[Federal Register Volume 65, Number 248 (Tuesday, December 26, 2000)]
[Notices]
[Pages 81640-81642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32620]



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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funding Availability (NOFA) for section 502 
Demonstration Program to Provide Single Family Housing (SFH) Loans and 
Grants in North Carolina to Elderly Families Who Lost Their Housing as 
a Result of a Major Disaster

AGENCY: Rural Housing Service (RHS), USDA.

ACTION: Notice.

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SUMMARY: This NOFA announces a Demonstration Program to provide section 
502 loans and grants in North Carolina for very-low and low-income 
elderly families who lost their housing as a result of a major 
disaster.

DATES: Applications may be submitted at any time until funds are 
exhausted. Funding is limited, and loan and grants will be obligated on 
a first come, first served basis from the date of receipt of a full 
application.

ADDRESSES: Applicants wishing to apply for assistance must contact 
their local Rural Development office in North Carolina for an 
application package. Rural Development offices are listed in the 
government section of phone books under ``United States Department of 
Agriculture (USDA), Rural Development.'' Applicants may also contact 
the State office serving North Carolina at the following address: USDA, 
Rural Development, 4405 Bland Road, Suite 260, Raleigh, NC 27609, phone 
(919) 873-2060, TDD (919) 873-2003 (these are not toll-free numbers).

FOR FURTHER INFORMATION CONTACT: For general information, applicants 
should contact their local or State Rural Development Office in North 
Carolina. Interested parties may also contact David J. Villano, Deputy 
Administrator, Single Family Housing, Rural Housing Service, United 
States Department of Agriculture, Stop 0780, 1400 Independence Avenue, 
SW, Washington, DC, 20250-0780, telephone (202) 720-5177 (voice) (this 
is not a toll free number) or (800) 877-8339 (TDD-Federal Information 
Relay Service).

SUPPLEMENTARY INFORMATION:

Programs Affected

    The Single Family Housing program is listed in the Catalog of 
Federal Domestic Assistance under Number 10.410, Very Low to Moderate 
Income Housing Loans.

Paperwork Reduction Act

    The information collection requirements contained in this notice 
have been approved by the Office of Management and Budget (OMB) under 
the provisions of 44 U.S.C. chapter 35 and have been assigned OMB 
control number 0575-0172 in accordance with the Paperwork Reduction Act 
(44 U.S.C. 3501 et seq.).

Discussion of Notice

I. Authority and Distribution Methodology

A. Authority

    Section 502 of the Housing Act of 1949 (42 U.S.C. 1471, et seq.) 
provides the Rural Housing Service (RHS) with the authority to make 
loans to very-low and low income persons and families who currently do 
not own adequate housing and cannot obtain other credit for modest 
housing in rural areas. The Demonstration Program described in this 
NOFA was authorized by the Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies Appropriations Act, 2001, 
Public Law 106-387 (October 28, 2000). Under this Demonstration 
Program, loans and grants may be made under section 502 of the Housing 
Act of 1949 in North Carolina to elderly families whose housing was 
destroyed by a major disaster as so declared by the President pursuant 
to the Robert T. Stafford Disaster Relief and Emergency Assistance Act. 
The applicant must (1) not have had insurance that covered such as loss 
and (2) be unable to repay a section 502 loan (without a section 502 
grant). Funds may only be used for the purchase of a new modular home 
and an adequate building site, or a new modular home if the applicant 
already owns an adequate building site.

B. Availability of Section 502 Funds for This Demonstration Program

    A combination loan and grant will be available for eligible persons 
under this NOFA; however, funding is limited. A maximum of $5,000,000 
in section 502 grant funds is available. Section 502 loan funds, with a 
budget authority level of $400,000, were made available under the 
aforementioned appropriations act. Funds under this NOFA are not 
subject to the provisions of 7 CFR 1940.565 and will be held in a 
National reserve.

I. Determining the Amount of a Loan and Grant

    Loan and grant combinations are available. Eligible applicants are 
expected to pay 20% of their adjusted income (as described in 7 CFR 
part 3550) toward a subsidized mortgage payment (principal and 
interest), real estate taxes, and insurance (PITI). After subtracting 
the monthly escrow for taxes and insurance, RHS will determine the 
maximum subsidized section 502 loan that the applicant can repay. The 
calculated loan amount will be deducted from the actual cost of the 
housing or market value, whichever is less. The remaining amount will 
be covered by a subsidized section 502 grant.
    For example, an applicant desires to purchase a new modular home 
for $72,000. Her adjusted income is $700 per month. Annual real estates 
taxes (based upon an ``as completed'' valuation) are estimated to be 
$400, and homeowners insurance is estimated to be $200. Twenty percent 
of her adjusted income is $140 per month ($700 times 20%). From that 
amount, $50 per month is deducted for taxes and insurance ($400 taxes 
plus $200 insurance divided by 12 equals $50 per month). In summary, 
the applicant can pay $90 per month towards a subsidized mortgage 
payment ($140 minus $50 for taxes and insurance equals $90). Based upon 
a $90 per month payment, the applicant would be eligible to receive a 
$30,000 section 502 subsidized loan. Since the cost of the house is 
$72,000, RHS will provide a $30,000 subsidized loan and $42,000 grant 
($72,000 cost minus $30,000 loan equals $42,000).

III. Impact of Other Affordable Housing Products

    If the applicant is to receive any other affordable housing product 
or assistance (a forgivable loan or grant from another source, 
additional FEMA assistance, etc.) in conjunction with funds from RHS, 
the RHS loan or grant will be reduced correspondingly. An outside grant 
will reduce the RHS grant; and an outside loan (requiring payments) 
will reduce the RHS loan on a dollar for dollar basis. For example, if 
the applicant is to receive a $5,000 grant from another source, it will 
reduce the amount of the RHS grant by $5,000. Similarly, a forgivable 
loan of $7,500 (one requiring no payments until the property is sold or 
title transferred) will also reduce the grant amount by $7,500. An 
affordable housing loan (which requires monthly payments) from another 
source of $2,000, will reduce the RHS loan amount by $2,000. RHS 
funding is extremely limited, and the Agency must ensure that funds are 
used prudently and to the maximum extent possible so that as many 
elderly families can be assisted as possible.

IV. Grants

    Under the terms of the grant, the grant recipient is required to 
personally occupy the housing acquired with grant

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funds for 10 years. If the grantee fails to personally occupy the 
housing for this term, then some or all of the grant must be repaid to 
the Agency, as discussed below. There is no penalty if the grantee 
stops personally occupying the property after the tenth anniversary of 
the grant. Repayment of the penalty for failing to personally occupy 
the housing will be secured by the standard Agency form deed of trust 
for North Carolina and the applicant will be required to sign an Agency 
grant agreement.

V. Grant Default and Penalties for Default

    The following events shall be considered a default under the grant:
    A. The property is sold or title transferred;
    B. The grantee fails to honor any of the terms of the grant 
agreement, or any of the terms of the Promissory Note, Mortgage or Deed 
of Trust securing an Agency loan which enabled the grantee to purchase 
the security property;
    C. The grantee falsely certifies, or fails to certify that the 
grantee occupies or will occupy the security property;
    D. The property is no longer personally occupied by the grantee, 
including by death of the grantee; or
    E. The grantee, or someone acting on the grantee's behalf, provided 
false or inaccurate information to obtain the grant.
    For the first full five years from closing, should a default occur, 
the penalty for default will be 100% of the grant amount. On the sixth 
anniversary, the penalty for default will be reduced by 20%, and the 
penalty will be reduced by an additional 20% on each succeeding 
anniversary date so that there will be no penalty for default after the 
tenth anniversary of the grant. In the case of death of the grantee at 
any time during the 10-year period, the penalty under the grant shall 
apply to anyone holding a remainder interest in the property, or by the 
heirs of the estate and the penalty amount will be promptly paid to the 
Agency. The Agency will charge interest on such penalty amount at the 
United States Treasury's current value of funds rate in effect at the 
time of default. The following example represents the potential 
penalties resulting from a default on a section 502 grant that was 
closed June 15, 2001:

Date of Default: Penalty for default
June 15, 2001: 100%
June 15, 2002: 100%
June 15, 2003: 100%
June 15, 2004: 100%
June 15, 2005: 100%
June 15, 2006: 100%
June 15, 2007: 80%
June 15, 2008: 60%
June 15, 2009: 40%
June 15, 2010: 20%
June 15, 2011: 0

    Under this example, if the property is sold or title transferred 
from June 15, 2001 up to and including June 15, 2006, the penalty would 
be 100% of the grant amount. For a default that would occur on July 1, 
2006, the penalty would be 100% of the grant amount. For a default that 
would occur on June 16, 2007, the penalty would be 80% of the grant 
amount.
    Should a default occur (with the exception of false or inaccurate 
information), the Agency may amortize repayment over a period of time 
with interest when it is in the best financial interest of the 
Government and is consistent with the objectives of the Demonstration 
Program.

VI. Submitting Loan and Grant Requests

    All applications must be filed with the appropriate Rural 
Development office and must meet the applicable requirements of 7 CFR 
part 3550 and this NOFA. Incomplete applications will be returned to 
the applicant. Applicants must provide documentation to support their 
loan and grant in accordance with 7 CFR part 3550 and this NOFA.

VII. Funding and Approval of Applications

    As mentioned, funding for this program is limited. Therefore, it is 
imperative that customers submit applications and related supporting 
documents in a timely manner. Submission of an application neither 
reserves funds nor ensures funding. Loan and grant requests will be 
obligated in the order in which a full application is received by Rural 
Development until funds are exhausted. A full application includes a 
valid sales contract for the purchase of a modular home, an adequate 
building site (or evidence of ownership, if the site is already owned), 
and a loan and grant request which can be approved in accordance with 7 
CFR part 3550 and this NOFA.

VIII. Applicability of Current Regulations

    All loan and grant requests for this Demonstration Program are 
subject to the provisions of this NOFA. Grants are also subject to 7 
CFR part 3015. In addition, loan and grant requests are subject to the 
requirements of 7 CFR part 3550, with the following modifications:

A. Loan Purposes

    Section 3550.52 does not apply except for paragraphs (d) and (e). 
Funds may only be used to purchase a new modular home and an adequate 
building site (if the applicant does not already own an adequate 
building site), and related eligible costs outlined in paragraph (d) 
such as site preparation, special features to accommodate the needs of 
persons with disabilities, title and closing costs, etc.

B. Eligibility Requirements

    Section 3550.53 applies, with the exception of paragraph (d).
    In addition, the applicant must:
    (1) be an elderly family as defined in section 3550.10; and
    (2) have owned or rented housing (which was their primary 
residence) that was destroyed by a major disaster declared by the 
President pursuant to the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act; and
    (3) have sufficient income to pay living expenses, current debts, 
real estate taxes (based upon an as-completed valuation), homeowners 
insurance, utilities, and required maintenance on the house; and
    (a) did not have homeowner's insurance or other insurance to cover 
such loss; or
    (b) cannot repay a section 502 loan without the benefit of a 
section 502 grant as described in this NOFA.

C. Applications

    Section 3550.55 applies, with the exception of paragraph (c).

D. Site Requirements

    Section 3550.56 applies, except for paragraph (a). In addition, a 
loan or grant may only be made in a rural area designated by RHS.

E. Dwelling Requirements

    Section 3550.57 applies, with the exception of paragraph (c). Only 
new modular homes are eligible under this Demonstration Program. In 
North Carolina, a modular home is defined as a manufactured building 
designed to be used as a one family unit which has been constructed and 
labeled indicating compliance with the North Carolina State Uniform 
Residential Building Code, Volume VII (available in most public 
libraries or through North Carolina Building Inspectors). The unit must 
have a North Carolina validation stamp. In addition, unless the 
applicant requests a waiver for individual needs, the modular unit must 
have the following design features at a minimum:
    (1) grab bars, or blocking for them, in the tub and shower;

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    (2) toilet centered a minimum of 18 inches from side wall with grab 
bars or blocking;
    (3) minimum 30  x  48 inch area of approach in front of all 
fixtures;
    (4) minimum 29 inch clearance below lavatory counter with insulated 
piping (a removable cabinet front may be used);
    (5) minimum 32 inch clearance for all door openings;
    (6) minimum 18 inch space at latch side of all doors;
    (7) ``view'' windows at a maximum 36 inch sill height;
    (8) electrical receptacles at 15 to 18 inches of height;
    (9) flush thresholds (maximum of \1/2\ inch rise);
    (10) minimum 42 inch accessible route throughout;
    (11) lights switches and thermostat at 48 inch maximum height;
    (12) high contrast, glare free floor surfaces and trim;
    (13) minimum of one entry ramped with accessible route to parking 
and mailbox, or property designed to accommodate such needs at a later 
time;
    (14) kitchen cabinets with removable panel under sink, pipes 
insulated, and removable fronts for work space;
    (15) lever handles for sink, lavatory, and door knobs; and
    (16) if the house does not have an attached garage, a minimum 8  x  
8 foot accessible, attached storage space.

F. Ownership Requirements

    Section 3550.58 applies with the exception of paragraphs (b), (c), 
(d), and (e). At the time of closing, the applicant must have fee-
simple ownership.

G. Escrow Account

    Section 3550.60 applies. Escrow accounts are required regardless of 
the loan and grant amounts.

H. Insurance

    Section 3550.61 applies; however, the loss payable clause must 
cover the combined amount of all loans needed to obtain the housing 
plus the section 502 grant. Flood insurance, where applicable, is 
required regardless of the loan or grant amount.

I. Appraisals

    Section 3550.62 applies. Appraisals are required regardless of the 
loan and grant amounts. The combined section 502 loan and grant, plus 
any prior liens, may not exceed the appraised value.

J. Maximum Loan Amount

    Section 3550.63 applies, with the exception of paragraph (b)(3). 
The Housing and Urban Development (HUD) 203(b) limits in effect as of 
September 30, 1998, apply.

K. Payment Subsidy

    Section 3550.68 applies, with the exception of paragraph (c). 
Eligible applicants will receive interest credit.

L. Deferred Mortgage Payments

    Section 3550.69 is not applicable.

M. Recapture

    Section 3550.162 applies; however, the section 502 grant shall be 
considered original equity. If the loan is repaid within its 10th year 
anniversary, or a penalty is imposed for a default on the grant, the 
balance due on the 502 grant shall be considered to be part of the 
outstanding balance on the 502 loan for recapture purposes.

N. Other

    Sections 3550.71, 3550.73, 3550.74, and 3550.101 through 3550.150 
are not applicable.

VI. Exception Authority

    The Administrator, or Deputy Administrator, Single Family Housing, 
reserves the right to make an exception to any requirement or provision 
of this NOFA or address any omission that is consistent with the 
applicable statute upon the request of the State Director for North 
Carolina if he or she determines that application of the requirement or 
provision, or failure to take action in the case of an omission, would 
adversely affect the Government's financial interests.

    Dated: December 15, 2000.
James C. Kearney,
Administrator, Rural Housing Service.
[FR Doc. 00-32620 Filed 12-22-00; 8:45 am]
BILLING CODE 3410-XV-U