial direct compliance costs on Indian 
tribal governments and that is not required by statute.
    The Agency has determined that this proposed rule does not, to our 
knowledge, have tribal implications that require formal tribal 
consultation under Executive Order 13175. If a Tribe requests 
consultation, the RHS will work with the Office of Tribal Relations and 
USDA Rural Development's Tribal Relations Team to ensure meaningful 
consultation is provided where changes, additions and modifications 
identified herein are not expressly mandated by Congress.

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 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.

Administrative Pay-As-You-Go-Act of 2023

    Section 270 of the Administrative Pay-As-You-Go-Act of 2023 (Pub. 
L. 118-5, div. B, title III, 137 Stat 31) amended 5 U.S.C. 801(a)(2)(A) 
to require U.S. Government Accountability Office (GAO) to assess agency 
compliance with the Act, which establishes requirements for 
administrative actions that affect direct spending, in GAO's major rule 
reports. The Act does not apply to this rule because it does not 
increase direct spending.

Unfunded Mandate Reform Act (UMRA)

    Title II of the 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 on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including 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 a Federal Agency 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 for the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, this proposed rule has been reviewed in accordance 
with 7 CFR part 1970 (``Environmental Policies and Procedures''). The 
Agency has determined that (i) this action meets the criteria 
established in 7 CFR 1970.53(f); (ii) no extraordinary circumstances 
exist; and (iii) the action is not ``connected'' to other actions with 
potentially significant impacts, is not considered a ``cumulative 
action'' and is not precluded by 40 CFR 1506.1. Therefore, the Agency 
has determined that the action does not have a significant effect on 
the human environment, and therefore neither an Environmental 
Assessment nor an Environmental Impact Statement is required.

Civil Rights Impact Analysis

    Rural Development has reviewed this 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 proposed 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. No major civil rights impact is likely to result 
from this proposed rule.

Assistance Listing

    The program affected by this regulation is listed in the Catalog of 
Federal Domestic Assistance under numbers 10.438--Rural Rental Housing 
Guaranteed Loans (Section 538).

Paperwork Reduction Act

    The information collection requirements contained in this

[[Page 87803]]

regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. This proposed rule contains no new reporting and 
recordkeeping requirements that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

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 and to promote the use of the internet 
and other information technologies to provide increased opportunities 
for citizen access to Government information and services, and for 
other purposes.

USDA Non-Discrimination Statement

    In accordance with Federal civil rights laws and 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; or the 711 Relay 
Service.
    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 usda.gov/sites/default/files/documents/ad-3027.pdf 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:
    a. Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    b. Fax: (833) 256-1665 or (202) 690-7442; or
    c. Email: [email protected].

Severability

    It is USDA's intention that the provisions of this rule shall 
operate independently of each other. If this rule or any portion of 
this rule is ultimately declared invalid or stayed as to a particular 
provision, it is USDA's intent that the rule nonetheless be severable 
and remain valid with respect to those provisions not affected by a 
declaration of invalidity or stayed. USDA concludes it would separately 
adopt all the provisions contained in this rule.

List of Subjects in 7 CFR Part 3565

    Conflict of interest, Credit, Fair housing, Loan programs--housing 
and community development, Low and moderate-income housing, 
Manufactured homes, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements, Rural areas.

    For the reasons discussed in the preamble, the Agency proposes to 
amend 7 CFR part 3565 as follows:

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

0
1. The authority citation for part 3565 continues to read as follows:

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

Subpart H--Project Management

0
2. Amend Sec.  3565.352 by revising paragraph (b) to read as follows:


Sec.  3565.352  Preservation of affordable housing.

* * * * *
    (b) Use restriction. For the original term of the guaranteed loan, 
the housing must remain available for occupancy by low- and moderate-
income households, in accordance with subpart E of this part. This 
requirement must be included in a deed restriction in a form acceptable 
to the Agency. The deed restriction must be recorded separately, before 
and with priority over other documents related to the transaction. The 
restriction will apply unless the housing is acquired by foreclosure or 
an instrument in lieu of foreclosure, or the Agency waives the 
applicability of this requirement after determining that each of the 
following three circumstances exist:
    (1) There is no longer a need for low-and moderate-income housing 
in the market area in which the housing is located;
    (2) Housing opportunities for low-income households and minorities 
will not be reduced as a result of the waiver; and
    (3) Additional federal assistance will not be necessary as a result 
of the waiver.
* * * * *

Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2024-25713 Filed 11-4-24; 8:45 am]
BILLING CODE 3410-XV-P