[Federal Register Volume 67, Number 68 (Tuesday, April 9, 2002)]
[Rules and Regulations]
[Pages 16969-16971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8528]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

RIN 0575-AC26


Guaranteed Rural Rental Housing Program

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (RHS) is amending its regulations 
for the Guaranteed Rural Rental Housing Program (GRRHP). The Housing 
Act of 1949, which authorizes RHS to administer GRRHP, was amended on 
December 27, 2000. The intended effect of this final rule change is 
limited to the implementation of five statutory changes. The revisions 
range from adding a definition of an ``Indian tribe'' to authorizing 
loans to be made for 25 years with an amortization of 40 years (i.e., 
balloon payments).

EFFECTIVE DATE: May 9, 2002.

FOR FURTHER INFORMATION CONTACT: Douglas H. MacDowell, Senior Loan 
Specialist, Multi-Family Housing Processing Division, Rural Housing 
Service, U.S. Department of Agriculture, STOP 0781, 1400 Independence 
Avenue SW., Washington, DC 20250-0781, Telephone (202) 720-1604.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and therefore has not been reviewed by the Office 
of Management and Budget (OMB).

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been previously approved by OMB under the provisions of 
44 U.S.C. chapter 35 and this regulation has been assigned OMB control 
number 0575-0174, in accordance with the Paperwork Reduction Act of 
1995. This rule does not impose any new information collection 
requirements from those approved by OMB.

Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice

[[Page 16970]]

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) no retroactive effect will be given to this rule; and 
(3) administrative proceedings in accordance with 7 CFR part 11 must be 
exhausted before bringing suit in court challenging action taken under 
this rule.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, RHS 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to state, local, or 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 RHS 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.
    This 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. Therefore, this rule is not subject 
to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13132, Federalism

    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.

Programs Affected

    The affected program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.438, section 538 Rural Rental Housing 
Guaranteed Loans.

Intergovernmental Consultation

    For the reasons contained in the notice related to 7 CFR part 3015, 
subpart V this program is not subject to Executive Order 12372 which 
requires intergovernmental consultation with state and local officials.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' It is the determination of RHS 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment and in 
accordance with the National Environmental Policy Act of 1969, Pub. L. 
91-190, an Environmental Impact Statement is not required.

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). 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 since this rulemaking action does not involve a new or 
expanded program nor does it require any more action on the part of a 
small business than a large entity.

Background

    GRRHP has been designed to increase the availability of affordable 
multifamily housing in rural areas. Qualified lenders are authorized to 
originate, underwrite, and close loans for multifamily housing projects 
guaranteed under this program. Projects may be for new construction or 
acquisition with substantial rehabilitation of at least $15,000 per 
unit. RHS guarantees such loans upon review of the lender's 
underwriting package, appraisal report, appropriate certifications, 
project information, and satisfactory completion of the appropriate 
level of environmental review by the Agency. Lenders are expected to 
provide servicing or contract for servicing of each loan it 
underwrites. Loans which are guaranteed may not exceed 90% of the total 
development cost of a project. This leaves 10% of the total development 
cost that must be provided from other sources. The guarantee itself is 
then limited to 90% of the loan amount.
    GRRHP is a relatively new program which was operated as a pilot 
program by RHS in 1996 and 1997 and as a permanent program since. 
During the early stages of the program, RHS identified barriers in the 
program's authorizing statute (section 538 of the Housing Act of 1949) 
that limited the success of the program.
    Congress subsequently addressed these barriers in the American 
Homeownership and Economic Act of 2000 (Pub. L. 106-569). This 
regulation incorporates those statutory changes by (1) defining 
``Indian tribe'', (2) outlining how to handle loan defaults on 
reservations, (3) authorizing guaranteed loans with repayment terms of 
not less than 25 nor greater than 40 years, and (4) removes the 
restriction on releasing borrowers from liability.

Procedural Background

    This final rule is limited to the implementation of the statutory 
changes made on December 27, 2000. The Agency has no discretion 
implementing these changes. Notice and public comment, therefore, are 
impractical, unnecessary, and contrary to the public interest.

List of Subjects in 7 CFR Part 3565

    Banks, Conflict of interests, Credit, Environmental impact 
statements, Fair housing, Hearing and appeal procedures, Low and 
moderate income housing, Mortgages, Real property acquisition.

    Therefore, chapter XXXV, title 7, Code of Federal Regulations, part 
3565 is amended as follows:

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

    1. The authority citation for part 3565 continues to read as 
follows:

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

Subpart A--General Provisions

    2. Section 3565.3 is amended by adding, in alphabetical order, a 
definition of ``Indian tribe.''


Sec. 3565.3  Definitions.

* * * * *
    Indian tribe. Any Indian tribe, band, nation, or other organized 
group or community of Indians, including any Alaska Native village or 
regional or village corporation, as defined by or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
that is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians pursuant to the Indian Self-Determination and Education 
Assistance Act of 1975 (25 U.S.C. 450 et seq.); or any entity 
established by the governing body of an Indian tribe, as described in 
this definition, for the purpose of financing economic development.
* * * * *

Subpart E--Loan Requirements

    3. Section 3565.209 is revised to read as follows:

[[Page 16971]]

Sec. 3565.209  Loan amortization.

    Each guaranteed loan shall be made for a period of not less than 25 
nor greater than 40 years from the date the loan was made and may 
provide for amortization of the loan over a period of not to exceed 40 
years with a final payment of the balance due at the end of the loan 
term.


Sec. 3565.214  [Removed and Reserved]

    4. Section 3565.214 is removed and reserved.

Subpart I--Servicing Requirements


Sec. 3565.403  [Amended]

    5. Section 3565.403(b)(2) is amended by removing the last sentence.

Subpart J--Assignment, Conveyance, and Claims

    6. Section 3565.452 is revised to read as follows:


Sec. 3565.452  Decision to liquidate.

    (a) A decision to liquidate shall be made when it is determined 
that the default cannot be cured through actions contained in 
Sec. 3565.403 of subpart I or it has been determined that it is in the 
best interest of the Agency and the lender to liquidate.
    (b) In the event of a default involving a loan to an Indian tribe 
or tribal corporation made under this section which is secured by an 
interest in land within such tribe's reservation (as determined by the 
Secretary of the Interior), including a community in Alaska 
incorporated by the Secretary of the Interior pursuant to the Indian 
Reorganization Act (25 U.S.C. 461 et seq.), the lender shall only 
pursue liquidation after offering to transfer the account to an 
eligible tribal member, the tribe, or the Indian housing authority 
serving the tribe. If the lender subsequently proceeds to liquidate the 
account, the lender shall not sell, transfer, or otherwise dispose of 
or alienate the property except to one of the entities described in the 
preceding sentence.

    Dated: April 3, 2002.
Arthur A. Garcia,
Administrator, Rural Housing Service.
[FR Doc. 02-8528 Filed 4-8-02; 8:45 am]
BILLING CODE 3410-XV-P