[Federal Register Volume 85, Number 233 (Thursday, December 3, 2020)]
[Rules and Regulations]
[Pages 77985-77987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25822]



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 Rules and Regulations
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
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  Federal Register / Vol. 85, No. 233 / Thursday, December 3, 2020 / 
Rules and Regulations  

[[Page 77985]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

[Docket No. RHS-20-MFH-0027]
RIN 0575-AD15


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

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Rural Housing Service (RHS or the Agency) published a 
proposed rule, September 3, 2019, 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. 
Through this action, RHS finalizes the proposed rule without any 
substantive revisions.

DATES: Effective January 4, 2021.

FOR FURTHER INFORMATION CONTACT: Abby Boggs, Acting Branch Chief, 
Multi-Family Housing Programs, Rural Housing Service, United States 
Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 
20250-0781, Telephone: (615) 490-1371 (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. ID at 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 times the Guarantee Fee Rate. 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.
    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.
    The Agency published a proposed rule on September 3, 2019 at 84 FR 
45927-45929, proposing to amend its regulation to remove the stated 
amount that the Agency will charge for the initial and annual guarantee 
fees. Three comments were received. Two commenters were in full support 
of the rule change. One commenter supports the rule; however, they 
suggested that the Agency establish a maximum limit on the annual fee 
amount. The Agency will not adopt this comment to establish a maximum 
limit on the annual fee amount as the intention of this regulation 
change is to offer flexibility in adjusting fees each year. This 
regulatory action will adopt the process of announcing the amount of 
fees charged through a published notice in the Federal Register, 
consistent with other RD programs, including the OneRD Guarantee Loan 
regulation. Therefore, RHS is moving forward with finalizing this rule.

Executive Order 12866--Classification

    This final 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 GRRHP is administered subject to appropriations by the United 
States Department of Agriculture (USDA) as authorized under the Housing 
Act of 1949 as amended, Section 538, Public Law 106-569, 42 U.S.C. 
1490p-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 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

[[Page 77986]]

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 USDA (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 final 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 Rural Development'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 the United States 
Department of Agriculture 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.

    For the reasons set forth in the preamble, RHS amends 7 CFR part 
3565 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 by adding a sentence at the end of the 
introductory text 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

[[Page 77987]]

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 is due no later than February 28, of 
each calendar year.
* * * * *

Elizabeth Green,
Acting Administrator, Rural Housing Service.
[FR Doc. 2020-25822 Filed 12-2-20; 8:45 am]
BILLING CODE 3410-XV-P