[Federal Register Volume 62, Number 185 (Wednesday, September 24, 1997)]
[Rules and Regulations]
[Pages 49912-49915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25450]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 343

[Department of the Treasury Circular, Public Debt Series No. 3-68]


Regulations Governing the Offering of United States Mortgage 
Guaranty Insurance Company Tax and Loss Bonds

AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury (Department) or (Treasury) is 
issuing in final form an amendment to its regulations governing United 
States Mortgage Guaranty Insurance Company Tax and Loss Bonds, referred 
to as tax and loss bonds. These securities are available for purchase 
only by companies organized and engaged in the business of writing 
mortgage guaranty insurance within the United States. Previously, these 
securities were issued in definitive (paper) form. They were only 
available in a ten year maturity. The Department has determined that 
maintaining and servicing these securities in definitive form is not 
cost-effective. The Department had also received many requests to offer 
a twenty year maturity. This final rule will reduce administrative 
overhead and costs by providing that on or after the effective date of 
the regulation, the securities will only be offered in book-entry form 
and that the securities may, at the option of the holder, be converted 
to book-entry form. It will also provide for maturities of either ten 
or twenty years. Minor changes to redemption notices have been added 
and all addresses have been updated.

EFFECTIVE DATE: September 24, 1997.

ADDRESSES: Copies are available for downloading from the Bureau of the 
Public Debt home page at: http://www.publicdebt.treas.gov/or may be 
obtained from the Division of Special Investments, 200 3rd St., P.O. 
Box 396, Parkersburg, WV 26106-0396.

FOR FURTHER INFORMATION CONTACT: Howard Stevens, Director, Division of 
Special Investments, at 304-480-7752, or Edward C. Gronseth, Deputy 
Chief Counsel, at 304-480-5192 or Jim Kramer-Wilt, Attorney/Adviser, 
Office of the Chief Counsel, at 304-480-5190.

SUPPLEMENTARY INFORMATION:

I. Background

    The Department of the Treasury, Bureau of the Public Debt, is 
providing for the voluntary conversion of outstanding definitive tax 
and loss securities to book-entry form and further providing for the 
issuance of only book-entry securities. This conversion will improve 
the cost-effectiveness of this program and the ease of administering 
transactions involving these securities.

II. Section-by-Section Summary

Subpart A--General Information

    Provisions included in the general information paragraph apply to 
the offering of these securities. Part 343 has been substantially 
rewritten. Changes from the 1968 regulations are as follows:
    (1) Paragraph 343.1--This paragraph has been renumbered from 343.6.
    (2) Paragraph 343.1(a)--This paragraph has been renumbered from 
343.6(a). It is amended to state that copies of 31 CFR part 306 may be 
obtained from the Division of Special Investments.
    (3) Paragraph 343.1(b)--This is a new paragraph titled Issuance. It 
states that on or after the effective date of this regulation, tax and 
loss bonds will be issued only in book-entry form on the books of the 
Treasury Department. The bonds will now be issued with ten or twenty 
year maturities designated by the purchaser and are non-interest 
bearing. Transfer by sale, exchange, assignment, pledge, or otherwise 
is prohibited. The bonds may be reissued as provided in paragraph 
343.4.
    (4) Paragraph 343.1(c)--This paragraph has been renumbered from 
343.6(b). It is amended to state that selected Federal Reserve Banks 
and branches, as fiscal agents of the United States, may be designated 
to perform such services requested of them by the Secretary of the 
Treasury in connection with purchases, transactions and redemptions of 
these bonds.
    (5) Paragraph 343.1(d)--This is a new paragraph titled Debt limit 
contingency. It states that the Department of the Treasury reserves the 
right to change or suspend the terms and conditions of the offering of 
tax and loss securities. This right includes provisions relating to the 
purchase and redemption of these bonds and any related notices. This 
may be done at any time the Secretary determines that the issuance of 
obligations sufficient to conduct the orderly financing operations of 
the United States cannot be made without exceeding the statutory debt 
limit. Announcement of such changes shall be provided by such means as 
the Secretary deems appropriate.
    (6) 343.1(3)--This paragraph has been renumbered from 343.3. It is 
amended to state that upon maturity of a bond, the Department will make 
payment of the principal amount due to the owner. A bond scheduled for 
maturity on a non-business day will be redeemed on the next business 
day with the same force and effect as if made on the maturity date.
    (7) Paragraph 343.1(f)--This paragraph is titled Reservations. It 
includes language of the former paragraph 343.3. It is revised to state 
that the Secretary of the Treasury may supplement or amend the terms of 
this circular or any related amendments and supplements. Transaction 
requests, including purchases or redemptions of bonds, are not 
acceptable if unsigned, inappropriately completed, or not timely 
submitted. The non-acceptance of inappropriate transaction requests is 
final. The authority of the Secretary to waive regulations under 31 CFR 
306.126 applies to part 343.
    (8) Paragraph 343.1(g)--This is a new paragraph titled Forms and 
additional information. It states that PD Form 3871 ``Application for 
Issue of United States Mortgage Guaranty Insurance Company Tax and Loss 
Bonds'', Fedwire instructions and other information will be furnished 
by the Division of Special Investments upon request. Interested parties 
may write to the Division of Special Investments or may telephone at 
(304) 480-7752. Application forms may also be downloaded from the 
Internet at Public Debt's home page at: http://
www.publicdebt.treas.gov/.

Subpart B--Tax and Loss Bonds

    This is a new subpart which includes information on the issue date, 
purchase, redemption, reissue and taxation of these bonds.
    (9) Paragraph 343.2--This paragraph has been renumbered. It 
combines the former paragraphs 343.1(c) and 343.2. This paragraph is 
revised to state that the issue date must be a business day. The 
securities will also be issued as of the date of receipt of Form PD F 
3871, along with remittance of funds for the full amount of the 
bond(s). Applications under this offering must be submitted to the 
Division of Special Investments. An application may be submitted by fax 
at (304) 380-7786 or (304) 480-6818, by mail or by other carrier. 
Applications submitted by mail should be sent by certified or 
registered mail.
    (10) Paragraph 343.2(b)--This paragraph has been renumbered from

[[Page 49913]]

343.2. It is revised to state that tax and loss bonds may be purchased 
only from the Division of Special Investments.
    (11) Paragraph 343(a)--This sub-paragraph has been renumbered from 
343.3. It has been revised to state that partial redemptions of bonds 
may be requested in any whole dollar amount; however, an account 
balance of less that $1,000 will be redeemed in total. The address to 
which redemptions are sent is changed to the address now listed in 
paragraph 343.3(d).
    (12) Paragraph 343.3(b)--This sub-paragraph has been renumbered 
from 343.3. This paragraph has been revised to state that payment will 
be made by the Automated Clearing House (ACH) method to the owner's 
account at a financial institution designated by the owner. To the 
extent applicable, provisions of Paragraph 357.26 on ``Payments'', and 
provisions of 31 CFR part 370, shall govern ACH payments made under 
this offering. The Department of the Treasury may employ alternate 
payment procedures, in lieu of ACH, in any case or class of cases where 
operational considerations require such action.
    (13) Paragraph 343.3(c)--This is a new paragraph titled Book-entry. 
It states that bonds will be redeemed automatically upon maturity. 
Payment will be made in accordance with the ACH payment instructions on 
file. Redemptions prior to maturity will be made upon receipt of a 
redemption request. Notice of redemption prior to maturity must be 
submitted by letter, on company letterhead, to the Division of Special 
Investments or faxed to (304) 480-7786 or (304) 480-6818.
    The notice must be received by the Division of Special Investments 
not less than three business days prior to the requested redemption 
date. It must contain the owner's name and Tax Identification Number, 
the requested redemption date, any changed payment routing 
instructions, the case number(s) to be redeemed, including original 
issue date(s) and the amount to be redeemed.
    (14) Paragraph 343.3(d)--This is a new paragraph titled Registered 
and provides for the redemption of a registered tax and loss bond. The 
bond(s) with the assignment for redemption properly completed and 
executed must be presented to the Division of Special Investments. 
Payment routing instructions must also be included with the bond(s) at 
redemption. Upon partial redemption of a registered bond, the remaining 
balance will be reissued in book-entry form with the original issue and 
maturity date.
    (15) Paragraph 343.4--This paragraph has been renumbered from 
343.5.
    (16) 343.4(a)--This paragraph has been renumbered from 343.5(a). It 
is revised to state that reissues must be sent to the Division of 
Special Investments. It also states that a bond will only be reissued 
in book-entry form but will continue to bear the same issue date and 
maturity as the original bond.
    (17) 343.4(b)--This paragraph has been renumbered from 343.5(b).
    (18) 343.4(c)--This paragraph has been renumbered from 343.5(c).
    (19) 343.4(d)--This paragraph has been renumbered from 343.5(d).
    (20) 343.4(e)--This is a new paragraph titled Conversion to book-
entry. It provides that any owner of tax and loss bonds held in 
registered form after the effective date of this regulation may submit 
the bonds to the Division of Special Investments for conversion to 
book-entry.
    (21)--Paragraph 343.5--This paragraph has been renumbered from 
343.4.

Procedural Requirements

    It has been determined that this final rule is not a significant 
regulatory action as defined in Executive Order 12866. Therefore, an 
assessment of anticipated benefits, costs and regulatory alternatives 
is not required.
    This final rule relates to matters of public contract. The notice 
and public procedures requirements of the Administrative Procedure Act 
are inapplicable, pursuant to 5 U.S.C. 553(a)(2). As no notice of 
proposed rulemaking is required, the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
    Because, as stated above, this regulation is being issued without 
prior notice and public procedure, the collection of information 
contained in this regulation has been reviewed under the requirements 
of the Paperwork Reduction Act (44 U.S.C. 3507 (j)) and, pending 
receipt and evaluation of public comments, approved by the Office of 
Management and Budget (OMB) under control number 1535-0127. An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a valid control number 
assigned by OMB.
    Comments concerning the collection of information should be 
directed to OMB, Attention: Desk Officer for the Bureau of the Public 
Debt, Office of Information and Regulatory Affairs, Washington, DC, 
20503, with copies to the Bureau of the Public Debt, Office of 
Administration, Graphics, Printing and Records Branch, Room 301, 200 
Third Street, Parkersburg, WV 26106. Any such comments should be 
submitted not later than November 24, 1997. Comments are specifically 
requested concerning:
    1. Whether the proposed collection of information is necessary for 
the proper performance of the functions of the Bureau of the Public 
Debt, including whether the information will have practical utility;
    2. The accuracy of the estimated burden associated with the 
proposed collection of information (see below);
    3. How to enhance the quality, utility and clarity of the 
information to be collected;
    4. How to minimize the burden of complying with the proposed 
collection of information, including the application of automated 
collection techniques or other forms of information technology; and
    5. Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collection of information in this regulation is in 31 CFR 
343.2, 343.3 and 343.4. This information is required to establish and 
maintain accounts for holding Mortgage Guaranty Insurance Company Tax 
and Loss Bonds. This information will be used to issue a Statement of 
Account to the entity, establish issue and maturity dates for the 
bonds, and provide electronic payment routing instructions for the 
proceeds. The collection of information is required to obtain a 
benefit. The likely respondents are companies engaged in the business 
of writing mortgage guaranty insurance with the United States.
    The estimated total annual reporting burden: 20 hours.
    The estimated average annual burden hours per respondent: 15 
minutes.
    The estimated number of respondents: 37 respondents.
    The estimated annual frequency of responses: 2.16 times.

List of Subjects in 31 CFR Part 343

    United States Mortgage Guaranty Insurance Company Tax and Loss 
Bonds.

    Dated: September 19, 1997.
Gerald Murphy,
Fiscal Assistant Secretary.

    For the reasons set forth in the preamble, part 343 of Title 31 of 
the Code of Federal Regulations is revised to read as follows:

[[Page 49914]]

PART 343--REGULATIONS GOVERNING THE OFFERING OF UNITED STATES 
MORTGAGE GUARANTY INSURANCE COMPANY TAX AND LOSS BONDS

Subpart A--General Information

Sec.
343.0  Offering of bonds.
343.1  General provisions.

Subpart B--Tax and Loss Bonds

343.2  Issue date and purchase.
343.3  Redemption.
343.4  Reissue.
344.5  Taxation.

    Authority: 5 U.S.C. 301; 26 U.S.C. 832; 31 U.S.C. 3102.

Subpart A--General Information


Sec. 343.0  Offering of bonds.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, and pursuant to paragraph 832(e) of the 
Internal Revenue Code of 1954, offers for sale only to companies 
organized and engaged in the business of writing mortgage guaranty 
insurance within the United States, bonds of the United States 
designated as Mortgage Guaranty Insurance Company Tax and Loss Bonds, 
hereinafter referred to as tax and loss bonds. The bonds are issued in 
a minimum amount of $1,000 or in any larger amount, in increments of 
not less than $1.00. This offering will continue until terminated by 
the Secretary of the Treasury.


Sec. 343.1  General provisions.

    (a) Regulations. Tax and loss bonds are subject to the general 
regulations with respect to United States securities, which are set 
forth in the Department of the Treasury Circular No. 300 (31 CFR part 
306), to the extent applicable. Copies of the circular may be obtained 
from the Bureau of the Public Debt, Division of Special Investments, 
Room 309, 200 Third St., P.O. Box 396, Parkersburg, WV 26106-0396 or 
downloaded from Public Debt's home page on the Internet at: http://
www.publicdebt.treas.gov/.
    (b) Issuance. Tax and loss bonds are issued in book-entry form on 
the books of the Treasury that are maintained by the Division of 
Special Investments. The bonds are issued with 10 or 20 year maturities 
as designated by the purchaser. These bonds are non-interest bearing. 
Any transfer by sale, exchange, assignment, pledge or otherwise, is 
prohibited. The bonds may be reissued as provided in Sec. 343.4.
    (c) Fiscal agents. Selected Federal Reserve Banks and Branches, as 
fiscal agents of the United States, may be designated to perform such 
services requested of them by the Secretary of the Treasury in 
connection with the purchase, redemption and other transactions 
involving these bonds.
    (d) Debt limit contingency. The Department of the Treasury reserves 
the right to change or suspend the terms and conditions of this 
offering, including provisions relating to the purchase of, and 
redemption of, the bonds as well as notices relating hereto, at any 
time the Secretary determines that the issuance of obligations 
sufficient to conduct the orderly financing operations of the United 
States cannot be made without exceeding the statutory debt limit. 
Announcement of such changes shall be provided by such means as the 
Secretary deems appropriate.
    (e) General redemption provisions. A bond may not be called for 
redemption by the Secretary of the Treasury prior to maturity. When the 
bond matures, payment will be made of the principal amount due to the 
owner. A bond scheduled for maturity on a non-business day will be 
redeemed on the next business day.
    (f) Reservations. The Secretary of the Treasury may at any time, or 
from time to time, supplement or amend the terms of this circular or 
any related amendments or supplements. Transaction requests, including 
purchases or redemptions of bonds, are not acceptable if unsigned, 
inappropriately completed, or not timely submitted. Any of these 
actions shall be final. The authority of the Secretary to waive 
regulations under 31 CFR 306.126 applies to part 343.
    (g) Forms and additional information. The application form for 
subscriptions, Fedwire instructions and other information will be 
furnished by the Division of Special Investments upon request by 
writing to the Division of Special Investments or by calling (304) 480-
7752. Application forms may also be downloaded from the Internet at 
Public Debt's home page at: http://www.publicdebt.treas.gov/.

Subpart B--Tax and Loss Bonds


Sec. 343.2  Issue date and purchase.

    (a) Issue date. The issue date must be a business day. The bonds 
will be issued as of the date of receipt of Form PD F 3871 
``Application for Issue of United States Mortgage Guaranty Insurance 
Company Tax and Loss Bonds'' and receipt of the remittance of funds for 
the full amount of the bond(s). Applications under this offering must 
be submitted to the Division of Special Investments. An application may 
be submitted by fax at (304) 480-7786 or (304) 480-6818, by mail, or by 
other carrier. Applications submitted by mail should be sent by 
certified or registered mail.
    (b) Purchase. Tax and loss bonds may only be purchased from the 
Division of Special Investments. The purchaser will instruct their 
financial institution to submit the exact amount of funds on the 
requested issue date to the Division of Special Investments via the 
Fedwire funds transfer system, with credit directed to the Treasury's 
General Account, according to wire instructions obtained from the 
Division of Special Investments (see Sec. 343.1(g)). Full payment 
should be submitted by 3:00 P.M. Eastern time to ensure that settlement 
of the transaction occurs.

[Approved by the Office of Management and Budget under control 
number 1535-0127.]


Sec. 343.3  Redemption.

    (a) General. Tax and loss bonds may not be called for redemption by 
the Secretary of the Treasury prior to maturity, but may be redeemed in 
whole or in part at the owner's option at any time after three months 
from issue date. The Director of the Internal Revenue Service District 
in which the owner's principal place of business is located will be 
given notice of all redemptions. Partial redemptions of bonds may be 
requested in any whole dollar amount; however, an account balance of 
less than $1,000 will be redeemed in total.
    (b) Method of payment. Payment will be made by the Automated 
Clearing House (ACH) method for the owner's account at a financial 
institution designated by the owner. To the extent applicable, 
provisions of Sec. 357.26, Payments, and provisions of 31 CFR part 370, 
shall govern ACH payments made under this offering. The Department of 
the Treasury may employ alternate payment procedures in lieu of ACH in 
any case or class of cases where operational considerations require 
such action.
    (c) Book-entry. Bonds will be redeemed automatically upon maturity. 
Payment will be made in accordance with the ACH payment instructions on 
file. Redemptions prior to maturity will be made upon receipt of a 
redemption request. Notice of redemption prior to maturity must be 
submitted in writing on company letterhead to the Division of Special 
Investments, or faxed to (304) 480-7786 or to (304) 480-6818. The 
notice must be received by the Division of Special Investments not less 
than three business days prior to the requested redemption date. It 
must contain the owner's name and Tax Identification Number, the 
requested

[[Page 49915]]

redemption date, any changed payment routing instructions, the case 
number(s) to be redeemed, including original issue date(s), and the 
amount to be redeemed.
    (d) Registered. To obtain redemption, a bond with the assignment 
for redemption properly completed and executed must be presented to the 
Division of Special Investments. Payment routing instructions must also 
be included with the bond at redemption. Upon partial redemption of a 
registered bond, the remaining balance will be reissued in book-entry 
form with the original issue and maturity date.

[Approved by the Office of Management and Budget under control 
number 1535-0127.]


Sec. 343.4  Reissue.

    (a) General. Reissue of a tax and loss bond may be made only under 
the conditions specified in this paragraph. A request for reissue must 
be made by an officer of the beneficial owner who is authorized to 
assign the bond for redemption. The request must be submitted to the 
Division of Special Investments. A bond will only be reissued in book-
entry form and will bear the same issue date and maturity as the 
original bond.
    (b) Correction of error. The reissue of a bond may be made to 
correct an error in the original issue upon an appropriate request, 
supported by satisfactory proof of the error.
    (c) Change of name. An owner whose name is changed in any legal 
manner after the issue of the bond should submit the bond with a 
request for reissue, substituting the new name for the name inscribed 
on the bond. The signature on the request for reissue should show the 
new name, the legal reason which caused the change to be made and the 
former name. It must be supported by satisfactory proof of the change 
of name.
    (d) Legal succession. A bond registered in the name of a company 
which has been succeeded by another company as the result of a merger, 
consolidation, incorporation, reincorporation, conversion, 
reorganization, or which has been lawfully succeeded in any manner 
whereby the business or activities of the original organization are 
continued without substantial change, will be paid to or reissued in 
the name of the successor upon an appropriate request on its behalf, 
supported by satisfactory evidence of successorship.
    (e) Conversion to book-entry. Although not required, any owner of 
tax and loss bonds held in registered form after the effective date of 
this regulation, may submit those bonds to the Division of Special 
Investments, for conversion to book-entry form.

[Approved by the Office of Management and Budget under control 
number 1535-0127.]


Sec. 343.5  Taxation

    Tax and loss bonds will be exempt from all taxation now or 
hereafter imposed on the principal by any state or any possession of 
the United States or of any local taxing authority.

[FR Doc. 97-25450 Filed 9-22-97; 12:17 pm]
BILLING CODE 4810-39-P