[Federal Register: October 28, 2003 (Volume 68, Number 208)]
[Rules and Regulations]
[Page 61329-61333]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc03-4]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1902, 1930, 1942, 1944, 1948, 1951, 1955, 1956, 1962,
1965, 1980, and 2045
Loan Payments and Collections
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Agencies are revising their internal loan payment and
collections regulations to replace the current regulations. This action
is necessary since existing regulations are obsolete and do not
accurately reflect the current payment and collections methodologies
employed by the Agencies. The intended effect is to simplify and update
the regulations; update internal control procedures for safeguarding
collections; remove references to the Concentration Banking System
(CBS) procedures which were eliminated in November 1997; and to add
procedures for new electronic payment methods that are currently in use
by the Agencies (Preauthorized Debits, FedWire, Customer Initiated
Payments, etc.). These amended regulations are to ensure the Agencies'
field offices have current guidance on the payment and collection
methods available and how to use them.
EFFECTIVE DATE: October 28, 2003.
FOR FURTHER INFORMATION CONTACT: Mark Huntley, Accountant, Office of
the Deputy Chief Financial Officer, Policy and Internal Review
Division, U.S. Department of Agriculture, STOP 33, PO Box 200011, St.
Louis, MO 63120, telephone: (314) 539-6063.
SUPPLEMENTARY INFORMATION:
Classification
This action is not subject to the provisions of Executive Order
12866 since it involves only internal Agency management. This action is
not published for prior notice and comment under the Administrative
Procedure Act since it involves only internal Agency management and
publication for comment is unnecessary and contrary to the public
interest.
Programs Affected
The catalog of Federal Domestic Assistance programs impacted by
this action are as follows:
10.404--Emergency Loans
10.405--Farm Labor Housing Loans and Grants
10.406--Farm Operating Loans
10.407--Farm Ownership Loans
10.410--Very Low to Moderate Income Housing Loans
10.411--Rural Housing Site Loans and Self-Help Housing Land Development
Loans
10.415--Rural Rental Housing Loans
10.417--Very Low-Income Housing Repair Loans and Grants
10.420--Rural Self-Help Housing Technical Assistance
10.421--Indian Tribes and Tribal Corporation Loans
10.427--Rural Rental Assistance Payments
10.760--Water and Waste Disposal Systems for Rural Communities
10.766--Community Facilities Loans and Grants
10.767--Intermediary Relending Program
10.768--Business and Industry Loans
10.770--Water and Waste Disposal Loans and Grants (Section 306C)
10.854--Rural Economic Development Loans and Grants
Intergovernmental Consultation
Programs with Catalog of Federal Domestic Assistance numbers
10.405, 10.407, 10.411, 10.415, 10.420, 10.421, 10.427, 10.760, 10.766,
10.767, 10.768, 10.770, and 10.854 are subject to the provisions of
Executive Order 12372 which requires intergovernmental consultation
with State and local officials.
Programs with Catalog of Federal Domestic Assistance numbers
10.404, 10.406, 10.410, and 10.417 are excluded from the scope of
Executive Order 12372.
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this rule: (1) Unless
otherwise specifically provided, 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 except as specifically
prescribed in the rule; and (3) administrative
[[Page 61330]]
proceedings of the National Appeals Division (7 CFR part 11) must be
exhausted before litigation against the Department is instituted.
Paperwork Reduction Act
The information collection requirements contained in this rule have
been approved by the Office of Management and Budget (OMB) under the
provisions of 44 U.S.C. chapter 35 and were assigned OMB control number
0575-0184 in accordance with the Paperwork Reduction Act of 1995. No
person is required to respond to a collection of information unless it
displays a valid OMB control number. This rule does not impose any new
information collection requirements from those approved by OMB.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 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, the
Agencies 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 agencies 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. Thus, the rule is not subject to the
requirements of section 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.'' The Agencies have determined that
this final action does not constitute a major Federal action
significantly affecting the quality of human environment, and in
accordance with the National Environmental Policy Act of 1969, 42
U.S.C. 4321 et seq., an Environmental Impact Statement is not 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 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.
Discussion of Final Rule
In November 1997 Rural Development discontinued using the
Concentration Banking System (CBS). CBS was a collection system in
which Rural Development field offices would deposit loan payments and
collections they received in Treasury Limited Accounts (TLA's) at local
banks. Daily, the concentrator bank (Mercantile Bank in St. Louis, MO)
would sweep all local bank TLA's and deposit the funds with Treasury.
Rural Development field offices would send the detailed loan payment
information to the Rural Development Finance Office (FO) in St. Louis,
MO. The FO would reconcile the detailed loan payment data with the
deposit information and credit the borrower accounts for the payment.
In September 1997, Rural Development implemented the Rural Housing
Service wholesale lockbox system. The wholesale lockbox significantly
reduced collections received in field offices and it was determined
that CBS was no longer cost effective to continue operating. In
addition, since 1997, Rural Development has expanded its use of
electronic collection methods (e.g., Preauthorized Debits, Customer
Initiated Payments, FedWire, etc.).
The Farm Service Agency (FSA) payment collection policies are
established in internal agency handbooks. While collections under some
FSA programs were processed according to 7 CFR 1951, subpart B, prior
to the USDA Reorganization Act, FSA no longer utilizes this subpart.
List of Subjects
7 CFR Part 1902
Accounting, Banks, banking, Grant programs--Housing and community
development, Loan programs--Agriculture, Loan programs--Housing and
community development.
7 CFR Part 1930
Accounting, Administrative practice and procedure, Grant programs--
Housing and community development, Loan programs--Housing and community
development, Low and moderate income housing, Reporting and
recordkeeping requirements.
7 CFR Part 1942
Community development, Community facilities, Loan programs--Housing
and community development, Loan security, Rural areas, Waste treatment
and disposal--Domestic, Water supply--Domestic.
7 CFR Part 1944
Farm labor housing, Grant programs--Housing and community
development, Loan programs--Housing and community development, Low and
moderate income housing--Rental, Migrant labor, Mobile homes,
Mortgages, Nonprofit organizations, Public housing, Rent subsidies,
Rural housing, Subsidies.
7 CFR Part 1948
Business and industry, Coal, Community development, Community
facilities, Energy, Grant programs--Housing and community development,
Housing, Nuclear energy, Planning, Rural areas, Transportation
7 CFR Part 1951
Accounting, Account servicing, Credit, Financial institutions,
Foreclosure, Government acquired property, Loan programs--Agriculture,
Loan programs--Housing and community development, Low and moderate
income housing loans--Servicing, Mortgages, Reporting requirements,
Rural areas, Sale of government acquired property, Surplus government
property.
7 CFR Part 1955
Government acquired property, Government property management, Sale
of government acquired property, Surplus government property.
7 CFR Part 1956
Accounting, Loan programs--Agriculture, Rural areas.
7 CFR Part 1962
Crops, Government property, Livestock, Loan programs--Agriculture,
Rural areas.
7 CFR Part 1965
Administrative practice and procedure.
7 CFR Part 1980
Loan programs--Business and industry--Rural development assistance,
Rural areas.
7 CFR Part 2045
Personnel, volunteers.
0
For the reasons set forth in the preamble, chapter XVIII, title 7, Code
of
[[Page 61331]]
Federal Regulations is amended as follows:
PART 1902--SUPERVISED BANK ACCOUNTS
0
1. The authority citation for part 1902 revised to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 U.S.C. 6991, et seq.;
42 U.S.C. 1480; Reorganization Plan No. 2 of 1953 (5 U.S.C. App.).
Subpart A--Disbursement of Loan, Grant, and Other Funds
Sec. 1902.8 [Removed and Reserved]
0
2. Section 1902.8 is removed and reserved.
Subpart C--[Removed and Reserved]
0
3. Subpart C of part 1902 consisting of Sec. Sec. 1902.101 through
1902.150 is removed and reserved.
PART 1930--GENERAL
0
4. The authority citation for part 1930 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005
Subpart C--Management and Supervision of Multiple Family Housing
Borrowers and Grant Recipients
0
5. In exhibit H the introductory text of paragraph IX is revised to
read as follows:
Exhibit H to Subpart C of Part 1930--Interest Credits on Insured Rural
Rental Housing and Rural Cooperative Housing Loans
* * * * *
IX Project Payments: With each payment made, the borrower will
complete Form RD 1944-29. The agency representative will transmit the
payments to the Finance Office.
* * * * *
PART 1942--ASSOCIATIONS
0
6. The authority citation for part 1942 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1932; 7 U.S.C. 1989; and 16
U.S.C. 1005.
Subpart A--Community Facility Loans
0
7. Section 1942.7(d) is revised to read as follows:
Sec. 1942.7 Loan closing.
* * * * *
(d) Unused funds. Obligated funds planned for project development
which remain after all authorized costs have been provided for will be
disposed of in accordance with Sec. 1942.17(p)(6) of this subpart.
* * * * *
Sec. 1942.19 [Amended]
0
8. Paragraph (h)(6) of section 1942.19 is removed and reserved.
PART 1944--HOUSING
0
9. The authority citation for part 1944 continues to read as follows:
Authority: 5 U.S.C. 301; 42 U.S.C. 1480.
Subpart D--Farm Labor Housing Loan and Grant Policies, Procedures,
and Authorizations
Sec. 1944.175 [Amended]
0
10. Paragraph (e) of section 1944.175 is removed and reserved.
Sec. 1944.181 [Amended]
0
11. Paragraph (b)(3)(ii) of section 1944.181 is removed and reserved.
Subpart I--Self Help Technical Assistance Grants
0
12. Section 1944.426(a)(1) is revised to read as follows:
Sec. 1944.426 Grant closeout.
(a) * * *
(1) The grantee will immediately refund to Rural Development any
balance of grant funds that are not committed for the payment of
authorized expenses.
* * * * *
PART 1948--RURAL DEVELOPMENT
0
13. The authority citation for part 1948 continues to read as follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1932 note.
Subpart B--Section 601 Energy Impacted Area Development Assistance
Program
0
14. Section 1948.90(b)(4) is revised to read as follows:
Sec. 1948.90 Land transfers.
* * * * *
(b) * * *
(4) Proceeds derived from the sale of land acquired or developed
through the use of a grant provided under this subpart must be divided
between the grantee and Rural Development on a pro rata basis. A
grantee may not recover its cost from sale proceeds to the exclusion of
Rural Development. The amount to be returned to Rural Development is to
be computed by applying the percentage of the Rural Development grant
participation in the total cost of the project to the proceeds from the
sale.
* * * * *
PART 1951--SERVICING AND COLLECTIONS
0
15. The authority citation for part 1951 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1932 Note; 7 U.S.C. 1989; 31
U.S.C. 3716; 42 U.S.C. 1480.
Subpart A--Account Servicing Policies
Sec. 1951.6 [Removed and Reserved]
0
16. Section 1951.6 is removed and reserved.
Subpart B--[Removed and Reserved]
0
17. Subpart B consisting of Sec. Sec. 1951.51 through 1951.55 is
removed and reserved.
Subpart E--Servicing of Community and Direct Business Programs
Loans and Grants
0
18. The introductory text of section 1951.221 is revised to read as
follows:
Sec. 1951.221 Collections, payments and refunds.
Payments and refunds are handled in accordance with the following:
* * * * *
Subpart J--Management and Collection of Nonprogram (NP) Loans
0
19. The first sentence of section 1951.455(e) is revised to read as
follows:
Sec. 1951.455 NP loan making for Single Family Housing (SFH) and farm
property (real and chattel).
* * * * *
(e) Downpayment. A downpayment must be collected at closing. * * *
* * * * *
Subpart K--Predetermined Amortization Schedule System (PASS)
Account Servicing
Sec. 1951.506 [Amended]
0
20. Paragraphs (b) and (c) of section 1951.506 are removed and
reserved.
PART 1955--PROPERTY MANAGEMENT
0
21. The authority citation for part 1955 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart B--Management of Property
0
22. Section 1955.55(e) is revised to read as follows:
[[Page 61332]]
Sec. 1955.55 Taking abandoned real or chattel property into custody
and related actions.
* * * * *
(e) Income and costs. Income received from the property will be
applied to the borrower's account as an extra payment. Expenditures
will be charged to the borrower's account as a recoverable cost.
* * * * *
0
23. In section 1955.62 the introductory text of paragraph (b)(1) is
revised to read as follows:
Sec. 1955.62 Removal and disposition of nonsecurity personal property
from inventory real property.
* * * * *
(b) * * *
(1) If a reasonable amount can likely be realized by the agency
from sale of the personal property, it may be sold at public sale.
Items under lien will be sold first and the proceeds up to the amount
of the lien paid to the lienholders less a pro rata share of the sale
expenses. Proceeds from sale of items not under lien and proceeds in
excess of the amount due a lienholder will be remitted and applied in
the following order:
* * * * *
0
24. In section 1955.66 the introductory text of paragraph (l) is
revised to read as follows:
Sec. 1955.66 Lease of real property.
* * * * *
(l) Lease income. Lease proceeds will be applied as follows:
* * * * *
Subpart C--Disposal of Inventory Property
0
25. Section 1955.109(c) is revised to read as follows:
Sec. 1955.109 Processing and closing (CONACT).
* * * * *
(c) Form of payment. Payments at closing will be in the form of
cash, cashier's check, certified check, postal or bank money order, or
bank draft made payable to the Agency.
* * * * *
0
26. Section 1955.117(d) is revised to read as follows:
Sec. 1955.117 Processing credit sales on program terms (housing).
* * * * *
(d) Downpayment. When a downpayment is made, it will be collected
at closing.
* * * * *
0
27. In section 1955.118 paragraphs (a) and (b)(4) are revised to read
as follows:
Sec. 1955.118 Processing cash sales or MFH credit sales on NP terms.
(a) Cash sales. Cash sales will be closed by the servicing official
collecting the purchase price (less any earnest money deposit or bid
deposit) and delivering the deed to the purchaser.
(b) * * *
(4) Downpayment. A downpayment of not less than 10 percent of the
purchase price is required at closing.
* * * * *
Sec. 1955.120 [Amended]
0
28. The last sentence in section 1955.120 is removed.
0
29. Section 1955.122(e) is revised to read as follows:
Sec. 1955.122 Method of sale (chattel).
* * * * *
(e) Negotiated sale. Perishable acquired items and crops (except
timber) and chattels for which no acceptable bid was received from
auction or sealed bid methods may be sold by direct negotiation for the
best price obtainable. No public notice is required to negotiate with
interested parties including prior bidders. Justification for the use
of this method of sale will be documented.
* * * * *
0
30. Section 1955.123(b) is revised to read as follows:
Sec. 1955.123 Sale procedures (chattel).
* * * * *
(b) Receipt of payment. Payment will be by cashier's check,
certified check, postal or bank money order or personal check (not in
excess of $500) made payable to the agency. Cash may be accepted if it
is not possible for one of these forms of payment to be used. Third
party checks are not acceptable. If full payment is not received at the
time of sale, the offer will be documented by Form RD 1955-45 or Form
RD 1955-46 where the chattel is sold jointly with real estate by
regular sale.
* * * * *
0
31. Section 1955.130(e)(2) is revised to read as follows:
Sec. 1955.130 Real estate brokers.
* * * * *
(e) * * *
(2) Offeror default. When a contract is cancelled due to offeror
default, the earnest money will be delivered to and retained by the
agency as full liquidated damages.
* * * * *
Sec. 1955.139 [Amended]
0
32. In section 1955.139 the last sentence in paragraph (a)(2) and the
second sentence in paragraph (a)(3)(iv) are removed.
0
33. The first sentence of Section 1955.147(e) is revised to read as
follows:
Sec. 1955.147 Sealed bid sales.
* * * * *
(e) Failure to close. If a successful bidder fails to perform under
the terms of the offer, the bid deposit will be retained as full
liquidated damages. * * *
* * * * *
Sec. 1955.148 [Amended]
0
34. In Section 1955.148 the last three sentences are removed.
PART 1956--DEBT SETTLEMENT
0
35. The authority citation for part 1956 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 31 U.S.C. 3711; 42
U.S.C. 1480.
Subpart B--Debt Settlement-Farm Loan Programs and Multi-Family
Housing
Sec. 1956.85 [Amended]
0
36. Paragraph (a)(2) of section 1956.85 is removed and reserved.
Subpart C--Debt Settlement--Community and Business Programs
Sec. 1956.139 [Amended]
0
37. Paragraph (b) of section 1956.139 is removed and reserved:
Sec. 1956.143 [Amended]
0
38. Paragraph (g)(2) of section 1956.143 is removed and reserved.
PART 1962--PERSONAL PROPERTY
0
39. The authority citation for part 1962 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart A--Servicing and Liquidation of Chattel Security
Sec. 1962.49 [Amended]
0
40. Paragraph (e)(3)(ii) of section 1962.49 is removed and reserved.
PART 1965--REAL PROPERTY
0
41. The authority citation for part 1965 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart B--Security Servicing for Multiple Housing Loans
0
42. Section 1965.61(a) is revised to read as follows:
[[Page 61333]]
Sec. 1965.61 General loan servicing requirements.
(a) Payments. Payments will be handled in accordance with subpart A
of part 1951 of this chapter, and subparts D and E of part 1944 of this
chapter.
* * * * *
PART 1980--GENERAL
0
43. The authority citation for part 1980 is revised to read as follows:
Authority: 7 U.S.C. 1989.
Subpart E--Business and Industrial Loan Program
Sec. 1980.461 [Removed and Reserved]
0
44. Section 1980.461 is removed and reserved.
PART 2045--GENERAL
0
45. The authority citation for part 2045 is revised to read as follows:
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480.
Subpart JJ--Rural Development--Utilization of Gratuitous Services
0
46. The last sentence of section 2045.1754(c) is revised to read as
follows:
Sec. 2045.1754 Scope of gratuitous services performed.
* * * * *
(c) * * * Such persons, except Construction Inspectors may, when
under direct supervision of County Supervisors, act as Collection
Officers and be allowed to use receipt books.
Dated: October 16, 2003.
Thomas C. Dorr,
Under Secretary, Rural Development.
Dated: October 10, 2003.
J.B. Penn,
Under Secretary for Farm and Foreign Agricultural Service.
[FR Doc. 03-27046 Filed 10-27-03; 8:45 am]