[Federal Register Volume 64, Number 221 (Wednesday, November 17, 1999)]
[Rules and Regulations]
[Pages 62566-62569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28371]
[[Page 62566]]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Parts 761 and 762
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1922, 1941, 1943, 1945, 1951, 1955, and 1965
RIN 0560-AF69
Streamlining of Regulations for Real Estate and Chattel
Appraisals
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This action eliminates unnecessary and burdensome
administrative provisions and procedures from the Agency's regulations
governing real estate and chattel appraisals used in conjunction with
the Farm Loan Programs, and clarifies the requirement that Agency real
estate appraisals must comply with the guidelines and standards
contained in the Uniform Standards of Professional Appraisal Practice.
The changes to the regulations will allow for the use of appraisal
forms and reports based on industry formats rather than requiring the
use of specific Agency formats. This action will also move the core
appraisal regulations as part of the Agency's overall effort to
consolidate its regulations.
EFFECTIVE DATE: December 17, 1999.
FOR FURTHER INFORMATION CONTACT: Chris L. Greenwalt, Senior Loan
Officer, Program Development and Economic Enhancement Division USDA/
FSA/PDEED/STOP 0521, 1400 Independence Avenue, SW., Washington, DC
20250-0521, telephone (202) 690-0431, facsimile (202) 720-8474, e-mail:
Chris__G[email protected].
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been reviewed under Executive Order 12866, has been
determined to be not significant for the purposes of E.O. 12866, and,
therefore, has not been reviewed by the Office of Management and
Budget.
Executive Order 12372
The programs to which this Executive Order may apply are listed in
the Catalog of Federal Domestic Assistance under the following:
10.407 Farm Ownership Loans
10.421 Indian Tribes and Tribal Corporation Loans
Programs listed under the numbers 10.407 and 10.421 are subject to,
and have complied with, the provisions of Executive Order 12372. (See
the Notices related to 7 CFR 3015, subpart V, at 48 FR 29112, June 24,
1983; 49 FR 22675, May 31, 1984; and 50 FR 14088, April 10, 1985.)
Environmental Impact Statement
It is the determination of the issuing Agency that this action is
not a major Federal action significantly affecting the environment and,
in accordance with the National Environmental Policy Act of 1969, Pub.
L. 91-190, an Environmental Impact Statement has not been prepared.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988, Civil Justice Reform. In accordance with this rule: (1) All
State and local laws and regulations that are in conflict with this
rule will be preempted; (2) no retroactive effect will be given to this
rule; and (3) administrative proceedings in accordance with 7 CFR parts
11 and 780, as applicable, must be exhausted before bringing suit in
court challenging action taken under this rule unless those regulations
specifically allow bringing suit at an earlier time.
Regulatory Flexibility Act
The Farm Service Agency (FSA) certifies that this rule will not
have a significant impact on a substantial number of small entities as
defined under the Regulatory Flexibility Act, Pub. L. 96-534, as
amended (5 U.S.C. 601). No actions are being taken under this rule that
would favor large entities over small entities. According to the 1992
Census of Agriculture, 1.9 million farmers or over 99 percent of all
farms in the United States are small entities as defined by the Small
Business Administration (SBA). Under the SBA definition, few if any
large entities are operators of family-sized farms who would be
eligible for FSA credit. This rule is expected to result in the Agency
adopting industry standards for appraisals which should reduce the
costs of appraisals and afford faster completion time. Therefore, a
Regulatory Flexibility Analysis has not been prepared.
Paperwork Reduction Act of 1995
This rule does not contain reporting or record keeping requirements
subject to the Paperwork Reduction Act of 1995.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA),
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments or the
private sector. Under section 202 of the UMRA, agencies must prepare a
written statement, including a cost benefit analysis, before
promulgating a notice of proposed rulemaking that includes any Federal
mandates that may result in expenditures to State, local, and 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 agencies 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.
The rule contains no Federal mandates (under the regulatory
provisions of title II of the UMRA) for State, local, and tribal
governments or the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Executive Order 12612
It has been determined that under section 6(a) of Executive Order
12612, Federalism, implications to warrant the preparation of a
Federalism Assessment. The provisions of this rule will not have a
substantial direct effect on States or their political subdivisions or
on the distribution of power and responsibilities among the various
levels of government.
Discussion of the Final Rule
This rule involves the farm loan programs formerly administered by
the Farmers Home Administration (FmHA). The Department of Agriculture
Reorganization Act of 1994, abolished FmHA on October 13, 1994, and its
Farmer Programs functions, now referred to as Farm Loan Programs, were
subsequently transferred by the Secretary to the Farm Service Agency
(FSA).
FSA is revising the existing core appraisal regulations, loan
servicing regulations, and the loan making regulations regarding real
estate and chattel appraisals for several reasons. Most importantly,
these changes are being made to eliminate the
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requirements that specific Agency appraisal formats must be used for
real estate and chattel appraisals required under Farm Loan Programs.
This change removes unnecessary administrative burdens and increases
the tools available to FSA to complete real estate and chattel
appraisals. Elimination of requirements for the use of specific forms
for real estate and chattel appraisals provides FSA the opportunity to
expand the use of contract appraisers who do not now participate due to
the requirement that agency appraisals must be on Agency appraisal
forms.
The rule maintains the current requirement that real estate
appraisals must comply with the Uniform Standards of Professional
Appraisal Practice (USPAP), as developed by the Appraisal Standards
Board of the Appraisal Foundation, pursuant to the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and as
applied to Federal agencies by Office of Management and Budget Circular
A-129. While the rule allows for different formats for chattel
appraisals, the rule maintains the current requirements regarding the
information that such appraisals contain.
The rule also eliminates the specific provisions regarding
appraisal of real property subject to an easement currently codified at
7 CFR 1922.209. This section is obsolete because it cross references
procedures at 7 CFR 1922.209 which was removed from part 1922 without a
replacement. Further, USPAP standards already adopted by FSA in its
current appraisal regulations codified at 7 CFR 1922.201 address the
issues regarding appraisals of real property that are subject to an
easement. Therefore, separate regulations on this subject are not
necessary.
The rule moves the core FSA appaisal regulations from 7 CFR part
1922 to 7 CFR part 761. This change is part of FSA's overall effort to
consolidate the Farm Loan Programs regulations that had been initially
promulgated by the former FmHA with FSA's other program regulations
into one range of parts in title 7 of the Code of Federal Regulations.
The rule also consolidates under Sec. 761.7 the current provisions
governing the use of existing real estate appraisals from the Operating
Loan Program (7 CFR 1941.25(a)(6)), Farm Ownership Loan Program (7 CFR
1943.25(c)(3)), and Emergency Loan Program (7 CFR 1945.175(c)(1)(iv))
to 7 CFR 761.7(d)).
The Agency is not seeking public comment regarding this rule,
because the rule does not change the standards applied to Agency
appraisals, it merely changes the location of the regulations in the
Code of Federal Regulations and makes a procedural change to allow the
use of any alternative appraisal format that complies with Agency
appraisal standards. Therefore, pursuant to 5 U.S.C. 552(b), the Agency
has concluded that it is unnecessary to seek public comment before
implementing this rule.
List of Subjects
7 CFR Part 761
Accounting, Accounting servicing, Loan programs--Agriculture, Real
Property-Appraisals, Rural areas.
7 CFR Part 762
Agriculture, Loan programs--Agriculture
7 CFR Part 1922
Loan programs--Agriculture, Real property-Appraisals, Rural areas
7 CFR Part 1941
Crops, Livestock, Loan programs--Agriculture, Rural areas, Youth
7 CFR Part 1943
Credit, Loan programs--Agriculture, Recreation, Water resources
7 CFR Part 1945
Agriculture, Disaster assistance, Loan programs--Agriculture
7 CFR Part 1951
Accounting servicing, Debt restructuring, Credit, Loan programs--
Agriculture
7 CFR Part 1955
Government property, Loan programs--Agriculture.
7 CFR Part 1965
Administrative practice and procedure, Foreclosure, Loan programs--
Agriculture, Rural areas.
For the reasons stated in the preamble, 7 CFR part 761 is added, 7
CFR part 1922 is removed and reserved, and 7 CFR parts 1941, 1943,
1945, 1951, 1955 and 1965 are amended as follows:
1. Add part 761 to read as follows:
PART 761--GENERAL AND ADMINISTRATIVE
Subpart A--General Provisions
Sec.
761.1-761.6 [Reserved]
761.7 Appraisals.
Authority: 7 U.S.C. 1989.
Sec. 761.1-761.6 [Reserved]
Sec. 761.7 Appraisals.
(a) General. This section describes Agency requirements for real
estate and chattel appraisals and reviews made in connection with the
making and servicing of direct and guaranteed Farm Loan Program loans
and nonprogram loans serviced under part 1951, subpart J of this
chapter.
(b) Definitions.
Administrative appraisal review means a review of an appraisal to
determine if the appraisal:
(1) Meets applicable Agency requirements; and
(2) Is accurate outside the requirements of standard 3 of USPAP.
Agency means the Farm Service Agency, including its employees and
state and area committee members, and any successor agency.
Farm Loan Programs (FLP) loans refers to Farm Ownership (FO), Soil
and Water (SW), Recreation (RL), Economic Opportunity (EO), Operating
(OL), Emergency (EM), Economic Emergency (EE), Softwood Timber (ST),
and Rural Housing loans for farm service buildings (RHF).
Technical appraisal review means a review of an appraisal to
determine if such appraisal meets the requirements of USPAP pursuant to
standard 3 of USPAP.
USPAP (Uniform Standards of Professional Appraisal Practice) means
standards governing the preparation, reporting, and reviewing of
appraisals established by the Appraisal Foundation pursuant to the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
(c) Appraisal standards. (1) Real estate. Real estate appraisals,
technical appraisal reviews of real estate appraisals, and their
respective forms must comply with the standards contained in USPAP, as
well as applicable Agency regulations and procedures for the specific
Farm Loan Program activity involved. A current copy of USPAP along with
other applicable appraisal procedures and regulations is available for
review in each Agency State Office.
(2) Chattel. An appraisal of chattel property may be completed on
an applicable Agency form (available in each Agency State Office) or
other format containing the same information.
(d) Use of an existing real estate appraisal. The Agency may use an
existing real estate appraisal to reach loan making or servicing
decisions if:
(2) The Agency determines the appraisal meets the requirements of
this section and applicable Agency loan making or servicing
requirements;
(3) The appraisal was completed within the previous 12 months; and
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(4) Current market values have remained stable since the appraisal
was complete.
(e) Appraisal reviews. (1) Real estate appraisals. With respect to
a real estate appraisal, the Agency may conduct a technical appraisal
review or an administrative appraisal review, or both.
(2) Chattel appraisals. With respect to a chattel appraisal, the
Agency may conduct an administrative appraisal review.
PART 762--GURANTEED FARM LOANS
2. The authority citation for part 762 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Sec. 762.127 [Amended]
3. Amend Sec. 762.127 to remove the second sentence in introductory
text of paragraph (d).
PART 1922 [Removed and Reserved]
4. Remove and reserve part 1922.
PART 1941--OPERATING LOANS
5. The authority citation for part 1941 is revised to read as
follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 1941.25 [Amended]
6. Amend Sec. 1941.25 to remove the second sentence of the
introductory text in paragraph (a) ``Forms FmHA 440-21, `Appraisal of
Chattel Property,' FmHA 1922-1, `Appraisal Report-Farm Tract' and FmHA
1922-11, `Appraisal for Mineral Rights', respectively'' and add in its
place ``forms in accordance with Sec. 761.7 of this title and, in the
case of an appraisal of mineral rights' the appropriate Agency form
(available in each Agency State Office) or other format that contains
the same information''.
PART 1943--FARM OWNERSHIP, SOIL AND WATER AND RECREATION
7. The authority citation for part 1943 continues to read as
follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 1943.25 [Amended]
8. Amend Sec. 1943.25 as follows:
a. Remove from paragraph (c)(1) ``Forms FmHA 1922-1 or FmHA 1922-8,
`Uniform Residential Appraisal Report,' for farm real estate or
residential farm real estate, respectively'' and add in its place
``forms in accordance with Sec. 761.7 of this title, and in the case of
an appraisal of residential real estate, the appropriate Agency form
(available in each Agency State Office) or other format that contains
the same information'';
b. Remove paragraph (c)(3);
c. Redesignate paragraphs (c)(4), (c)(5), and (c)(6) as paragraphs
9c)(3), (c)(4), and (c)(5), respectively.
d. Remove from the first sentence in newly designated paragraph
(c)(3) ``subpart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title'';
e. Add at the end of the last sentence before the period of newly
designated paragraph (c)(3) ``or other format that contains the same
information''; and
Sec. 1943.75 [Amended]
9. Amend Sec. 1943.75 as follows:
a. Remove from paragraph (c)(1) ``Forms FmHA 1922-1 or FmHA 1922-8,
`Uniform Residential Appraisal Report' for farm real estate or
residential farm real estate, respectively'' and add in its place
``forms in accordance with Sec. 761.7 of this title, and in the case of
an appraisal of residential real estate, the appropriate Agency form
(available in each Agency State Office ) or other format that contains
the same information'';
b. Remove paragraph (c)(3);
c. Redesignate paragraphs (c)(4), (c)(5), and (c)(6) as paragraphs
(c)(3), (c)(4), and (c)(5), respectively.
d. Remove from the first sentence in newly designated paragraph
(c)(3) ``supart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title'';
e. Add at the end of the last sentence before the period of newly
designated paragraph (c)(3) ``or other format that contains the same
information''; and
PART 1945--EMERGENCY
10. The authority citation for part 1945 continues to read as
follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 42 U.S.C. 1980.
Sec. 1945.169 [Amended]
11. In Sec. 1945.169 remove from paragraph (p)(1)(iii) ``in the
comments section of Form FmHA or its successor agency under Public Law
103-354 1922-1, `Appraisal Report-Farm Tract' '' and add in its place
``on the real estate appraisal''.
Sec. 1945.175 [Amended]
12. Amend Sec. 1945.175 as follows:
a. Remove from the introductory text to paragraph (c)(1) ``Forms
FmHA 1922-or FmHA 1922-8, `Uniform Residential Appraisal Report' for
farm real estate or residential farm real estate, respectively'' and
add in its place ``forms in accordance with Sec. 761.7 of this title,
and in the case of an appraisal of residential real estate' the
appropriate Agency form (available in each Agency State Office) or
other format that contains the same information'';
b. Add at the end before the period of paragraph (c)(1)(ii) ``or
other format that contains the same information'';
c. Remove paragraph (c)(1)(iv); and
d. Redesignate paragraphs (c)(1)(v) as paragraph (c)(1)(iv).
PART 1951--SERVICING AND COLLECTION
13. The authority citation for part 1951 continues to read as
follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1932 Note, 7 U.S.C. 1989, 42
U.S.C. 1480.
14. Amend Sec. 1951.909 as follows:
a. Remove from the second sentence of paragraph (f)(1) ``subpart E
of part 1922 of this chapter'' and add in its place ``Sec. 761.7 of
this title''; and
b. Revise paragraph (i)(3)(ii) to read as follows:
Sec. 1951.909 Processing primary loan service programs requests.
* * * * *
(i) * * *
(3) * * *
(ii) The appraisal report must conform to Sec. 761.7 of this title
for real estate and chattels.
* * * * *
Sec. 1951.910 [Amended]
15. In Sec. 1951.910 remove from the third sentence of paragraph
(a)(1) ``subpart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title''.
PART 1955--PROPERTY MANAGEMENT
16. The authority citation for part 1955 continues to read as
follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 42 U.S.C. 1480.
Sec. 1955.10 [Removed]
17. In Sec. 1955.10 remove from the fourth sentence of the
introductory text of paragraph (e) ``subpart E of part 1922 of this
chapter'' and add in its place ``Sec. 761.7 of this title''.
18. In Sec. 1955.66 revise paragraph (h)(2) to read as follows:
Sec. 1955.66 Lease of real property.
* * * * *
(h) * * *
(2) The purchase price (option price) will be the advertised sales
price as determined by an appraisal prepared in accordance with
Sec. 761.7 of this title.
* * * * *
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Sec. 1955.107 [Amended]
19. In Sec. 1955.107 remove from the second sentence of paragraph
(a)(1) ``subpart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title''.
PART 1965--REAL PROPERTY
20. The authority citation for part 1965 continues to read as
follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 42 U.S.C. 1480.
Sec. 1965.12 [Amended]
21. In Sec. 1965.12 remove from the first and second sentences of
paragraph (e) ``subpart E of part 1922 of this chapter'' and add in its
place ``Sec. 761.7 of this title''.
Sec. 1965.13 [Amended]
22. In Sec. 1965.13 remove from the first sentence of paragraph (d)
``subpart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title''.
Sec. 1965.25 [Amended]
23. In Sec. 1965.25 remove from paragraph (d)(1) ``subpart E of
part 1922 of this chapter'' and add in its place ``Sec. 761.7 of this
title''.
Sec. 1965.26 [Amended]
24. In Sec. 1965.26 remove from the second sentence of paragraph
(a)(2) ``subpart E of part 1922 of this chapter'' and add in its place
``Sec. 761.7 of this title''.
Sec. 1965.27 [Amended]
25. Amend Sec. 1965.27 as follows:
a. Remove from paragraph (g)(5) ``Forms FmHA or its successor
agency under Public Law 103-354 1922-1 or FmHA or its successor agency
under Public Law 103-354 1922-8, as appropriate,'' and add in its place
``Real estate appraisals meeting the requirements of 761.7 of this
title''; and
b. Remove from the fourth sentence of paragraph (h)(1) ``subpart E
of part 1922 of this chapter'' and add in its place ``Sec. 761.7 of
this title''.
Signed in Washington, D.C., on October 21, 1999.
August Schumacher, Jr.,
Under Secretary for Farm and Foreign Agricultural Services.
[FR Doc. 99-28371 Filed 11-16-99 8:45 am]
BILLING CODE 3410-05-M