[Federal Register Volume 61, Number 174 (Friday, September 6, 1996)]
[Rules and Regulations]
[Pages 47404-47408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23081]



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Part VIII





Department of Housing and Urban Development





_______________________________________________________________________



24 CFR Part 573



Loan Guarantee Recovery Fund; Final Rule

  Federal Register / Vol. 61, No. 174 / Friday, September 6, 1996 / 
Rules and Regulations  

[[Page 47404]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 573

[Docket No. FR-4108-F-01]
RIN 2506-AB87


Office of the Assistant Secretary for Community Planning and 
Development; Loan Guarantee Recovery Fund

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Final rule.

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

SUMMARY: The Church Arson Prevention Act of 1996 (the Act) authorizes 
certain Federal departments to implement procedures to address the 
destructive consequences of acts of arson and terrorism carried out 
against places of worship. Section 4 of the Act directs HUD to publish 
regulations governing the provision of loan guarantees to financial 
institutions that make loans to certain nonprofit organizations 
adversely affected by such acts. This final rule implements section 4 
of the Act. Specifically, this rule establishes the procedures, terms, 
and conditions by which HUD will guarantee loans to assist nonprofit 
organizations in financing activities designed to rebuild and 
rehabilitate structures, to replace and restore personal property, and 
to finance other eligible activities as provided for in this final 
rule. In addition, HUD anticipates forming a cooperative venture and 
participating with other entities in the pooling of funds so as to 
better achieve the objectives of the Act and this final rule.

EFFECTIVE DATE: These regulations take effect on October 7, 1996, 
unless prior to this date HUD publishes a notice in the Federal 
Register announcing an earlier effective date. Affected parties do not 
have to comply with the information collection requirements in 
Secs. 573.6, 573.7, 573.8, and 573.11 until HUD publishes in the 
Federal Register the control numbers assigned by the Office of 
Management and Budget (OMB) to these information collection 
requirements. Publication of the control numbers notifies the public 
that OMB has approved these information requirements under the 
Paperwork Reduction Act of 1995.
FOR FURTHER INFORMATION CONTACT: Tony Johnston, Deputy Director, 
Financial Management Division, Office of Block Grant Assistance, Room 
7180, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410, telephone number (202) 708-1871. Hearing- or 
speech-impaired individuals may access this number via TTY by calling 
the Federal Information Relay Service at 1-800-877-8399. FAX inquiries 
may be sent to Mr. Johnston at (202) 708-1798. (Other than the ``800'' 
number, the telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

    On July 3, 1996, President Clinton signed into law the ``Church 
Arson Prevention Act of 1996'' (Pub. L. 104-155) (the Act). In passing 
this legislation, the Congress made the following findings:

    The Congress finds the following:
    (1) The incidence of arson or other destruction of vandalism of 
places of religious worship, and the incidence of violent 
interference with an individual's lawful exercise or attempted 
exercise of the right of religious freedom at a place of religious 
worship pose a serious national problem.
    (2) The incidence of arson of places of religious worship has 
recently increased, especially in the context of places of religious 
worship that serve predominantly African-American congregations.
    (3) Changes in Federal law are necessary to deal properly with 
this problem.
    (4) Although local jurisdictions have attempted to respond to 
the challenges posed by such acts of destruction or damage to 
religious property, the problem is sufficiently serious, widespread, 
and interstate in scope to warrant Federal intervention to assist 
State and local jurisdictions.
    (5) Congress has authority, pursuant to the Commerce Clause of 
the Constitution, to make acts of destruction or damage to religious 
property a violation of Federal law.
    (6) Congress has authority, pursuant to section 2 of the 13th 
amendment to the Constitution, to make actions of private citizens 
motivated by race, color, or ethnicity that interfere with the 
ability of citizens to hold or use religious property without fear 
of attack, violations of Federal criminal law.

    The Act provides Federal, State and local law-enforcement agencies 
with the needed additional tools to address violent crimes against 
places of worship, strengthens the penalties for these crimes, and 
authorizes Federal assistance for rebuilding efforts. Section 4 of the 
Act, entitled ``Loan Guarantee Recovery Fund,'' authorizes the 
Secretary of HUD to guarantee loans made by financial institutions to 
assist certain nonprofit organizations (organizations described in 
section 501(c)(3) of the Internal Revenue Code of 1986) that have been 
damaged as a result of acts of arson or terrorism. The Act provides 
that loans shall be guaranteed in accordance with procedures that the 
Secretary shall establish by regulation.
    This final rule implements section 4 of the Act by establishing a 
new 24 CFR part 573. Part 573 describes the procedures, terms, and 
conditions by which HUD will guarantee loans to assist eligible 
nonprofit organizations. Under Sec. 573.3 of this final rule, eligible 
borrowers may use guaranteed loan funds for a wide range of activities, 
including: (1) the acquisition of real or personal property; (2) the 
rehabilitation of real property; (3) the construction, reconstruction 
or replacement of real property improvement; (4) clearance, demolition, 
and removal of structures, fixtures, and improvements; (5) site 
preparation; (6) architectural, engineering, and security expenses; and 
(7) refinancing existing indebtedness. The term of a loan guaranteed by 
HUD under new 24 CFR part 573 may not exceed 20 years.

II. Justification for Final Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. Part 10 provides for exceptions to the general rule 
if the agency finds good cause to omit advance notice and public 
participation. The good cause requirement is satisfied when prior 
public procedure is ``impracticable, unnecessary, or contrary to the 
public interest'' (24 CFR 10.1). HUD finds that good cause exists to 
publish this rule for effect without first soliciting public comment.
    The purpose of this rule is to implement the authority provided by 
the Congress for HUD to guarantee loans made by financial institutions 
to certain nonprofit organizations that suffer damage to their property 
as a result of acts of arson or terrorism. The Department of Justice 
has identified more than 40 eligible organizations that have had 
property damaged or destroyed through acts of arson or terrorism within 
the last few months. These organizations are in immediate need of 
assistance to rebuild and restore their properties. Financial 
institutions are willing to assist these organizations in their 
rebuilding efforts, provided a certain level of assurance exists with 
respect to the repayment of the loans to be made. The loan guarantee 
recovery fund established by this final rule provides the necessary 
assurance. Accordingly, HUD believes that it would be contrary to the 
public interest to delay the effectiveness of the rule to solicit 
comment.
    Before issuance of this rule, HUD held meetings with 
representatives of 501(c)(3) organizations that have been damaged by 
arson or terrorism, as well

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as with financial institutions, State and local organizations, and 
other public agencies. This rule incorporates many of the comments and 
suggestions offered by these organizations and entities. Although this 
rule is being issued in final form, additional public comments on this 
regulation are welcome on a continuing basis. These additional comments 
will be beneficial to any future loan guarantee authority provided to 
HUD. Interested persons are invited to submit comments regarding the 
final rule to the Office of the General Counsel, Rules Docket Clerk, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410-0500. Communications should refer to 
the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each communication submitted will be available 
for public inspection and copying during regular business hours (7:30 
a.m. to 5:30 p.m. Eastern Time) at the above address.

III. Findings and Certifications.

    Paperwork Reduction Act Statement. The information collection 
requirements contained in Secs. 573.6, 573.7, 573.8, and 573.11 have 
been submitted to the Office of Management and Budget (OMB) for 
emergency review and approval under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3520). An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless the collection displays a valid control number. The OMB control 
number, when assigned, will be announced by separate notice in the 
Federal Register.
    Executive Order 12866, Regulatory Planning and Review. This final 
rule was reviewed by the Office of Management and Budget (OMB) under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action,'' as defined in 
section 3(f) of the Order (although not economically significant under 
section (3)(f)(1) of the Order). Any changes made to the final rule 
subsequent to its submission to OMB are clearly identified in the 
docket file, which is available for public inspection in the office of 
the Department's Rules Docket Clerk, Room 10276, 451 Seventh Street SW, 
Washington Dc, 20410.
    Unfunded Mandates Reform Act. The Secretary has reviewed this rule 
before publication and by approving it certified, in accordance with 
the Unfunded Mandates Reform Act of 199 (2 U.S.C. 1532), that this rule 
does not impose a Federal mandate that will result in the expenditure 
by State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year.
    Regulatory Flexibility Act. The Secretary, in accordance with the 
Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed and approved 
this final rule, and in so doing certifies that this final rule will 
not have a significant economic impact on a substantial number of small 
entities. The purpose of this rule is to assist certain nonprofit 
organizations that experience damage to their real and personal 
property as a result of acts of arson or terrorism. All qualified 
financial institution, are eligible to apply for loan guarantees under 
this rule.
    Environmental Impact. A Finding of No Significant Impact with 
respect to the environment was made in accordance with HUD's 
regulations at 24 CFR part 50, which implement section 102(2)(C) of the 
National Environmental Policy Act of 1969. The Finding of No 
Significant Impact is available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of General Counsel, the Rules 
Docket Clerk, Room 10276, 451 Seventh Street, SW, Washington, DC 20410.
    Executive Order 12612, Federalism. The General Counsel, as the 
Designated Official under section 6(a) of Executive Order 12612, 
Federalism, has determined that this rule will not have substantial 
direct effects on States or their political subdivisions, or the 
relationship between the Federal Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
Government. No programmatic or policy changes will result from this 
document's promulgation that would affect the relationship between the 
Federal Government and State and local governments.
    Executive Order 12606, The Family. The General Counsel, as the 
Designated Official under section 6(a) of Executive Order 12606, The 
Family, has determined that this rule will not have potential for 
significant impact on family formation, maintenance, or general well-
being, and thus is not subject to review under the Order. No 
significant change in existing HUD policies or programs, as those 
policies relate to the family, will result from promulgation of this 
final rule.

List of Subjects in 24 CFR Part 573

    Loan programs--housing and community development, Nonprofit 
organizations, Reporting and recordkeeping requirements.

    Accordingly, title 24 of the Code of Federal Regulations is amended 
as follows:
    1. A new part 573 is added to read as follows:

PART 573--LOAN GUARANTEE RECOVERY FUND

Sec.
573.1 Authority and purpose.
573.2 Definitions.
573.3 Eligible activities.
573.4 Loan term.
573.5 Underwriting standards and availability of loan guarantee 
assistance.
573.6 Submission requirements.
573.7 Loan guarantee agreement.
573.8 Environmental procedures and standards.
573.9 Other requirements.
573.10 Fees for guaranteed loans.
573.11 Record access and recordkeeping.

    Authority: Pub. L. 104-155, 110 Stat. 1392, 18 U.S.C. 241 note; 
42 U.S.C. 3535(d).


Sec. 573.1  Authority and purpose.

    Section 4 of the Church Arson Prevention Act of 1996 (Pub. L. 104-
155, approved July 3, 1996) authorizes HUD to guarantee loans made by 
financial institutions to certain nonprofit organizations to finance 
activities designed to remedy the damage and destruction to real and 
personal property caused by acts of arson or terrorism. This part 
establishes the general procedures and requirements that apply to HUD's 
guarantee of these loans.


Sec. 573.2  Definitions.

    The following definitions are only applicable to loan guarantees 
under this part, and are not criminal definitions.
    Act means ``The Church Arson Prevention Act of 1996'' (Pub. L. 104-
155, approved July 3, 1996).
    Arson means a fire or explosion causing damage to (or destruction 
of) real or personal property that a Qualified Certification Official 
determines, or reasonably believes, to be deliberately set.
    Borrower means an organization described in section 501(c)(3) of 
the Internal Revenue Code of 1986, as amended, whose property has been 
damaged or destroyed as a result of an act of arson or terrorism and 
that incurs a debt obligation to a financial institution for the 
purpose of carrying out activities eligible under his part.
    Financial Institution means a lender which may be a bank, trust 
company, savings and loan association, credit union, mortgage company, 
or other issuer regulated by the Federal Deposit Insurance Corporation, 
the Office of Thrift Supervision, the Credit Union Administration, or 
the U.S. Comptroller

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of the Currency. A Financial Institution may also be a Pension Fund.
    Guarantee means an obligation of the United States Government 
guaranteeing payment of the outstanding principal loan amount, in whole 
or in part, plus interest thereon, on a debt obligation of the Borrower 
to a Financial Institution upon failure of the Borrower to repay the 
debt.
    Guaranteed Loan Funds means funds received by the borrower from the 
Financial Institution to finance eligible activities under this part, 
the repayment of which is guaranteed by HUD.
    Loan Guarantee Agreement means an agreement between a Financial 
Institution and the Secretary detailing the rights, responsibilities, 
procedures, terms, and conditions under which a loan provided by a 
Financial Institution to a Borrower may be guaranteed under section 4 
of the Act.
    Qualified Certification Official (QCO). (1) For the purpose of 
certifying an act of arson. A State or local official authorized to 
investigate possible acts of arson. For the purposes of this 
definition, such an official is authorized to execute an Official 
Incident Report or its equivalent and may be an official or employee of 
such agencies as the local fire department, the local police 
department, or the State Fire Marshall Office or its equivalent. The 
term ``Qualified Certification Official'' also includes HUD, which will 
consult with the Bureau of Alcohol, Tobacco, and Firearms of the 
Department of the Treasury in making its determinations.
    (2) For the purpose of certifying an act of terrorism. The 
Secretary or his designee, in consultation with the Federal Bureau of 
Investigation, shall determine whether an act of violence is a 
terrorist act or is reasonably believed to be a terrorist act.
    Section 4 Guaranteed Loan means a HUD guaranteed loan made by a 
Financial Institution to a Borrower for the purpose of carrying out 
eligible activities to address damage or destruction caused by acts of 
arson or terrorism.
    Terrorism means an act of violence causing damage to (or 
destruction of) real or personal property that the Secretary or his 
designee, in consultation with the Federal Bureau of Investigation, 
determines to be, or reasonably believes to be, a terrorist act, as 
defined by applicable Federal law or guidelines.


Sec. 573.3  Eligible activities.

    Guaranteed Loan Funds may be used by a Borrower for the following 
activities when it is certified in accordance with Sec. 573.6(e) that 
the activity is necessary to address damage caused by an act or acts of 
arson or terrorism as certified in accordance with Sec. 573.6(f):
    (a) Acquisition of improved or unimproved real property in fee or 
under long term lease.
    (b) Acquisition and installation of personal property.
    (c) Rehabilitation of real property owner, acquired, or leased by 
the Borrower.
    (d) Construction, reconstruction, or replacement of real property 
improvement.
    (e) Clearance, demolition, and removal, including movement of 
structures to other sites, of buildings, fixtures and improvements on 
real property.
    (f) Site preparation, including construction, reconstruction, or 
installation of site improvements, utilities, or facilities, which is 
related to the activities described in paragraphs (a), (c), or (d) of 
this section.
    (g) Architectural, engineering, and similar services necessary to 
develop plans in connection with activities financed under paragraphs 
(a), (b), (c), or (d) of this section.
    (h) Acquisition, installation and restoration of security systems.
    (i) Loans for refinancing existing indebtedness secured by a 
property to be constructed, rehabilitated, or reconstructed, if such 
financing is determined to be appropriate to achieve the objectives of 
the Act and this part.
    (j) Other necessary project costs such as insurance, bonding, legal 
fees, appraisals, surveys, relocation, closing costs, etc., paid or 
incurred by the Borrower in connection with the completion of the above 
activities.


Sec. 573.4  Loan term.

    The term of the loan to be guaranteed by HUD under this part may 
not exceed 20 years.


Sec. 573.5  Underwriting standards and availability of loan guarantee 
assistance.

    (a) HUD may, in its discretion, accept the underwriting standards 
of the Financial Institution making a loan to a Borrower.
    (b) HUD will not make the loan guarantee unless it determines that 
the guaranteed loan is an acceptable financial risk under HUD's 
generally applicable loan underwriting standards based on the 
following:
    (1) The Borrower's ability to pay debt service; and
    (2) The value of the collateral assigned or pledged as security for 
the repayment of the loan.
    (c) The provision of a loan guarantee to a Financial Institution 
and the amount of the guarantee do not depend in any way on the 
purpose, function, or identity of the organization to which the 
Financial Institution has made, or intends to make, a Section 4 
Guaranteed Loan.
    (d) HUD may disapprove a request for loan guarantee assistance 
based on the availability of funding.
    (e) HUD may decline any Financial Institution's participation if 
its underwriting criteria are insufficient to make the guarantee an 
acceptable financial risk, or if the proposed interest rates or fees 
are unacceptable. HUD expects the proposed interest rates to take into 
account the value of the Federal guarantee.
    (f) HUD may limit the availability of Guaranteed Loan Funds to 
geographic areas having the greatest need, as determined by a needs 
analysis of the most current available date conducted by HUD.
    (g) Other requirements associated with the underwriting standards 
and guidelines shall be contained in the Loan Guarantee Agreement.


Sec. 573.6  Submission requirements.

    A Financial Institution seeking a Section 4 Guaranteed Loan must 
submit to HUD the following documentation:
    (a) A statement that the institution is a Financial Institution as 
defined at Sec. 573.2.
    (b) A statement that the Borrower is eligible as defined at 
Sec. 573.2.
    (c) A description of each eligible activity for which the loan is 
requested.
    (d) A statement of other available funds to be used to finance the 
eligible activities (e.g., insurance proceeds).
    (e) A certification by the Borrower that the activities to be 
assisted resulted from an act of arson or terrorism which is the 
subject of the certification described in paragraph (f) of this 
section.
    (f) A certification by a QCO that the damage or destruction to be 
remedied by the use of the Guaranteed Loan Funds resulted from an act 
of arson or terrorism.
    (g) The environmental documentation required by Sec. 573.8.
    (h) A narrative of the institution's underwriting standards used in 
reviewing the Borrower's loan request.
    (i) The interest rate on the loan and fees the lender intends to 
use in connection with the loan; and
    (j) The percentage of the loan for which a guarantee is requested.


Sec. 573.7  Loan guarantee agreement.

    (a) The rights and responsibilities with respect to the guaranteed 
loan shall be substantially described in an

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agreement entered into between the Financial Institution, as the 
lender, and the Secretary, as the guarantor, which agreement shall 
provide that:
    (1) The lender has submitted or will submit a request for loan 
guarantee assistance that is accompanied by the Borrower's request for 
a loan to carry out eligible activities described in Sec. 573.3;
    (2) The lender will require the Borrower to execute a promissory 
note promising to repay the guaranteed loan in accordance with the 
terms thereof;
    (3) The lender will require the Borrower to provide collateral 
security, to an extent and in a form, acceptable to HUD;
    (4) HUD reserves the right to limit loan guarantees to loans 
financing the replacement of damaged property with comparable new 
property;
    (5) The lender will follow certain claim procedures to be specified 
by HUD in connection with any defaults, including appropriate 
notification of default as required by HUD;
    (6) The lender will follow procedures for payment under the 
guarantee whereby the lender will be paid (up to the amount of 
guarantee) the amount owed to the lender less any amount recovered from 
the underlying collateral security for the loan; and
    (7) The lender will act as the fiscal agent for the loan, servicing 
the guaranteed loan, maintaining loan documents, and receiving the 
Borrower's payments of principal and interest. The Borrower and the 
lender may be required to execute a fiscal agency agreement.
    (b) In addition, the agreement shall contain other requirements, 
terms, and conditions required or approved by HUD.


Sec. 573.8  Environmental procedures and standards.

    The environmental review requirements at 24 CFR part 50 are 
applicable to this part.
    (a) Environmental procedures. Before any lender's submission 
requesting a loan guarantee for the acquisition, rehabilitation, or 
construction of real property can be selected for a loan guarantee, HUD 
shall determine whether any environmental thresholds are exceeded in 
accordance with 24 CFR part 50, which implements the National 
Environmental Policy Act (NEPA) and the related Federal environmental 
laws and authorities listed under 24 CFR 50.4. To assist in complying 
with environmental requirements, Borrowers are encouraged to select 
sites that are free of environmental hazards and are to provide HUD 
with environmental data needed to make a determination of compliance. 
For successful Borrowers, the costs for preparing the environmental 
data are eligible as project costs.
    (1) If HUD determines that one or more of the thresholds are 
exceeded, HUD shall conduct a compliance review of the issue and, if 
appropriate, establish mitigating measures that the applicant shall 
carry out for the property.
    (2) The lender's submissions under Sec. 573.6 shall provide HUD 
with:
    (i) Documentation for environmental threshold review; and
    (ii) Any previously issued environmental reviews prepared by local, 
State, or other Federal agencies for the proposed property.
    (3) In providing the above information, the Borrower is encouraged 
to contact the local community development agency to obtain any 
previously issued environmental reviews for the proposed property as 
well as for other relevant information that can be used in the 
applicant documentation for the environmental threshold review.
    (4) HUD reserves the right to disqualify any request where one or 
more environmental thresholds are exceeded if HUD determines that the 
compliance review cannot be satisfactorily completed.
    (5) If Guaranteed Loan Funds are requested for acquisition, 
rehabilitation, or construction, Borrowers and Financial Institutions 
are prohibited from committing or expending State, local, or other 
funds to undertake property acquisition, rehabilitation or construction 
under this part until HUD issues a letter of commitment notifying the 
lender of HUD approval of the loan guarantee.
    (b) Environmental thresholds. HUD shall determine whether a NEPA 
environmental assessment is required. Also, HUD shall determine whether 
the proposed property triggers thresholds for the applicable Federal 
environmental laws and authorities listed under 24 CFR 50.4 as follows:
    (1) For minor rehabilitation of a building and acquisition of any 
property, Federal environmental laws and authorities may apply when the 
property is:
    (i) Located within designated coastal barrier resources;
    (ii) Contaminated by toxic chemicals or radioactive materials;
    (iii) Located within a floodplain;
    (iv) A building for which flood insurance protection is required;
    (v) Located within a runway clear zone at a civil airport or within 
a clear zone or accident potential zone at a military airfield; or
    (vi) Listed on, or eligible for listing on, the National Register 
of Historic Places; located within, or adjacent to, an historic 
district, or is a property whose area of potential effects includes a 
historic district or property.
    (2) For major rehabilitation of a building or for new construction 
or rebuilding, and environmental assessment under NEPA is required and, 
in addition to paragraph (b)(1) (i) through (vi) of this section, other 
Federal environmental laws and authorities may apply when the property:
    (i) Affects coastal zone management;
    (ii) Is located near hazardous industrial operations handling fuels 
or chemicals of an explosive or flammable nature;
    (iii) Affects a sole source aquifer;
    (iv) Affects endangered species;
    (v) Is located within a designated wetland; or
    (vi) Is located in a high noise area.
    (c) Qualified data sources. The environmental threshold information 
provided by applicants mut be from qualified data sources. A qualified 
data source means any Federal, State, or local agency with expertise or 
experience in environmental protection (e.g., the local community 
development agency; the local planning agency; the State environmental 
protection agency; or the State Historic Preservation Officer) or any 
other source qualified to provide reliable information on the 
particular property.
    (d) Definition. Minor rehabilitation means proposed fixing and 
repairs:
    (1) Whose estimated cost is less than 75 percent of the estimated 
cost of replacement after completion;
    (2) That does not involve changes in land use from residential to 
nonresidential, or from nonresidential to residential; and
    (3) In the case of residential properties, that does not increase 
density more than 20 percent.
    (e) Project consultants. In achieving compliance with these 
procedures, Borrower's architectural and engineering consultants shall 
consider these environmental factors and provide information in their 
plan narratives as to how their construction plans conform with the 
above environmental factors. To facilitate HUD's compliance with party 
50, the Borrower is required to submit the consultant's information and 
plan narrative discussing the pertinent environmental factors under 
this section.

[[Page 47408]]

Sec. 573.9  Other Requirements.

    (a) Nondiscrimination and equal opportunity. The nondiscrimination 
and equal opportunity requirements described in 24 CFR part 5, subpart 
A apply to this part.
    (b) 24 CFR part 84. The provisions of 24 CFR part 84 apply to 
guaranteed loans under this part.
    (c) Lead-Based Paint. Housing assisted under this part is subject 
to the lead-based paint requirements described in 24 CFR part 35.
    (d) Labor Standards. (1) Davis-Bacon. All laborers and mechanics 
employed by contractors or subcontractors in the performance of 
construction work financed in whole or in part with Guaranteed Loan 
Funds under this part shall be paid wages at rates not less than those 
prevailing on similar construction in the locality as determined by the 
Secretary of Labor in accordance with the Davis-Bacon Act, as amended 
(40 U.S.C. 276a-276a-5). This paragraph shall apply to the 
rehabilitation of residential property only if such property contains 
not less than 8 units.
    (2) Volunteers. The provisions of paragraph (d)(1) of this section 
shall not apply to volunteers under the conditions set forth in 24 CFR 
part 70. In applying part 70, loan guarantees under this part shall be 
treated as a program for which there is a statutory exemption for 
volunteers.
    (3) Labor standards. Any contract, subcontract, or building loan 
agreement executed for a project subject to Davis-Bacon wage rates 
under paragraph (d)(1) of this section shall comply with all labor 
standards and provisions of 29 CFR parts 1, 3 and 5 that would be 
applicable to a loan guarantee program to which Davis-Bacon wage rates 
are made applicable by statute.


Sec. 573.10  Fees for guaranteed loans.

    (a) No fees will be assessed by HUD for its guaranty of a loan 
under this part.
    (b) The lender may assess the Borrower loan origination fees or 
other charges provided that such fees and charges are those charged by 
the lender to its other customers for similar transactions, and are no 
higher than those charged by the lender for similar transactions.


Sec. 573.11  Record Access and Recordkeeping.

    Records pertaining to the loans made by the Financial Institution 
shall be held for the life of the loan. A lender with a Section 4 
Guaranteed Loan shall allow HUD, the Comptroller General of the United 
States, and their authorized representatives access from time to time 
to any documents, papers or files which are pertinent to the guaranteed 
loan, and to inspect and make copies of such records which relate to 
any Section 4 Loan. Any inspection will be made during the lender's 
regular business hours or any other mutually convenient time.

    Dated: September 5, 1996.
Howard Glaser,
Acting Assistant Secretary for Community Planning and Development.
[FR Doc. 96-23081 Filed 9-5-96; 2:54 pm]
BILLING CODE 4210-29-P