[Federal Register Volume 84, Number 170 (Tuesday, September 3, 2019)]
[Proposed Rules]
[Pages 45927-45929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18773]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 84, No. 170 / Tuesday, September 3, 2019 / 
Proposed Rules  

[[Page 45927]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

[Docket No. RHS-19-MFH-0017]
RIN 0575-AD15


Guaranteed Rural Rental Housing Change in Initial Guarantee Fee 
and Annual Guarantee Fee

AGENCY: Rural Housing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Rural Housing Service (RHS or the Agency) is proposing to 
amend its regulation to remove the stated amount that the Agency will 
charge for the initial and annual guarantee fees. The regulation change 
will allow the Agency the flexibility to establish or make any future 
changes to the initial and annual guarantee fees without the need for a 
regulatory change.

DATES: Comments on the proposed rule must be received on or before 
November 4, 2019.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower ``Search Regulations and Federal 
Actions'' box, select ``Rural Housing Service'' from the agency drop-
down menu, then click on ``Submit.'' In the Docket ID column, select 
RHS-19-MFH-0017 to submit or view public comments and to view 
supporting and related materials available electronically. Information 
on using Regulations.gov, including instructions for accessing 
documents, submitting comments, and viewing the docket after the close 
of the comment period, is available through the site's ``User Tips'' 
link.
     Postal Mail/Commercial Delivery: Submit written comments 
to Michele L. Brooks, Director, Innovation Center--Regulations 
Management Division, Rural Development, U.S. Department of Agriculture, 
STOP 1522, 1400 Independence Avenue SW, Washington, DC 20250-1522. All 
written comments will be available for public inspection during regular 
work hours at 1400 Independence Avenue SW, Mailstop 1522, Washington, 
DC 20250.

FOR FURTHER INFORMATION CONTACT: Tammy Daniels, Finance and Loan 
Analyst, Multi-Family Housing Guaranteed Loan Division, Rural Housing 
Service, U.S. Department of Agriculture, STOP 0781-Room# 1263S, 1400 
Independence Avenue SW, Washington, DC 20250-0781, Telephone: (202) 
720-0021 (this is not a toll-free number); email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Background and Summary of Changes

    RHS administers the Section 538 Guaranteed Rural Rental Housing 
Program (GRRHP) under the authority of the Housing Act of 1949, as 
amended (42 U.S.C. 1490p-2). Under the GRRHP, RHS guarantees loans for 
the development of housing and related facilities in rural areas. 
Section 538(g) authorizes the Secretary of Agriculture to charge 
certain fees to lenders for loan guarantees. See 42 U.S.C. 1490p-2(g). 
The charged fees are required to be used to offset costs associated 
with loan guarantees. See 42 U.S.C. 1490p-2(u).
    The Agency's GRRHP implementing regulation is at 7 CFR part 3565 
and currently sets the exact percentage of the initial guarantee fee 
and the annual guarantee fee charged by the Agency. The Agency is 
proposing to amend the regulation by removing the language that 
indicates the specific amount of the initial guarantee fee and the 
annual guarantee fee currently charged by the Agency. The Agency is 
making this change to allow for flexibility and to allow the program to 
create the maximum housing affordability to residents by lowering 
program costs when practical. In most cases, the annual guarantee fee 
is passed onto the borrower, where it is most likely included in the 
interest rate. Thus, any reduction in the fee will result in a lower 
interest rate and would ultimately create a reduction in rental rates.
    The calculation of the initial guarantee fee is the product of the 
percentage of the guarantee times the initial principal amount of the 
guaranteed loan. The initial guarantee fee will be due at the time the 
closing package is submitted to the Agency for review and approval. The 
GRRHP annual fee is a non-refundable amount that the lender must pay 
the year that the loan closes and going forward each year that the loan 
guarantee remains in effect. Due to the negative subsidy, combined with 
the overall health of the Section 538 GRRHP portfolio, the Agency would 
like to have the flexibility in its regulation to reduce the annual 
guarantee fee due on the outstanding principal amount of the loan that 
will be charged each year or portion of a year that the guarantee is in 
effect. For example, if a guaranteed loan closes on any date between 
January 1 and December 31, 2018, the effective date for the fee 
determination will be December 31, 2018. The annual fee will be 
collected by February 28, 2019, and each calendar year going forward 
while the guarantee remains in effect.
    If changes do occur in the fee amounts, the Agency will release 
those changes through a notice in the Federal Register. When the fee 
changes are announced in the Federal Register, the Agency will provide 
guidance on how to process the loans which will be impacted by the new 
fee structure. Interested parties will be able to locate current fees 
on the Agency's public website.

Executive Order 12866--Classification

    This proposed 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.

Authority

    The Guaranteed Rural Rental Housing program (GRRHP) is administered 
subject to appropriations by the U.S. Department of Agriculture (USDA) 
as authorized under the Housing Act of 1949 as amended, Section 538, 
Public Law 106-569, 42 U.S.C. 1490 p-2.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1970, 
subpart A, ``Environmental Policies.'' RHS determined that this action 
does not constitute a major Federal action significantly affecting the 
quality of the environment. In accordance with the National 
Environmental Policy Act of 1969, Public Law 91-190, an

[[Page 45928]]

Environmental Impact Statement is not required.

Regulatory Flexibility Act

    The 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 on 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 required of a large entity.

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. This rule does 
not impose substantial direct compliance costs on State and local 
Governments; therefore, consultation with States is not required.

Executive Order 12988--Civil Justice Reform

    This rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) Unless otherwise specifically provided, 
all State and local laws that conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule except 
as specifically prescribed in the rule; and (3) administrative 
proceedings of the National Appeals Division of the Department of 
Agriculture (7 CFR part 11) must be exhausted before bringing suit in 
court that challenges action taken under this rule.

Unfunded Mandate Reform Act (UMRA)

    Title II of the 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 on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including 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 a Federal Agency 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 for the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. This proposed rule contains no new reporting and 
recordkeeping requirements that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act by 
promoting the use of the internet and other Information Technologies in 
order to provide increased opportunities for citizen access to 
Government information, services, and other purposes.

Programs Affected

    The program affected by this regulation is listed in the Catalog of 
Federal Domestic Assistance under numbers 10.438--Rural Rental Housing 
Guaranteed Loans (Section 538).

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on RHS in the development 
of regulatory policies that have tribal implications or preempt 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 rule is not 
subject to the requirements of Executive Order 13175. If tribal leaders 
are interested in consulting with RHS on this rule, they are encouraged 
to contact USDA's Office of Tribal Relations or RD's Native American 
Coordinator at: [email protected] to request such a consultation.

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 loan 
in accordance with 2 CFR part 415, subpart C.

Non-Discrimination Statement

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, familial/parental status, income derived from a public 
assistance program, political beliefs, or reprisal or retaliation for 
prior civil rights activity, in any program or activity conducted or 
funded by USDA (not all bases apply to all programs). Remedies and 
complaint filing deadlines vary by program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992, submit your completed form or letter to USDA 
by:
    (1) Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410;
    (2) Fax: (202) 690-7442; or
    (3) Email: [email protected].
    USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR 3565

    Conflict of interest, Credit, Fair housing, Loan programs-housing 
and community development, Low and moderate-income housing, 
Manufactured homes, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements, Rural areas.

[[Page 45929]]

    For the reasons set forth in the preamble, 7 CFR part 3565 is 
proposed to be amended as follows:

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

0
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 B--Guarantee Requirements

0
2. Amend Sec.  3565.53 introductory text by adding a sentence at the 
end and revising paragraphs (a) and (b) to read as follows:


Sec.  3565.53   Guarantee fees.

    * * * Changes to the initial and annual guarantee fees will be 
established by the Agency and will be published in a Notice in the 
Federal Register.
    (a) Initial guarantee fee. The Agency will establish and charge an 
initial guarantee fee of up to one percent of the guarantee amount. 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.
    (b) Annual guarantee fee. An annual guarantee fee will be charged, 
as established by the Agency, each year or portion of a year that the 
guarantee is in effect. This fee will be collected on February 28, of 
each calendar year.
* * * * *

Bruce W. Lammers,
Administrator, Rural Housing Service.
[FR Doc. 2019-18773 Filed 8-30-19; 8:45 am]
 BILLING CODE 3410-XV-P