[Federal Register Volume 67, Number 35 (Thursday, February 21, 2002)]
[Rules and Regulations]
[Pages 7942-7943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4100]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1951

RIN 0560-AG43


Farm Loan Programs Account Servicing Policies--Reduction of 
Amortized Shared Appreciation Recapture Amortization Rate

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: The Farm Service Agency (FSA) is amending its regulations to 
reduce the amortization rate on Shared Appreciation Agreement recapture 
and clarify the references made to Shared Appreciation (SA) loans.
    Pursuant to statutory mandate, the amortization rate on all future 
(SA) payment agreements will be the current Homestead Protection 
Program interest rate less 100 basis points (1 percent). In addition, 
the amortization rate on all SA payment agreements in existence as of 
October 28, 2000, will be similarly reduced.
    Additionally, SA loans will now be referred to as SA amortized 
payments and the Promissory Notes used in the amortization of these 
amounts will be referred to as payment agreements. This change is being 
made to clarify the fact that SA agreements are an amortization of an 
existing debt which is not derived from obligated loan funds.

DATES: Effective March 25, 2002.

FOR FURTHER INFORMATION CONTACT: Michael Cumpton, Farm Loan Programs, 
Loan Servicing and Property Management Division, United States 
Department of Agriculture, Farm Service Agency, STOP 0523, 1400 
Independence Avenue, SW, Washington, DC 20250-0523, telephone (202) 
690-4014; electronic mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be significant and was reviewed by 
the Office of Management and Budget under Executive Order 12866.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
602), the undersigned has determined and certified by signature of this 
document that this rule will not have a significant economic impact on 
a substantial number of small entities. New provisions included in this 
rule will not impact a substantial number of small entities to a 
greater extent than large entities. Therefore, a regulatory flexibility 
analysis was not performed.

Environmental Evaluation

    It is the determination of FSA that this action is not a major 
Federal action significantly affecting the environment. Therefore, in 
accordance with the National Environmental Policy Act of 1969, and 7 
CFR part 1940, subpart G, an Environmental Impact Statement is not 
required.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. In accordance with this executive order: 
(1) All State and local laws and regulations that are in conflict with 
this rule will be preempted; (2) except as specifically stated in this 
rule, no retroactive effect will be given to this rule; and (3) 
administrative proceedings in accordance with 7 CFR parts 11 and 780 
must be exhausted before seeking judicial review.

Executive Order 12372

    For reasons contained in the notice related to 7 CFR part 3015, 
subpart V (48 FR 29115, June 24, 1983), the programs within this rule 
are excluded from the scope of E.O. 12372, which requires 
intergovernmental consultation with State and local officials.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires Federal agencies to assess the effects of their regulatory 
actions on State, local, and tribal governments or the private sector 
of $100 million or more in any 1 year. When such a statement is needed 
for a rule, section 205 of the UMRA requires FSA to prepare a written 
statement, including a cost and benefit assessment, for proposed and 
final rules with ``Federal mandates'' that may result in such 
expenditures for State, local, or tribal governments, in the aggregate, 
or to the private sector. UMRA generally requires agencies to consider 
alternatives and adopt the more cost effective or least burdensome 
alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates, as defined under 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 UMRA.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Paperwork Reduction Act

    The amendments to 7 CFR part 1951 contained in this rule require no 
revisions to the information collection requirements that were 
previously approved by OMB (0560-0161) under the provisions of 44 
U.S.C. chapter 35.

Federal Assistance Programs

    These changes affect the following FSA programs as listed in the 
Catalog of Federal Domestic Assistance:

    10.404--Emergency Loans
    10.406--Farm Operating Loans
    10.407--Farm Ownership Loans

[[Page 7943]]

Discussion of the Final Rule

    The Farm Service Agency (FSA) published a final rule on August 18, 
2000, (65 FR 50401-50405) to change the amortization rate of the Shared 
Appreciation Agreement recapture amortization and reamortization from 
the Non-Program rate to the Homestead Protection Program rate. Section 
818 of the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 2001, (2001 
Appropriations Act) enacted on October 28, 2000, mandates that the 
amortization rate on all Shared Appreciation (SA) amortization 
agreements made after enactment will be reduced to the current 
Homestead Protection Program interest rate less 100 basis points (1 
percent). This rate will be referred to as the SA amortization rate. In 
addition, section 818 of the 2001 Appropriations Act requires the 
interest rate on all SA amortizations existing as of the date of 
enactment of the 2001 Appropriations Act, to be reduced to the SA 
amortization rate as of that date. To comply with the 2001 
Appropriations Act, FSA is publishing this final rule. The changes 
enacted herein were mandated by statute. The changes in terminology 
regarding SA amortized payments amounts are simply clarifications of 
the existing regulation. Therefore, notice and comment are impractical, 
unnecessary and contrary to the public interest and not required.

List of Subjects in 7 CFR Part 1951

    Account Servicing, Credit, Debt Restructuring, Loan Programs--
Agriculture.


    Accordingly, 7 CFR part 1951 is amended as follows:

PART 1951--SERVICING AND COLLECTIONS

    1. The authority citation for part 1951 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 
U.S.C. 1480.

    2. Revise the heading for subpart S to read as follows:

Subpart S--Farm Loan Programs Account Servicing Policies


Sec. 1951.901  [Amended]

    3. Revise the third sentence in Sec. 1951.901 to read as follows:
    * * * Shared Appreciation amortized payments (SA) may be 
reamortized under this subpart if the borrower also has outstanding FLP 
program loans.* * *
    4. In Sec. 1951.909 revise paragraph (e)(2)(vii)(D) and the third 
sentence of paragraph (e)(2)(viii)(A) to read as follows:


Sec. 1951.909  Processing primary loan service programs requests.

* * * * *
    (e) * * *
    (2) * * *
    (vii) * * *
    (D) SA payment agreements may not exceed 25 years from the date of 
the original amortized agreement.
* * * * *
    (viii) * * *
    (A) * * * SA payment agreements will be reamortized at the current 
SA amortization rate in effect on the date of approval or the rate on 
the original payment agreement, whichever is less.
* * * * *

    5. In Sec. 1951.914 revise paragraph (e) to read as follows:


Sec. 1951.914  Servicing shared appreciation agreements.

* * * * *
    (e) Shared appreciation amortization. Shared appreciation may be 
amortized to a nonprogram amortized payment for borrowers who will 
continue with FSA on program loans. Shared appreciation will not be 
amortized if the amount is due because of acceleration, payment in full 
or satisfaction of the debt, or the borrower ceases farming. The amount 
due may be converted to an SA amortized payment under the following 
conditions:
    (1) The borrower must have a feasible plan as defined in 
Sec. 1951.906 including the SA amortized payment.
    (2) The borrower must be unable to pay the shared appreciation, or 
obtain the funds elsewhere to pay the shared appreciation.
    (3) [Reserved]
    (4) [Reserved]
    (5) The payment agreement term will be based on the borrower's 
repayment ability and the life of the security, not to exceed 25 years.
    (6) The interest rate will be the SA amortization rate contained in 
RD Instruction 440.1 (available in any FSA office).
    (7) A lien will be obtained on any remaining FSA security, or if 
there is no security remaining, the best lien obtainable on any other 
real estate or chattel property sufficient to secure the SA payment 
agreement, if available.
    (8) The borrower will sign a payment agreement for each SA 
amortized payment established.
    (9) [Reserved]
    (10) [Reserved]
    (11) If the borrower has no outstanding Farm Loan Program loans and 
becomes delinquent on the SA amortized payment, the SA payment 
agreement will be serviced in accordance with subpart J of this part. 
If the borrower has outstanding Farm Loan Programs loans, and becomes 
delinquent or financially distressed in accordance with Sec. 1951.906, 
the SA amortized payment will be considered for reamortization in 
accordance with Sec. 1951.909(e).
* * * * *

    Signed in Washington, DC, on February 12, 2002.
J.B. Penn,
Under Secretary for Farm and Foreign Agricultural Services.
[FR Doc. 02-4100 Filed 2-20-02; 8:45 am]
BILLING CODE 3410-05-P