[Federal Register Volume 60, Number 70 (Wednesday, April 12, 1995)]
[Notices]
[Pages 18576-18578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8946]



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DEPARTMENT OF AGRICULTURE
Rural Housing and Community Development Service


Submission of Information Collection to OMB (Under Paperwork 
Reduction Act and 5 CFR Part 1320)

AGENCY: Rural Housing and Community Development Service, USDA.

ACTION: Notice.

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SUMMARY: The information collection requirements described below have 
been submitted to Office of Management and Budget (OMB) for expedited 
clearance under 5 CFR 1320.18. The RHCDS solicits comments on the 
subject submission. This action is necessary in order for RHCDS to 
inform Multiple Family Housing program borrowers with Section 8 
project-based housing subsidy who signed RHCDS interest credit 
agreements prior to October 27, 1980, that RHCDS may have improperly 
reduced benefits under the interest credit agreement. Each affected 
borrower will be advised of available options, ranging from reversal of 
certain previous RHCDS actions and retroactive application of certain 
collections to the borrower's loan account. Each affected borrower will 
be given the opportunity to request correction of the application of 
interest credit subsidy to their loan account. The intended effect is 
to restore the affected borrower accounts to their correct accounting 
status.

ADDRESSES: Interested persons are invited to submit comments regarding 
this submission. Comments should refer to the proposal by name and 
should be sent to: Lisa Grove, USDA Desk Officer, Office of Management 
and Budget, New Executive Office Building, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: William F. Daniel, Senior Loan 
Officer, Multiple Family Housing Servicing and Property Management 
Division, RHCDS, Ag Box 0782, 14th and Independence Avenue, SW., 
Washington, DC 20250, Telephone (202) 720-1619.

SUPPLEMENTARY INFORMATION: RHCDS has submitted this proposal for 
collection of information to OMB for expedited clearance as required by 
the Paperwork Reduction Act (44 U.S.C. Chapter 35). The supporting 
statement attached explains the need for informing affected borrowers 
and requesting them to advise RHCDS concerning their choice of 
available options in servicing their loan account.

    Authority: Section 3507 of the Paperwork Reduction Act, 44 
U.S.C. 3507.

Supporting Statement

    Notification of Choice of Options for Borrowers with Section 515/8 
and Interest Credit Agreements Signed before October 27, 1980.

Justification

    1. The Rural Housing and Community Development Service (RHCDS), 
successor in part to the Farmers Home Administration (FmHA), is 
authorized under sections 515 and 521 of title V of the Housing Act of 
1949, to provide loans and grants to eligible recipients (borrowers) 
for the development of rural rental housing to benefit very-low and 
low-income rural residents. By Memorandum of Understanding (MOU) dated 
June 23, 1976, the Secretaries of Agriculture and Housing and Urban 
Development (HUD) agreed that HUD's Section 8 project-based subsidy 
program could be combined with the FmHA Section 515 program to reduce 
shelter cost for the beneficiaries (tenants).
    On October 27, 1980, FmHA initially issued its regulations [7 CFR 
part 1930, subpart C (0575-0033)] for the ``Management and Supervision 
of Multiple Family Housing Borrowers and Grant Recipients.'' Exhibit C 
of this regulation stipulated conditions that permit the Agency to 
require the borrower to deposit any excess funds from the subsidy 
stream into the project reserve account should the HUD Section 8 rent 
rate exceed rent rates approved by FmHA. In the event the reserve 
account built to a level exceeding a required amount, FmHA was then 
permitted to reduce or cancel any interest credit that FmHA provided in 
meeting its agreement with HUD as stipulated in the MOU. The intended 
effect was to avoid double subsidy by the Federal Government, namely 
Interest Credit by FmHA and Section 8 by HUD, for the same span of 
subsidy need.
    During its administration of the combined loan and subsidy 
programs, FmHA established six interest credit agreement forms as the 
program regulations developed. In 1994, a challenge to the Agency's 
ability to reduce or cancel interest credit was filed in Federal court. 
RHCDS has reviewed all interest credit agreement forms and regulations, 
including those previously used. RHCDS concluded that any interest 
credit agreement signed before October 27, 1980, does not support 
reduction or cancellation of interest credit, collection of overage, or 
requiring any excess funds to be deposited in the project reserve 
account resulting from HUD Section 8 rent adjustments, with one 
exception which is described in the Administrative Notice for the 
October 13, 1977, interest credit agreement form.
    RHCDS intends to issue an Administrative Notice (AN) to all Acting 
State Directors and District Directors for Rural Economic and Community 
Development (RECD), who have oversight responsibility for RHCDS 
programs. The AN will explain the background of factors leading to the 
conclusion that interest credit agreements signed before October 27, 
1980, lack basis for RHCDS or its predecessor Agency, FmHA, to cancel 
or reduce interest credit, collect overage and require deposit of 
excess subsidy funds in a project reserve account. The AN will explain 
the correct administration of interest credit agreements for each of 
the six versions of the agreement form ever used.
    Each RECD servicing office (District Office) will be directed to 
identify all Section 515 multiple family housing loan accounts that 
have Section 8 project-based subsidy. Attachment 1 of the AN contains 
the wording of the notice to be sent by certified mail to each 
identified loan account borrower. The borrower will have certain 
choices to request retroactive processing of their loan account or to 
maintain status quo. Attachment 2 of the AN contains the language of 
the response that each affected borrower is asked to return to the 
servicing office by close of business, December 29, 1995, for 
corrective processing. The public burden will involve the borrower 
reading Attachment 1, considering choices, and responding to the RECD 
servicing office, using Attachment 2.
    2. The purpose of Attachment 2 of the AN will be to allow affected 
borrowers to inform the RECD servicing office one time of their choice 
of available options in the servicing of their loan account. The 
servicing office will process, within 60 calendar days of receipt, any 
requests for retroactive application of loan payments and overage that 
was collected by RHCDS. The loan payments and overage will be reapplied 
as of the date they were originally applied. Such reapplication will 
have the effect of paying borrower loan accounts ahead of schedule. The 
servicing office will honor any request to have RHCDS cease the 
requirement of depositing excess rent in the project reserve account. 
Should the borrower choose to continue with the current loan servicing 
arrangement, no further action by RHCDS will be required other than to 
file the completed Attachment 2 reply [[Page 18577]] in the borrower 
casefile. If the collection of information were not to take place using 
Attachment 2, considerable cost to RHCDS and the borrower would result 
because of the time it would require for each servicing office to call 
each affected borrower, explain the content of the AN and solicit a 
verbal response. Documentation of borrower choices would be seriously 
weakened by not using Attachment 2.
    3. RHCDS is currently working with industry representatives to 
establish a fully automated interface in communication between 
servicing office and borrower. It is not yet available for use with 
this information collection effort.
    4. Duplication is not a factor in this one-time information 
collection effort. RHCDS has no way of knowing what each borrower will 
select from among the available choice of options in servicing their 
loan account. Such information will be the result of a conscious 
conclusion of variable considerations known only to each borrower.
    5. The information collection will affect small businesses and 
organizations. The Attachment 1 notice to borrower and the Attachment 2 
response to the servicing office is succinct, consisting of only four 
pages containing self-explanatory information.
    6. This will be a one-time collection of information and will not 
be repeated.
    7. This information collection effort is consistent with the 
provisions of 5 CFR 1320.6.
    8. The following organizations and points of contact were consulted 
January 27-February 3, 1995, to obtain their views and insights on the 
availability of data for this one-time collection, clarity of 
instructions and recordkeeping, disclosure and format of Attachment 2 
and the data elements to be reported:

a. Johanna Shreve, Rural Housing Council, National Association of Home 
Builders, 1201 15th Street, NW., Washington, D.C. 20005, Telephone 202-
822-0236 ---
b. Anna Moser, Council for Rural Housing and Development, 1300 19th 
Street, NW., Suite 410, Washington, D.C. 20037, Telephone 202-296-5159
c. Herb Collins, Boston Capital, 313 Congress Street, Boston, 
Massachusetts, 02210-1231, Telephone 617-330-0072
d. Art Collings, Housing Assistance Council, Inc., 1025 Vermont Avenue, 
NW., Suite 606, Washington, D.C. 20005

    No major problems were noted during the consultations that cannot 
be resolved.
    9. Discussions were held in professional confidence in generic 
terms; no particular individual borrower or loan account was discussed.
    10.-There are no questions in this information collection that are 
of a sensitive nature, such as sexual behavior, religious beliefs, and 
other matters commonly considered private.
    11. The cost to the Federal Government and to the respondents will 
occur only one time, thus the estimates of cost shown in this 
justification are the one-time cost rather than annualized as it would 
be for an on-going public burden.
    The average RHCDS administrative cost is $27.40 per employee hour. 
This cost is a composite of salary and employment benefits and RHCDS 
overhead. The RHCDS cost per respondent is estimated at $54.40 for 2 
hours of work for each respondent; total cost is estimated at $34,598.
    In consultation with the contacts described in Item 8, RHCDS 
estimates each respondent will devote an average of 2 hours at an 
average cost of $30.00 per hour to respond. The cost per respondent for 
this one-time information collection is estimated at $60.00; total cost 
is estimated at $38,160.
    12.-RHCDS estimates there are 636 respondents who will respond to 
the information collection effort. The collection of information will 
occur only one time. Attachment 1 of the AN will be sent by certified 
mail to inform each respondent about three choices of options. 
Attachment 2 of the AN will be used as the response document on which 
the respondent will identify their choice of each option.
    The Federal burden estimate is 2 hours on average to prepare 
Attachments 1 and 2 of the AN, send them by certified mail, and receive 
and process each response using Agency automation systems. The public 
burden estimate is 2 hours on average to receive Attachments 1 and 2 of 
the AN, read, comprehend, seek and receive professional consultation, 
make a decision and respond using Attachment 2.
    13. This is the first and only time this burden will be necessary. 
This is a unique burden rather than a reoccurring burden, thus there 
are no changes in burden.
    14.-Data collected will not be published.

Attachment 1--Guide Letter

Certified Mail--Return Receipt Requested

Addressee
    (Insert Section 515/8 Borrower Name and Address)
Reference: (Project Name)
    Dear (Borrower): You have been identified by the Rural Housing 
and Community Development Service (RHCDS) as a borrower that may be 
entitled to a reversal of actions previously taken in the 
administration of your loan account. Your loan documents include an 
interest credit agreement that was signed before October 27, 1980. 
The interest credit agreement was executed in conjunction with a 
Housing Assistance Payment Contract (Section 8 subsidy) administered 
by the Department of Housing and Urban Development (HUD).
    In the course of administering your loan account, RHCDS, 
formerly known as the Farmers Home Administration (FmHA), cancelled 
or reduced the amount of interest credit provided by the Agency, 
and/or required you to pay overage to offset interest credit to 
prevent the Federal Government from providing a double subsidy to 
the project. Additionally, you may have been required to deposit 
excess HUD Section 8 subsidy in the project reserve account.
    The Agency has determined in retrospective review that the 
Agency should not have taken certain actions in the past that 
resulted in cancellation or reduction of interest credit, payment of 
overage, and deposit of excess HUD subsidy into the project reserve 
account.
    An exception to what has been stated thus far in this letter 
will apply if you executed Form FmHA 444-7 (Rev. 10-13-77), 
``Interest Credit and Rental Assistance Agreement,'' before October 
27, 1980, and the third block of paragraph 2 of the agreement was 
checked. In this instance, the Agency had a legal basis to take the 
actions which were taken.
    At this time, RHCDS is offering you the following options from 
which to choose:
    1. Have RHCDS retroactively restore any level of interest credit 
that was cancelled or reduced, and retroactively remove any previous 
overage charges;
    2. Have RHCDS apply amounts equivalent to each collection of the 
difference between the original note payment under interest credit, 
and the payment resulting from the elimination of interest credit, 
and/or each collected overage payment as regular payments to the 
loan as of the date each payment was originally applied. As a 
result, the loan balance will show ahead of schedule. The 
requirement to make regularly scheduled monthly payments will 
continue;
    3. Have RHCDS cease requiring you to deposit excess funds from 
HUD rent adjustments in the project reserve account; or
    4. Continue with your current loan servicing and payment 
arrangement with the understanding that RHCDS cannot require you to 
maintain the current arrangement.
    The preceding options are offered to you until December 29, 
1995. RHCDS is allowing time for you to evaluate the effects of 
choosing any of the available options on the finances of your 
project and/or your Federal and State taxes. This offer will not 
extend beyond December 29, 1995. It will not be repeated nor will a 
change of choice be permitted at a later date.
    We ask that you complete the attached Choice of Options and 
return it to this [[Page 18578]] Servicing Office by close of 
business,December 29, 1995. Our office will process and submit your 
Choice of Options within 60 days of receiving the request. If you do 
not respond by this date, RHCDS will continue with your current loan 
servicing and payment arrangement.
    Please note that RHCDS will not be sending you a reminder to 
consider and submit your Choice of Options. If you have any 
questions, please contact us at (to be filled in by the local RHCDS 
Servicing Office).

        Sincerely,

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RHCDS Servicing Official

Attachment 2--Guide Letter

Notification of Choice of Options for Borrowers With Section 515/8 and 
Interest Credit Agreements Signed Before October 27, 1980

    Dear RHCDS Servicing Office:
    In response to your certified letter dated __________, 1995, we 
have selected the following options for the further servicing of our 
loan account. We understand this is a one-time offer by the Rural 
Housing and Community Development Service (RHCDS) and our choice of 
one of each of the following categories is final and must be 
received by RHCDS by close of business December 29, 1995. We further 
understand that adjustments to the loan account will not be in the 
form of cash refunds from RHCDS.

Interest Credit

    [  ] We choose to have RHCDS retroactively reinstate interest 
credit to its original level and retroactively have amounts 
equivalent to each collection of the difference between the original 
note payment under interest credit and the payment resulting from 
the elimination of interest credit be applied as regular payments to 
the loan as of the date each payment was originally applied. We 
understand our loan account will show as paid ahead of schedule 
after the adjustment and we are to continue paying regularly 
scheduled monthly loan payments.
    [  ] We choose to continue with cancellation or reduction of 
interest credit as a voluntary choice made now or in a previous 
year.

Overage

    [  ] We choose to have RHCDS retroactively remove previous 
overage charges and have amounts equivalent to each collection of 
overage be applied as regular payments to the loan as of the date 
each payment was originally applied. We understand our loan account 
will show as paid ahead of schedule after the adjustment and we are 
to continue paying regularly scheduled monthly loan payments.
    [  ] We choose to continue paying overage as a voluntary choice 
made now or in a previous year.

Deposit of Excess Rent in the Project Reserve Account

    [  ] We choose to have RHCDS remove the requirement of 
depositing excess rent in the project reserve account, additionally:
    [  ] We are a limited profit or nonprofit borrower and we choose 
to apply any excess rent and the amount in the reserve account that 
is excess to the required reserve account level adjusted for project 
life-cycle needs on the loan account, or
    [  ] We are a full profit borrower and we choose to claim as 
profit any excess rent and the amount in the reserve account that is 
excess to the required reserve account level adjusted for project 
life-cycle needs, subject to approval by the RHCDS Servicing Office; 
(or)
    [  ] We choose to continue depositing the excess rent in the 
project reserve account as a voluntary choice made now or in a 
previous year.

      Sincerely,

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(Borrower name and signature of borrower official)

    Public reporting for this collection of information is estimated 
to average 2 hours per response, including the 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, AG Box 7630, Washington, DC 
20250; and to the Office of Management and Budget, Paperwork 
Reduction Project, (OMB No. 0575-0033), Washington, DC 20503. Please 
do not return this form to either of these addresses. Forward to 
RECD only.

    Dated: March 28, 1995.
Maureen Kennedy,
Acting Administrator, Rural Housing and Community Development Service.
[FR Doc. 95-8946 Filed 4-11-95; 8:45 am]
BILLING CODE 3410-07-U