[Federal Register Volume 87, Number 211 (Wednesday, November 2, 2022)]
[Rules and Regulations]
[Pages 66075-66077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23754]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
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
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 87, No. 211 / Wednesday, November 2, 2022 /
Rules and Regulations
[[Page 66075]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Parts 3550 and 3555
[Docket No. RHS-22-SFH-0023]
Single Family Housing Section 502 Direct and Guaranteed
Manufactured Housing Pilots
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural
Development (RD) agency of the United States Department of Agriculture
(USDA), is issuing this notice to waive two regulatory requirements for
the Section 502 Direct and Guaranteed Manufactured Housing pilot
program. The Agency's intention is to evaluate the existing regulations
and remove regulatory barriers to assist eligible applicants with
improved ease of use for very low- to moderate-income homeowners
seeking to purchase affordable housing. The pilot also supports the
current Administration's Housing Supply Action Plan which seeks to
boost new financing mechanisms to build and supply quality affordable
housing units. This notice briefly discusses the continuation of the
existing waivers and provides contact information for additional
details about the pilot program.
DATES: The effective date of the two regulatory waivers is November 2,
2022. The duration of the pilot program is anticipated to continue
until November 4, 2024, at which time the RHS may extend the pilot
program (with or without modifications) or terminate it depending on
the workload and resources needed to administer the program, feedback
from the public, and the effectiveness of the program. RHS will notify
the public whether the pilot program has been extended or terminated.
FOR FURTHER INFORMATION CONTACT: Stephanie Freeman, Finance and Loan
Analyst, Policy, Analysis, and Communications Branch, Single Family
Housing Guaranteed Loan Division, Rural Development, U.S. Department of
Agriculture, Email: [email protected]; Phone: (314) 457-6413
and Jeremy Anderson, Finance and Loan Analyst, Single Family Housing
Direct Loan Division, Rural Development, U.S. Department of
Agriculture, Email: [email protected]; Phone: (202) 690-3971.
SUPPLEMENTARY INFORMATION:
Background
The RHS is committed to helping improve the economy and quality of
life in rural areas by offering a variety of programs. The Agency
offers loans, grants, and loan guarantees to help create jobs, expand
economic development, and provide critical infrastructure investments.
RHS also provides technical assistance loans and grants by partnering
with agricultural producers, cooperatives, Indian tribes, non-profits,
and other local, state, and federal agencies.
Affordable housing is essential to the vitality of communities in
rural America. RD's Single Family Housing Programs give families and
individuals the opportunity to purchase, build, repair their existing
home, or to refinance their current mortgage under certain criteria.
Eligibility for these loans, loan guarantees, or grants is based on
income which varies according to the average median income for each
eligible rural area.
The Section 502 Direct Loan Program under 7 CFR 3550 assists very
low- and low-income applicants obtain decent, safe and sanitary housing
in eligible rural areas by providing payment assistance to increase an
applicant's repayment ability. The payment assistance is a type of
subsidy that reduces the mortgage payment for a short time and is
determined by the adjusted family income. There are a number of
different factors that determine the applicant's eligibility for this
program but at minimum the applicant, as determined in accordance with
7 CFR 3550.53 and 42 U.S.C. 1471, must have an adjusted income that is
at or below the applicable low-income limit for the area where they
wish to purchase a home and they must demonstrate a willingness and
have the ability to repay debt.
The Section 502 Guaranteed Loan Program, under 7 CFR 3555, provides
a 90% loan note guarantee to approved lenders in efforts to provide
low- and moderate-income households the opportunity to own adequate,
modest, decent, safe and sanitary dwellings as their primary residence
in eligible rural areas. Eligible applicants may purchase, build,
rehabilitate, improve or relocate a dwelling in an eligible rural area.
Applicant eligibility for this program is determined by the lender
pursuant to the criteria set forth in 7 CFR 3555, Subpart D.
RHS may authorize limited demonstration programs to test new
approaches to offering housing under the statutory authority granted to
the Secretary, as set forth in 42 U.S.C. 1476(b), 7 CFR 3550.7 and 7
CFR 3555.2(b). Demonstration programs are time- and scope-limited
programs designed to test new approaches and for those reasons,
demonstration programs need not be consistent with all regulatory
provisions while active.
In 2021, the Agency extended the existing Section 502 Manufactured
Housing Pilot program in order to continue assessing the pilots'
impact. The first pilot involves financing existing manufactured homes;
the second pilot involves the ownership requirement for new energy-
efficient manufactured and modular homes in land-lease communities
operating on a nonprofit basis. These allowances remain unchanged from
any previous extensions of this pilot program. As pilot programs, the
number of participating states remain restricted while providing for
adequate regional representation.
Continuation of the Existing Manufactured Home Pilot
The Agency is continuing with the existing manufactured housing
pilot, which was initially implemented on August 12, 2016, in which RD
waived the regulatory restrictions cited in 7 CFR 3550 and 3555 and
will finance existing manufactured homes in the pilot states even if
the home is not currently financed by RD. Under current regulations,
new manufactured homes are eligible for financing through the Section
502 Single Family Housing (SFH) Direct and Guaranteed Loan Programs.
Existing manufactured homes
[[Page 66076]]
are not eligible unless the home is already financed through RD (7 CFR
3550.52(e)(1); 3550.73(b); 3555.208(b)(3)).
Eligibility Requirements
Approved lenders in the SFH Guaranteed Loan Program do not require
additional approval to participate provided the home is in a pilot
state. The loan request must be from an eligible applicant, all the
pilot conditions listed in this section must be met, and all other
program requirements that have not been waived must be met. The
following States are included in this pilot: Colorado, Iowa, Louisiana,
Michigan, Mississippi, Montana, Nevada, New Hampshire, New York, North
Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas,
Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and
Wyoming. The following unit requirements below must be met:
The unit must have been constructed on or after January 1, 2006, in
conformance with the Federal Manufactured Home Construction and Safety
Standards (FMHCSS), as evidenced by an affixed Housing and Urban
Development (HUD) Certification Label and the unit must not have been
previously installed on a different homesite, or had any structural
alterations to it since construction in the factory, except for
porches, decks or other structures which were built to engineered
designs or were approved and inspected by local code officials.
The unit inspection is required using one of two methods: Option
(1) Form HUD-309, ``HUD Manufactured Home Installation Certification
and Verification Report'' completed in accordance with 24 CFR 3286.511
by a qualified party as follows: A manufactured home or residential
building inspector employed by the local authority having jurisdiction
over the site of the home, provided that the jurisdiction has a
residential code enforcement program; a professional engineer,
registered architect, a HUD-accepted Production Inspection Primary
Inspection Agency (IPIA) or a Design Approval Primary Inspection Agency
(DAPIA), or an International Code Council (ICC) certified inspector.
Option (2) Obtain a certification that the foundation design meets the
requirements of either HUD Handbook 4930.3G or HUD Publication 7584,
which updated and revised the pre-1996 version of HUD Handbook 4930.3G,
``Permanent Foundations Guide for Manufactured Housing (PFGMH).''
Certifications referencing either Publication 7584 or Handbook 4930.3G
are acceptable. The foundation certification must be from a licensed
professional engineer, or registered architect, who is licensed/
registered in the state where the manufactured home is located and must
attest to compliance with current guidelines of the PFGMH. The
certification must be site specific and contain the engineer's or
registered architect's signature, seal and/or state license/
certification number. This certification can take the place of Form
HUD-309.
Guaranteed loan applications submitted under this pilot must be
manually submitted and underwritten, however the documents may be
submitted through the Guaranteed Underwriting System (GUS). A job aid
for this type of submission is available in our USDA LINC Training and
Resource Library in the ``Loan Origination'' tab or directly here:
https://www.rd.usda.gov/sites/default/files/linc_manual_submission_job_aid.pdf . Agency staff will need to select
``MANUFACTURED (PILOT)'' for ``Construction Type'' in the Property
Information section in the Guaranteed Loan System (GLS). This will
allow for the proper identification of pilot loans for tracking and
monitoring purposes.
Direct loan applications submitted under the pilot are submitted
directly to the local RD office. Agency staff will need to select
Program Type Code 1014 (very low income) or 1015 (low income) unless
the property is located in a persistent poverty county, in which case
Program Type Code 1114 (very low income) or 1115 (low income) will be
used. In addition, Agency staff will need to select a Construction Type
of ``Manuf/Home'' and a Dwelling Type of ``Purchase Old, Refinance,
Purchase Old/Repair, or Refinance/Repair'' in UniFi. This will allow
for the proper identification of pilot loans for tracking and
monitoring purposes.
The applicant and property must meet all other criteria set forth
in applicable statutes, 7 CFR part 3550 and HB-1-3550 for Direct loans
or 7 CFR part 3555 and HB-1-3555 for Guaranteed loans, as applicable.
These criteria include, but are not limited to, the following: The unit
must have a floor area of not less than 400 square feet; the unit must
meet the Comfort Heating and Cooling Certificate Uo (Coefficient of
heat transmission) Value Zone for the location; the towing hitch and
running gear must have been removed; the manufactured home must be
classified and taxed as real estate; the remaining economic life of the
property must meet or exceed the 30 year term of the proposed loan; and
the unit replacement cost coverage must be equal to the insured value
of the improvements or the unpaid principal balance with deductible(s)
of up to but not exceeding the greater of $1,000 or one percent (1%) of
the policy.
Continuation of the Ownership Requirement Pilot for Energy Efficient
Manufactured and Modular Home Financing in Land-Lease Communities
Operating on a Nonprofit Basis
The Agency is continuing with the existing pilot that involves the
ownership requirement for new energy-efficient manufactured and modular
homes in land-lease communities operating on a nonprofit basis.
According to 7 CFR 3550.58(b), a leasehold interest must have an
unexpired term that is at least 150 percent of the term of the mortgage
for Direct loans. According to 7 CFR 3555.203(b)(3), a leasehold
interest must have an unexpired term of at least 45 years from the date
of loan closing for a Guaranteed loan.
Eligibility Requirements
Under this pilot, RD will accept a lease with an unexpired term
that is at least two years beyond the term of the promissory note in
the pilot states. The following States are included in this pilot:
California, Michigan, Minnesota, New Hampshire, Oregon, Pennsylvania,
Vermont, and Wisconsin. The loan request must be from an eligible
applicant, all the pilot conditions must be met, and new manufactured
and modular homes must meet the following pilot conditions:
At a minimum, new manufactured and modular homes must be Energy
Star compliant and the unexpired term of the lease must be at least two
years longer than the mortgage term. While the lease terms in 7 CFR
3550.58(b) and 3555.203(b)(3) could be seen as providing borrowers
additional protection, many states have statutes that promulgate fair
lease terms and afford protections to residents of land-lease
communities.
For the SFH Guaranteed Loan Program, pilot states should consider
following the recommendations in HUD's interim guidance related to 24
CFR 3285.312 on the use of frost-free foundations or frost protected
shallow foundations.
For the SFH Direct Loan Program, pilot states may use the
recommendations from HUD's interim guidance on frost-free or frost-
protected shallow foundations in lieu of RD Instruction 1924-A, Exhibit
J. Under the HUD interim guidance recommendations, the installer should
install all footings and piers below the
[[Page 66077]]
frost line depth, or for Frost Free Foundations, have a site
investigation performed by a soil engineer or geotechnical engineer to
verify if the soil condition at each home site is of a non-frost
susceptible classification and is well drained. In lieu of a site soil
investigation, a layer of washed gravel, or crushed stone, or course or
dense sand may be provided to the frost line depth.
For either of these alternatives, subsurface drains need to be
provided; or use a Frost Protected Shallow Foundation system that
utilizes below ground insulation to protect the soil from freezing with
subsurface drains provided at each site. The applicant and property
must meet all other criteria set forth in applicable statutes, 7 CFR
part 3550 and HB-1- 3550 for Direct loans or 7 CFR part 3555 and HB-1-
3555 for Guaranteed loans, as applicable. Program Directors should use
the tracking tool under the ``Energy Efficient Housing'' link on the
SFH SharePoint tracking site to report loans made under this pilot.
Paperwork Reduction Act
The regulatory waivers for this pilot contains no new reporting or
recordkeeping burdens under OMB control number 0575-0179 that would
require approval under the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35).
Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
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,
family/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.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, or staff office; the USDA TARGET
Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service
at (800) 877-8339.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at https://www.ascr.usda.gov/complaint_filing_cust.html, from any USDA office, by calling (866) 632-
9992, or by writing a letter addressed to USDA. The letter must contain
the complainant's name, address, telephone number, and a written
description of the alleged discriminatory action in sufficient detail
to inform the Assistant Secretary for Civil Rights (ASCR) about the
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by:
(1) Mail: U.S. Department of Agriculture Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue, Washington, DC
20250-9410; or (2) Fax: (833) 256-1665 or (202) 690-7442; or (3) Email:
[email protected].
Authority: Title V, Section 502 of the Housing Act of 1949, as
amended; 42 U.S.C. 1472.
Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2022-23754 Filed 11-1-22; 8:45 am]
BILLING CODE 3410-XV-P