[Federal Register Volume 59, Number 86 (Thursday, May 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10756]


[[Page Unknown]]

[Federal Register: May 5, 1994]


                                                    VOL. 59, NO. 86

                                              Thursday, May 5, 1994

DEPARTMENT OF AGRICULTURE

Farmers Home Administration

7 CFR Part 1980

RIN 0575-AB29

 

Guaranteed Loan Programs

AGENCY: Farmers Home Administration, USDA.

ACTION: Proposed rule.

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SUMMARY: Farmers Home Administration (FmHA) proposes to amend its 
regulations on the monitoring of lender's collection activity after a 
final loss is paid, when a guaranteed borrower's account remains 
unsatisfied. This action is taken to further define criteria, by which 
FmHA will monitor the lender's future recovery from unsatisfied 
guaranteed borrower accounts. There is no formal procedure at present 
for monitoring these accounts. The intended effect is to maximize 
collections from unsatisfied guaranteed borrower accounts and to 
minimize the financial loss to the Government.

DATES: Written comments must be submitted by July 5, 1994.

ADDRESSES: Submit written comments in duplicate, to the Office of the 
Chief, Regulations, Analysis and Control Branch (RACB), Farmers Home 
Administration, U.S. Department of Agriculture, Room 6348, South 
Agriculture Building, 14th and Independence Avenue, SW., Washington, DC 
20250. All written comments made pursuant to this publication will be 
available for public inspection during regular work hours at the above 
address.

FOR FURTHER INFORMATION CONTACT: James C. Root, Senior Loan Officer, 
Guaranteed Servicing Branch, Farmer Programs Loan Servicing and 
Property Management Division, Farmers Home Administration, U.S. 
Department of Agriculture, Room 5444, South Agricultural Building, 14th 
and Independence Avenue, SW., Washington, DC 20250, at (202) 720-4572.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The Collection of information requirements contained in this 
regulation have been submitted to the Office of Management and Budget 
for review under Section 504(h) of the Paperwork Reduction Act of 1980. 
Public reporting burden for this collection of information is estimated 
to vary from 15 minutes to 28 hours per response, with an average of 2 
hours per response including time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Send comments 
regarding this burden estimate or any other aspect of this collection 
of information, including suggestions for reducing this burden, to 
Department of Agriculture, Clearance Officer, OIRM, Room 404-W, 
Washington, D.C. 20250; and to the Office of Management and Budget, 
Attention: Desk Officer for the Farmers Home Administration, 
Washington, DC 20503.

Classification

    We are issuing this proposed rule in conformance with Executive 
Order 12866, and we have determined that it is not a ``significant 
regulatory action.'' Based on information compiled by the Department, 
we have determined that this proposed rule: (1) Would have an effect on 
the economy of less than $100 million; (2) would not adversely affect 
in a material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities; (3) would not create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency; (4) would not alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or rights and 
obligations of recipients thereof; and (5) would not raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or principles set forth in Executive Order 12866.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR Part 1940, 
Subpart G, ``Environmental Program.'' It is the determination of FmHA 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment, and in 
accordance with the National Environmental Policy Act of 1969, Public 
Law 91-190, an Environmental Impact Statement is not required.

Programs Affected

    This Action affects the following FmHA programs as listed in the 
catalog of Federal Domestic Assistance:

10.404  Guaranteed Emergency Loans
10.406  Guaranteed Farm Operating Loans
10.407  Guaranteed Farm Ownership Loans
10.415  Rural Rental Housing Loans
10.416  Soil and Water Loans
10.768  Business and Industrial Loans
10.766  Community Facilities Loans
10.428  Economic Emergency Loans
10.434  Non-Profit National Corporations Loan and Grant Program

Intergovernmental Consultation

    For the reasons set forth in the final rule related Notice(s) to 7 
CFR 3015, subpart V (48 FR 29115, June 24, 1983; and 48 FR 54317, 
December 1, 1983), numbers 10.415, 10.416, 10.766, and 10.768 are 
subject to the provisions of Executive Order 12372 which requires 
intergovernmental consultation with State and local officials. The 
remaining numbered programs are excluded from the scope of Executive 
Order 12372.

Discussion of Proposed Rule

    The FmHA, in a response to an audit conducted by the Office of 
Inspector General, agreed to strengthen FmHA Instructions regarding the 
monitoring of loan accounts for 3 years following the year in which 
final losses were paid in order to maximize potential future 
recoveries.

List of Subjects in 7 CFR Part 1980

    Agriculture, Loan programs--Agriculture, Loan programs--Business 
and Industry--Rural development assistance, Loan programs--Housing and 
community development, Loan programs--Community programs--Rural 
development assistance.
    Therefore, as proposed, Chapter XVIII, Title 7, Code of Federal 
Regulations, is amended as follows:

PART 1980--GENERAL

    1. The authority citation for Part 1980 continues to read as 
follows:

    Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 
2.23 and 2.70.

Subpart A--General

    2. Section 1980.69 is added to read as follows:


Sec. 1980.69  Future collections.

    After a loan or an account has been liquidated, and the final loss 
claim has been paid, FmHA will continue to maintain the borrower 
account in an active status for 3 fiscal years, following the fiscal 
year in which liquidation was completed or until the account is paid in 
full, the borrower and all guarantors have been released from 
liability, and/or the account is otherwise satisfied. A lender may, 
with FmHA's concurrence, release a borrower and/or cosigner from 
liability only when adequate compensation/consideration is received. 
The servicing official will continue to monitor the collection efforts 
of the lender during the 3 fiscal years following the fiscal year in 
which the final loss claim was paid. The servicing official will send 
FmHA Form Letter 1980-A-1 along with Form FmHA 1980-26, ``Report on 
Collection Activities on Liquidated Accounts,'' by October 31st of each 
year, to each lender that has an FmHA guaranteed loan account which 
remains unsatisfied after the payment of the final loss claim. The loan 
servicing official will establish a follow-up system to assure each 
lender returns the appropriately completed Form FmHA 1980-26, by 
November 30th. Appropriate follow-up will be initiated for those 
lenders not providing adequate information as a result of the servicing 
official's request. The servicing official will forward these reports 
by program to the State Director by December 15th. The State Director 
will consolidate the reports by program and report the results to the 
Administrator by December 31st of each year. The FmHA servicing 
official will ensure that any funds received by the lender after the 
payment of the final loss claim will be prorated between FmHA and the 
lender in accordance with the Lender's Agreement. The lender will 
promptly transmit to FmHA such amounts recovered in proportion to the 
percentage of the guaranteed portion of the loan by using Form FmHA 
1980-43, ``Lender's Guaranteed Loan Payment to FmHA,'' and the lender 
will retain such amount in proportion to the percentage of the 
unguaranteed portion of the loan.

Subpart B--Farmer Programs Loans

    3. Section 1980.146, paragraph (e)(3) is revised to read as 
follows:


Sec. 1980.146  Liquidation.

* * * * *
    (e) * * *
    (3) Future Recovery. The County Supervisor will monitor collection 
activities of lenders on unsatisfied liquidated accounts, which have 
had final loss claims paid, for 3 fiscal years following the fiscal 
year in which the loss claims were paid, beginning with loans which had 
final loss claims paid during fiscal year 1990. On October 31st of each 
year, the County Supervisor will provide FmHA Form Letter 1980-A-1 and 
Form FmHA 1980-26, ``Report on Collection Activities on Liquidated 
Accounts,'' to each guaranteed lender for each guaranteed loan on which 
a final loss has been paid, but the account remains unsatisfied (the 
account is not paid in full, the borrower or any guarantors have not 
been released of liability, or the account has not been otherwise 
satisfied). A lender may, with FmHA's concurrence, release a borrower 
and/or cosigner from liability only when adequate compensation/
consideration is received. The County Supervisor will establish a 
follow-up on each respective borrower management system card to send 
FmHA Form Letter 1980-A-1 and Form FmHA 1980-26 on October 31st and 
follow-up on November 30th for lenders who have not completed and 
returned to FmHA, Form FmHA 1980-26. The County Supervisor will forward 
these reports to the State Director by December 15th in accordance with 
Sec. 1980.69 of subpart A of this part.
* * * * *
    Dated: February 23, 1994.
Bob Nash,
Under Secretary for Small Community and Rural Development.
[FR Doc. 94-10756 Filed 5-4-94; 8:45 am]
BILLING CODE 3410-07-U