[Federal Register Volume 81, Number 96 (Wednesday, May 18, 2016)]
[Rules and Regulations]
[Pages 31163-31165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11608]



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 Rules and Regulations
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  Federal Register / Vol. 81, No. 96 / Wednesday, May 18, 2016 / Rules 
and Regulations  

[[Page 31163]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3555

RIN 0575-AD04


Single Family Housing Guaranteed Loan Program

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Housing Service (RHS or Agency) is amending the 
current regulation for the Single Family Housing Guaranteed Loan 
Program (SFHGLP) on the subject of liquidation value appraisals. In 
order to reduce overall processing time, reduce cost, and expedite 
claim submission, lenders will order the liquidation value appraisal 
used to estimate a loss claim against the SFHGLP instead of the Agency. 
Currently, if a Real Estate Owned (REO) property remains unsold by the 
lender at the end of the permissible marketing period, the Agency 
orders a liquidation value appraisal and applies an acquisition and 
management resale factor to estimate holding and disposition cost. This 
amendment requires the servicing lender to order the liquidation value 
appraisal. The costs associated with obtaining the liquidation value 
appraisal can then be included in the liquidation costs paid under the 
guarantee.

DATES: Effective Date: June 17, 2016.

FOR FURTHER INFORMATION CONTACT: Lilian Lipton, Finance and Loan 
Analyst, Single Family Housing Guaranteed Loan Division, STOP 0784, 
Room 2250, USDA Rural Development, South Agriculture Building, 1400 
Independence Avenue SW., Washington, DC 20250-0784, telephone: (202) 
260-8012, email is [email protected].

SUPPLEMENTARY INFORMATION: RHS amends the current regulation for the 
Single Family Housing Guaranteed Loan Program (SFHGLP) on the subject 
of liquidation value appraisals. In order to reduce overall processing 
time, reduce cost, and expedite claim submission, lenders will order 
the liquidation value appraisal used to estimate a loss claim against 
the SFHGLP instead of the Agency. Specifically, RHS amends 7 CFR 
3555.306(f)(3), 3555.352(e), 3555.353(b)(1), and 3555.354(b)(1)(i) and 
(ii) and (b)(2).

Executive Order 12866, Classification

    This rule has been determined to be non-significant and, therefore 
was not reviewed by the Office of Management and Budget (OMB) under 
Executive Order 12866.

Executive Order 12988, Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Except where specified, all State and local laws and 
regulations that are in direct conflict with this rule will be 
preempted. Federal funds carry Federal requirements. No person is 
required to apply for funding under SFHGLP, but if they do apply and 
are selected for funding, they must comply with the requirements 
applicable to the Federal program funds. This final rule is not 
retroactive. It will not affect agreements entered into prior to the 
effective date of the rule. Before any judicial action may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR part 11 must be exhausted.

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 
effect of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, the 
Agency 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 the Agency to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most 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.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' It is the determination of the 
Agency 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, Public 
Law 91-190, neither an Environmental Assessment nor an Environmental 
Impact Statement is required.

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 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.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) the undersigned has determined and certified by signature of this 
document that this rule change will not have a significant impact on a 
substantial number of small entities. This rule does not impose any 
significant new requirements on Agency applicants and borrowers, and 
the regulatory changes affect only Agency determination of program 
benefits for guarantees of loans made to individuals.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    Executive Order 13175 imposes requirements on RHS in the 
development of regulatory policies that have Tribal implications or 
preempt

[[Page 31164]]

tribal laws. RHS has determined that the rule does not have a 
substantial direct effect on one or more Indian Tribe(s) or on either 
the relationship or the distribution of powers and responsibilities 
between the Federal Government and Indian Tribes. Thus, this final rule 
is not subject to the requirements of Executive Order 13175. If a Tribe 
determines that this rule has implications of which RHS is not aware 
and would like to engage with RHS on this rule, please contact USDA 
Rural Development's Native American Coordinator at (720) 544-2911 or 
[email protected].

Executive Order 12372, Intergovernmental Consultation

    These loans are subject to the provisions of Executive Order 12372, 
which require intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each SFHGLP 
in accordance with 2 CFR part 415, subpart C.

Programs Affected

    The program affected by this regulation is listed in the Catalog of 
Federal Domestic Assistance under Number 10.410, Very Low to Moderate 
Income Housing Loans (Section 502 Rural Housing Loans).

Paperwork Reduction Act

    The information collection and record keeping requirements 
contained in this regulation have been approved by OMB in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The 
assigned OMB control number is 0570-0179.

E-Government Act Compliance

    The Agency is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Non-Discrimination Policy

    The U.S. Department of Agriculture (USDA) prohibits discrimination 
against its customers, employees, and applicants for employment on the 
bases of race, color, national origin, age, disability, sex, gender 
identity, religion, reprisal, and where applicable, political beliefs, 
marital status, familial or parental status, sexual orientation, or all 
or part of an individual's income is derived from any public assistance 
program, or protected genetic information in employment or in any 
program or activity conducted or funded by the Department. (Not all 
prohibited bases will apply to all programs and/or employment 
activities.)
    If you wish to file a Civil Rights program complaint of 
discrimination, complete the USDA Program Discrimination Complaint Form 
(PDF), found online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any USDA office, or call (866) 632-
9992 to request the form. You may also write a letter containing all of 
the information requested in the form. Send your completed complaint 
form or letter to us by mail at U.S. Department of Agriculture, 
Director, Office of Adjudication, 1400 Independence Avenue SW., 
Washington, DC 20250-9410, by fax (202) 690-7442 or email at 
[email protected].
    Individuals who are deaf, hard of hearing or have speech 
disabilities and you wish to file either an EEO or program complaint 
please contact USDA through the Federal Relay Service at (800) 877-8339 
or (800) 845-6136 (in Spanish).
    Persons with disabilities, who wish to file a program complaint, 
please see information above on how to contact us by mail directly or 
by email. If you require alternative means of communication for program 
information (e.g., Braille, large print, audiotape, etc.) please 
contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

I. Background Information

    On October 6, 2015, RHS published a proposed rule with request for 
comments for the Single Family Housing Guaranteed Loan Program (SFHGLP) 
(80 FR 60298-60300). Rural Development received comments from one 
respondent. The comments are addressed below.

II. Discussion of the Comments Received

    Comment: The respondent strongly supported the Agency's proposal 
and requested clarification: (1) If mortgagees will be required to 
order a liquidation value appraisal when a sale date for a possessed 
home has been scheduled, but the sale date falls outside the 
permissible marketing period; (2) if mortgagees should order a 
liquidation value appraisal for the property when a contract for a sale 
falls through after the permissible marketing period has expired; and 
(3) if mortgagees will be held liable for not having ordered a 
liquidation value appraisal in the event a home sale is scheduled to be 
finalized on a date that is near the end of the permissible marketing 
period and the sale falls through.
    RHS response: Technical details of lenders responsibilities while 
servicing non-performing loans are explained in the Agency's 3555 
Handbook, therefore there will be no changes made in this provision.

List of Subjects in 7 CFR Part 3555

    Home improvement, Loan programs--housing and community development, 
Mortgage insurance, Mortgages, Rural areas.

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

PART 3555--GUARANTEED RURAL HOUSING PROGRAM

0
1. The authority citation for part 3555 continues to read as follows:

    Authority:  5 U.S.C. 301; 42 U.S.C. 1471 et seq.

Subpart G--Servicing Non-Performing Loans

0
2. Section 3555.306 is amended by revising paragraph (f)(3) to read as 
follows:


Sec.  3555.306  Liquidation.

* * * * *
    (f) * * *
    (3) The lender must notify the Agency when the property has not 
been sold within 30 days of the expiration of the permissible marketing 
period. If the REO remains unsold at the end of the permissible 
marketing period, the lender will order a liquidation value appraisal 
and the Agency will apply an acquisition and management resale factor 
to estimate holding and disposition cost. Interest expenses accrued 
beyond 90 days of the foreclosure sale date or expiration of any 
redemption period, whichever is later, will be the responsibility of 
the lender and not covered by the guarantee.
* * * * *

Subpart H--Collecting on the Guarantee

0
3. Section 3555.352 is amended by revising paragraph (e) to read as 
follows:


Sec.  3555.352  Loss covered by the guarantee.

* * * * *
    (e) Liquidation costs. Reasonable and customary liquidation costs, 
such as attorney fees, liquidation value appraisals, and foreclosure 
costs. Annual fees advanced by the lender to the Agency are ineligible 
for reimbursement when calculating the loss payment, as otherwise 
provided by the Agency.

[[Page 31165]]


0
4. Section 3555.353 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  3555.353  Net recovery value.

* * * * *
    (b) * * *
    (1) The value of the property as determined by a liquidation value 
appraisal. The value should be determined as if the property would be 
sold without the market exposure it would ordinarily receive in a 
normal transaction, or within 90 days, minus;
* * * * *

0
5. Section 3555.354 is amended by revising paragraphs (b)(1) and (2) to 
read as follows:


Sec.  3555.354  Loss claim procedures.

* * * * *
    (b) * * *
    (1) The lender must submit a loss claim request that includes a 
completed liquidation value appraisal within 30 calendar days of the 
period ending:
    (i) Nine (9) months after either foreclosure or the end of any 
applicable redemption period, whichever is later, if the property 
remains unsold and is not located on American Indian restricted land; 
or
    (ii) Twelve (12) months after either foreclosure or the end of any 
applicable redemption period, whichever is later, if the property 
remains unsold and is located on American Indian restricted land. Late 
claims made beyond this period of time, or submitted with a liquidation 
value appraisal not completed within the timeframes described in 
paragraphs (b)(1)(i) and (ii) of this section, may be rejected.
    (2) The lender must submit a loss claim that includes the completed 
liquidation value appraisal within 30 calendar days of receiving the 
appraisal. Late claims made beyond this period of time, or submitted 
with a liquidation value appraisal not completed within the timeframes 
described in paragraphs (b)(1)(i) and (ii) of this section, may be 
rejected.
* * * * *

    Dated: March 26, 2016.
Tony Hernandez,
Administrator, Rural Housing Service.
[FR Doc. 2016-11608 Filed 5-17-16; 8:45 am]
 BILLING CODE 3410-XV-P