[Federal Register Volume 67, Number 37 (Monday, February 25, 2002)]
[Notices]
[Pages 8679-8684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4332]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Availability of Funding and Requests for Proposals for 
Guaranteed Loans Under the Section 538 Guaranteed Rural Rental Housing 
Program

AGENCY: Rural Housing Service, USDA.

ACTION: Notice of fund availability.

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    Required Responses From: Eligible Lenders for Multi-Family Lending.
    Program Offers: Loan Guarantees and Interest Credits for Rural 
Housing.
SUMMARY: This Notice of Fund Availability (NOFA or Notice) announces 
the timeframe, submission requirements and deadlines to submit 
proposals in the form of ``NOFA responses'' for the section 538 
Guaranteed Rural Rental Housing Program (GRRHP)for the Fiscal Year (FY) 
2002 allocation of $99.77 million. This Notice describes the commitment 
of program dollars, eligibility requirements, lender responsibilities, 
and the overall NOFA and application processes.
    The GRRHP operates under 7 CFR part 3565. The GRRHP Origination and 
Servicing Handbook (HB-1-3565) is available to provide lenders and the

[[Page 8680]]

general public with guidance on program administration. HB-1-3565, 
which contains a copy of 7 CFR part 3565 in Appendix 1, can be found at 
the Rural Development regulation web site address http://rdinit.usda.gov/regs.
    Eligible lenders are invited to submit NOFA responses for the 
development of affordable rental housing to serve rural America. The 
Rural Housing Service (RHS) will review responses submitted by eligible 
lenders, on the lender's letterhead, and signed by both the prospective 
borrower and lender. Although a complete application is not required in 
response to the NOFA, eligible lenders may submit a complete 
application concurrently with the NOFA response. The submission of a 
complete application will not affect the scoring process.

DATES: The FY 2002 program dollars will be allocated through a 
continuous selection process. The RHS will review all NOFA responses 
through May 16, 2002. Reviews will take place on an on-going basis. 
Those responses that are selected that subsequently submit complete 
applications and meet all federal environmental requirements will 
receive commitments until all funds are expended. A notice will be 
placed in the Federal Register when all funds are committed for FY 
2002. NOFA responses received after May 16, 2002 will be held for 
review subject to the availability of funds.
    Eligible lenders intending to mail a NOFA response or application 
must provide sufficient time to permit delivery to the NOFA submission 
address on or before the closing deadline date and time. Acceptance by 
a U.S. Post Office or private mailer does not constitute delivery. 
Postage due NOFA responses and applications will not be accepted.

FOR FURTHER INFORMATION CONTACT: Arlene Nunes, Senior Loan Specialist, 
Guaranteed Loans, Multi-Family Housing Processing Division, U.S. 
Department of Agriculture, South Agriculture Building, Room 1271, STOP 
0781, 1400 Independence Avenue, SW, Washington, DC 20250-0781. E-mail: 
[email protected]. Telephone: (202) 401-2307. This number is 
not toll-free. Hearing or speech-impaired persons may access that 
number by calling the Federal Information Relay Service toll-free at 
(800) 877-8339.
    Eligiblity of Prior Year Selected NOFA Responses: NOFA responses 
selected in FY 2001 are eligible for FY 2002 program dollars subject to 
the availability of funds. FY 2001 NOFA responses selected by RHS for 
submission of a complete application may submit an application for 
competition for FY 2002 funding without completing a FY 2002 NOFA 
response. All qualified applications will be funded on a first come 
basis until all program funds are exhausted. RHS will commit and 
obligate funds only to lenders that submit a complete application 
including all federal environmental documents required by 7 CFR 1940 
subpart G, Form RD 3565-1, ``Application for Loan and Guarantee'' and 
the 2,500 dollar application fee.

General Program Information

    Program Purpose: The section 538 Guaranteed Rural Rental Housing 
Program is designed to increase the supply of affordable multi-family 
housing through partnerships between the RHS and major lending sources, 
as well as state and local housing finance agencies and bond issuers.
    Qualifying Properties: Qualifying properties include new 
construction for multi-family housing units or acquisition of existing 
structures with rehabilitation of at least 15,000 dollars per unit.
    Eligible Financing Sources: Any form of Federal, state, and 
conventional sources of financing can be used in conjunction with the 
loan guarantee, including Home Investment Partnership Program (HOME) 
grant funds, tax exempt bonds, and low income housing tax credits.
    Maximum Guarantee: The maximum guarantee for a permanent loan will 
be 90 percent of the unpaid balance and interest on the loan. The 
maximum guarantee on a construction loan will be 90 percent of the work 
in place, which have credit enhancements, or up to 90 percent of the 
amount actually advanced by the lender, whichever is less.
    Reimbursement of Losses: Any losses will be split on a pro-rata 
basis between the lender and the RHS from the first dollar lost.
    Interest Rate: RHS will accept the best rate negotiated between the 
lender and prospective borrower indexed to the 10-year Treasury Bond 
Yield. However, priority points will be given for interest rates less 
than 300 basis points over the 10-Year Treasury Bond Yield. Interest 
rates must be fixed over the term of the loan.
    Interest Credit: RHS will award interest credit to at least 20 
percent of the loans made under the program. If 20 percent of the loans 
have not received interest credit by May 16, 2002, then RHS will award 
interest credit to those loans that initially requested interest credit 
and have the highest interest credit priority score until at least 20% 
of the loans have received interest credit. Requests for interest 
credit must be made in the NOFA response. Lenders are not permitted to 
make requests for interest credit after the selection process has taken 
place.
    Due to limited funding and in order to distribute Interest Credit 
assistance as broadly as possible, the Agency has decided to limit the 
interest credit to $1.5 million per loan. For example, if an eligible 
request were made for interest credit on a loan of $2.5 million, up to 
$1.5 million of the loan would receive interest credit and $1 million 
would be originated at the note rate. Interest credit is not available 
for construction loans. Interest credit is only available for permanent 
loans. Lenders with projects that are viable with or without interest 
credit are encouraged to submit a NOFA response reflecting financial 
and market feasibility under both funding options. NOFA responses 
requesting consideration under both options will not affect interest 
credit selection. However, once the interest credit funds are 
exhausted, only those NOFA responses requesting consideration under 
both funding options or the Non-Interest Credit option will be further 
considered.
    Due to limited interest credit funds and the responsibility of RHS 
to target and give priority to rural areas most in need, NOFA responses 
requesting interest credit must score a minimum of 65 points under the 
criteria established in this NOFA. In the event of ties, selection 
between responses will be by lot.
    Surcharges for Guarantee of Construction Advances: There is no 
surcharge for the guarantee of construction advances for FY 2002.
    Program Fees for FY 2002: The following information stipulates the 
program fees.
    (1) There is an initial guarantee fee of 1 percent of the total 
guarantee amount, which will be due when the loan guarantee is issued. 
In the case of a combination construction and permanent loan guarantee, 
the 1 percent initial fee will be paid when the construction loan note 
guarantee is issued. For purposes of calculating this fee, the 
guarantee amount is the product of the percentage of the guarantee 
times the initial principal amount of the guaranteed loan.
    (2) There is an annual renewal fee of 0.5 percent of the 
outstanding principal and interest of the loan. This fee will be 
collected annually on January 1st of each calendar year.

[[Page 8681]]

    (3) There is no fee for site assessment and market analysis or 
preliminary feasibility in FY 2002.
    (4) There is a non-refundable application fee of $2,500 when the 
application is submitted.
    (5) There is a flat fee of $500 when a lender requests RHS to 
extend the term of a guarantee commitment.
    (6) There is a flat fee of $500 when a lender requests RHS to 
extend a guarantee commitment after the period of the commitment 
lapses.
    (7) There is a flat fee of $1,250 when a lender requests RHS to 
approve the transfer of property and assumption of the loan to an 
eligible prospective borrower.
    (8) There is no lender application fee for lender approval in FY 
2002.
    Eligible Lenders: An eligible lender for the section 538 Guaranteed 
Loan Housing Program as required by 7 CFR 3565.102 must be a licensed 
business entity or Housing Finance Agency in good standing in the state 
or states where it conducts business. Lender eligibility requirements 
are contained in 7 CFR part 3565, subpart C, section 3565.102 ``Lender 
Eligibility''. Below is a list of eligible lenders under 7 CFR 
3565.102:
    (1) A licensed business entity that meets the qualifications and 
has the approval of the Secretary of Housing and Urban Development 
(HUD) to make multi-family housing loans that are insured under the 
National Housing Act. A complete list of HUD approved lenders can be 
found in the HUD Web site at www.hud.gov.
    (2) A licensed business entity that meets the qualifications and 
has the approval of the Freddie Mac or Fannie Mae corporations to make 
multi-family housing loans that are sold to the same corporations. A 
complete list of Freddie Mac approved lenders can be found in Freddie 
Mac's web site at www.freddiemac.com. Fannie Mae approved lenders are 
found at www.fanniemae.com.
    (3) A state or local Housing Finance Authority (HFA) with a top-
tier rating from Moody's or Standard & Poors, or member of the Federal 
Home Loan Bank system, and the demonstrated ability to underwrite, 
originate, process, close, service, manage, and dispose of multi-family 
housing loans in a prudent manner.
    (4) Be a GRRHP approved lender, defined as an entity with an 
executed multi-family housing Lender's Agreement with RHS.
    (5) Lenders that can demonstrate the capacity to underwrite, 
originate, process, close, service, manage, and dispose of multi-family 
housing loans. In order to be approved the lender will have to have an 
acceptable level of financial soundness as determined by a lender 
rating service. The submission of materials demonstrating capacity will 
be required if the lender's NOFA response is selected.
    Lenders who are otherwise ineligible may become eligible if they 
maintain a correspondent relationship with an eligible lender that does 
have the capacity to underwrite, originate, process, close, service, 
manage, and dispose of multi-family housing loans. In this case, the 
eligible lender must submit the NOFA response and application. All 
contractual and legal documentation will be signed between RHS and the 
lender that submitted the NOFA response and application.
    RHS Lender Approval Application: Lenders whose NOFA responses are 
selected will be notified by the RHS to submit a request for RHS lender 
approval application within 30 days of notification. Lenders that have 
received RHS lender approval in the past and are in good standing do 
not need to reapply for RHS lender approval.
    Submission of Documentation for RHS Lender Approval: All lenders 
that have not yet received RHS lender approval must submit a complete 
application for RHS lender approval. As RHS does not have a formal 
application form, a complete application will consist of a cover letter 
requesting RHS lender approval and the following documentation:
    (1) a request for RHS lender approval on the lender's letterhead;
    (2) Lenders who are HUD, Freddie Mac or Fannie Mae multi-family 
approved lenders are required to show evidence of this status, such as 
a copy of a letter designating the distinction.
    (3) The lender's Loan Origination, Loan Servicing and Portfolio 
Management Handbooks. These handbooks should detail the lender's 
policies and procedures on loan origination through termination for 
multi-family loans;
    (4) Portfolio performance data;
    (5) Copies of standard documents that will be used in processing 
GRRHP loans;
    (6) Resumes and qualifications of key personnel that will be 
involved in the GRRHP;
    (7) Identification of standards and processes that deviate from 
those outlined in the GRRHP Origination and Servicing Handbook (HB-1-
3565) found at http://rdinit.usda.gov/regs;
    (8) A copy of the most recent audited financial statements;
    (9) Lender specific information including: (a) Legal name and 
address, (b) list of principal officers and their responsibilities, (c) 
certification that the officers and principals of the lender have not 
been debarred or suspended from Federal programs, (d) Form AD 1047, 
``Certification Regarding Debarment and Suspension,'' (e) certification 
that the lender is not in default or delinquent on any Federal debt or 
loan, or possess an outstanding finding of deficiency in a federal 
housing program, and (f) certification of the lender's credit rating;
    (10) Documentation on bonding and insurance; and
    (11) Certification that computer systems comply with year 2000 
technology.
    RHS Lender Approval Requirements: Lenders who request RHS lender 
approval must meet the standards stipulated in the 7 CFR part 3565, 
subpart C, section 3565.103 ``Approval Requirements.''
    Lender Responsibilities: Lenders will be responsible for the full 
range of loan origination, underwriting, management, servicing, 
compliance issues and property disposition activities associated with 
their projects. The lender will be expected to provide guidance to the 
prospective borrower on the RHS requirements during the application 
phase. Once the guarantee is issued, the lender is expected to service 
each loan it underwrites or contract these services to another capable 
entity.

Discussion of Notice

    Content of NOFA Responses: All NOFA responses require lender 
information and project specific data. Incomplete responses will not be 
considered for funding. Lenders will be notified of incomplete NOFA 
responses. Complete NOFA responses are to include a signed cover letter 
from the lender on the lender's letterhead and the following 
information:

(1) Lender Information

    A. Lender certification--The lender must certify that the lender 
will make a loan to the prospective borrower for the proposed project, 
under specified terms and conditions subject to the issuance of the RHS 
guarantee. Lender certification must be on the lender's letterhead and 
signed by both the lender and the prospective borrower.

(2) Project Specific Data

    A. The lender must submit the project specific data below on the 
lender's letterhead, signed by both the lender and the prospective 
borrower.

[[Page 8682]]



------------------------------------------------------------------------
 
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Lender Name                          Insert the lender's name
------------------------------------------------------------------------
 
Lender Tax ID #                      Insert lender's tax ID #
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Lender Contact Name                  Name of the lender contact for Loan
------------------------------------------------------------------------
 
Mailing Address                      Lender's complete mailing address
------------------------------------------------------------------------
 
Phone #                              Phone # for lender contact
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Fax #                                Insert lender's fax #
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E-mail Address                       Insert lender contact e-mail
                                      address
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Borrower Name and Organization Type  State whether borrower is a Limited
                                      Partnership, Corporation, Indian
                                      Tribe, etc.
------------------------------------------------------------------------
 
Tax Classification Type              State whether borrower is for
                                      profit, not for profit, etc.
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Borrower Tax ID #                    Insert borrower's tax ID #
------------------------------------------------------------------------
 
Borrower Address, including County   Insert borrower's address and
                                      county
------------------------------------------------------------------------
 
Borrower Phone #                     Insert borrower's phone #
------------------------------------------------------------------------
 
Principal or Key Member for the      Insert name and title
 Borrower
------------------------------------------------------------------------
 
Borrower Information and Statement   Attach relevant information
 of Housing Development Experience
------------------------------------------------------------------------
 
New Construction or Acquisition or   State whether the project is new
 Repair or Rehabilitation of at       construction or acquisition or
 Least $15,000 Per Unit               repair or rehabilitation
------------------------------------------------------------------------
 
Project Location Town or City        Town or city in which the project
                                      is located
------------------------------------------------------------------------
 
Project County                       County in which the project is
                                      located
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Project State                        State in which state the project is
                                      located
------------------------------------------------------------------------
 
Project Zip Code                     Insert zip code
------------------------------------------------------------------------
 
Project Congressional District       Congressional District for project
                                      location
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Project Name                         Insert project name
------------------------------------------------------------------------
 
Project Type                         Family, senior (all residents over
                                      55), or mixed
------------------------------------------------------------------------
 
Property Description and Proposed    Provide as an attachment
 Development Schedule
------------------------------------------------------------------------
 
Total Project Development Cost       Enter amount for total project
------------------------------------------------------------------------
 
# of Units                           Insert the # of units in the
                                      project
------------------------------------------------------------------------
 
Cost Per Unit                        Total development cost divided by #
                                      of units
------------------------------------------------------------------------
 
Bedroom Mix                          # of units by # of bedrooms
------------------------------------------------------------------------
 
Rent                                 Proposed rent structure
------------------------------------------------------------------------
 
Median Income for Community          Provide median income for the
                                      community
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Evidence of Site Control             Attach relevant information
------------------------------------------------------------------------
 
Description of Any Environmental     Attach relevant information
 Issues
------------------------------------------------------------------------
 
Loan Amount                          Insert the loan amount
------------------------------------------------------------------------
 
Interest Credit (IC)                 Is interest credit requested for
                                      this loan (Yes or No)?
------------------------------------------------------------------------
 

[[Page 8683]]

 
Interest Rate (for interest credit   Lenders seeking interest credit
 requests only)                       must provide the interest rate.
                                      Priority points will be awarded to
                                      projects requesting interest
                                      credit for interest rates less
                                      than 300 basis points over the 10-
                                      year treasury bond yield
------------------------------------------------------------------------
 
If Above Is Yes, Should Proposal Be  If Yes, proposal must show
 Considered Under Non-IC Selection,   financial feasibility for NON-IC
 If IC Funds Are Exhausted?           consideration.
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Borrower's Proposed Equity           Insert amount.
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Tax Credits                          Will the project be allocated tax
                                      credits? How much? What is the
                                      estimated value of the tax credits
                                      awarded?
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Other Sources of Funds               List all funding sources.
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Loan to Value                        Guaranteed loan divided by value of
                                      project.
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Debt Coverage Ratio                  Net Operating Income divided by
                                      debt service payments.
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Percentage of Guarantee              Percentage guarantee requested.
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Collateral                           Attach relevant information.
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Empowerment Zone (EZ) or Enterprise  Yes or No? Is the project in a
 Community (EC)                       recognized EZ or EC?
------------------------------------------------------------------------
 
Colonia or Tribal Lands              Is the project in a Colonia or on
                                      an Indian Reservation? Yes or No?
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Population                           Must be within the 20,000
                                      population limit set for the
                                      program.
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Is a Guarantee for Construction      State yes or no. The Agency will
 Being Requested? Are Advances        guarantee construction advances,
 Being Requested?                     only as part of a combination
                                      construction and permanent loan.
------------------------------------------------------------------------
 
Loan Term                            Up to a 40-year amortized loan
                                      Balloon mortgage with a minimum 25-
                                      year term are eligible.
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------------------------------------------------------------------------

    Scoring of Priority Criteria for Selection of Projects with 
Interest Credit Requests: RHS will allocate points to projects with 
requests for interest credit. Projects with no interest credit request 
will be reviewed for eligibility and viability on a continuous basis 
and without any priority selection criteria.
    The seven priority criteria for projects with requests for interest 
credit are listed below.
    Priority 1--Projects located in rural communities with the smallest 
populations.
    Score for Priority 1--Projects with the lowest populations will 
receive the highest points.

------------------------------------------------------------------------
                        Population size                          Points
------------------------------------------------------------------------
0-1,000 people................................................        20
1,001-2,000 people............................................        19
2,001-3,000 people............................................        18
3,001-4,000 people............................................        17
4,001-5,000 people............................................        16
5,001-6,000 people............................................        15
6,001-7,000 people............................................        14
7,001-8,000 people............................................        13
8,001-9,000 people............................................        12
9,001-10,000 people...........................................        11
10,001-11,000 people..........................................        10
11,001-12,000 people..........................................         9
12,001-13,000 people..........................................         8
13,001-14,000 people..........................................         7
14,001-15,000 people..........................................         6
15,001-16,000 people..........................................         5
16,001-17,000 people..........................................         4
17,001-18,000 people..........................................         3
18,001-19,000 people..........................................         2
19,001-20,000 people..........................................         1
------------------------------------------------------------------------

    Priority 2--The RHS will award points for projects with 3-5 bedroom 
units.
    Score for Priority 2--The RHS will score the projects with the 3-5 
bedroom units as follows:

------------------------------------------------------------------------
                   No. of 3-5 bedroom units                      Points
------------------------------------------------------------------------
More than 15..................................................        20
10-15.........................................................        15
5-9...........................................................        10
1-4...........................................................         5
------------------------------------------------------------------------

    Priority 3--The most needy communities as determined by the median 
income from the most recent census data will receive points.
    Score for Priority 3--The RHS will allocate points to projects 
located in communities having the lowest median income. Points for 
median income will be awarded as follows:

------------------------------------------------------------------------
                    Median income (dollars)                      Points
------------------------------------------------------------------------
Less than $25,000.............................................        20
$25,000-$29,999...............................................        15
$30,000-$34,999...............................................        10
$35,000-$40,000...............................................         5
More than $40,000.............................................         0
------------------------------------------------------------------------

    Priority 4--Projects that demonstrate partnering and leveraging in 
order to develop the maximum number of units and promote partnerships 
with state and local communities will also receive points.
    Score for Priority 4--The RHS will award points as follows:

------------------------------------------------------------------------
              Loan to value ratio (percentage %)                 Points
------------------------------------------------------------------------
More than 75..................................................        10
70-75.........................................................        15
Less than 70..................................................        20
------------------------------------------------------------------------

    Priority 5--RHS will award points for interest rates less above the 
10-Year Treasury Bond Yield as follows:

                          Score for Priority 5
------------------------------------------------------------------------
                         Interest rate                           Points
------------------------------------------------------------------------
300 basis points or more, inclusive...........................       -20
299 to 200 basis points, inclusive............................         5
199 to 100 basis points, inclusive............................        10

[[Page 8684]]

 
99 to 50 basis points, inclusive..............................        15
Less than 50 basis points, inclusive..........................        20
------------------------------------------------------------------------

    Priority 6--The development of projects on Tribal Lands, or in an 
Empowerment Zone or Enterprise Community will receive points.
    Score for Priority 6--The RHS will attribute 20 points to projects 
that are developed in any of the locations described in priority 6.
    Priority 7--The development of projects in a Colonia or in a place 
identified in the State's Consolidated Plan or State Needs Assessment 
as a high need community for multi-family housing will receive points.
    Score for Priority 7--The RHS will attribute 20 points to projects 
that are developed in any of the locations described in priority 7.
    NOFA Submission Address: Eligible lenders will send the NOFA 
responses to: Director, Multi-Family Housing Processing Division, Rural 
Housing Service, U.S. Department of Agriculture, Room 1263, STOP 0781, 
1400 Independence Avenue, SW, Washington, DC 20250-0781. Responses for 
participation in the program must be identified as ``Section 538 
Guaranteed Rural Rental Housing Program'' on the envelope.
    Notifications: NOFA responses will be reviewed for completeness and 
eligibility. The RHS will notify those lenders whose NOFA responses are 
selected via letter. The RHS will request lenders without RHS lender 
approval to apply for RHS lender approval within 30 days upon receipt 
of notification of selection. For information regarding RHS Lender 
Approval, please refer to section SUBMISSION OF DOCUMENTATION FOR RHS 
LENDER APPROVAL in this NOFA. Requests for RHS lender approval should 
be sent to the person and address listed in the NOFA SUBMISSION ADDRESS 
section in this NOFA.
    Lenders will also be invited to submit a complete application and 
the required application fee of $2,500 to the Rural Development State 
Office where the project is located.
    Submission of GRRHP Applications: Notification letters will 
instruct lenders to contact the Rural Development State Office 
immediately following notification of selection to schedule required 
agency reviews. Rural Development State Office addresses can be found 
in the USDA web site, www.usda.gov, under the Rural Development program 
area.
    Rural Development State Office staff will work with lenders in the 
development of the complete application. Applications must include; (1) 
The appropriate level of environmental review in accordance with 7 CFR 
part 1940, subpart G, (2) the Civil Rights Impact Analysis 
Certification, (3) intergovernmental review (7 CFR part 3015, subpart 
V), and (4) appropriate flood insurance coverage as stipulated in 7 CFR 
part 1806 subpart B.
    The deadline for the submission of a complete application and fee 
is 90 days from the date of notification of NOFA selection. If the 
application and fee are not submitted within 90 days from the date of 
notification, the selection is subject to cancellation, thereby 
allowing another NOFA response that is ready to proceed with processing 
to be selected.
    Obligation of Program Funds: The RHS will only obligate funds to 
projects that undergo a satisfactory environmental review in accordance 
with the National Environmental Protection Act (NEPA).
    Conditional Commitment: Once the complete application and 
application fee are received and all NEPA requirements have been met, 
the Rural Development State Office will issue a conditional commitment, 
which stipulates the conditions that must be met for the issuance of a 
guarantee, in accordance with 7 CFR part 3565, subpart G, section 
3565.303. Once the conditional commitment is issued the funds are 
obligated to the lender.
    Issuance of Guarantee: The RHS will issue a guarantee to the lender 
for a project in accordance with 7 CFR part 3565, subpart G, section 
3565.303 ``Issuance of Loan Guarantee.'' No guarantee can be issued 
without a complete application, review of appropriate certifications, 
satisfactory assessment of the appropriate level of environmental 
review, and the completion of any conditional requirements.

    Dated: February 15, 2002.
James C. Alsop,
Acting Administrator, Rural Housing Service.
[FR Doc. 02-4332 Filed 2-22-02; 8:45 am]
BILLING CODE 3410-XV-P