[Federal Register: November 4, 2008 (Volume 73, Number 214)]
[Rules and Regulations]
[Page 65503-65505]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04no08-3]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 1980
RIN 0575-AC73
Income Limit Modification
AGENCY: Rural Housing Service, USDA.
ACTION: Direct final rule.
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SUMMARY: The Rural Housing Service (RHS) is amending its exiting income
limit structure for the Single Family Housing Guaranteed Loan Program
(SFHGLP). The effect of this action is to provide more efficient
service to lenders, investors and Agency staff by modifying the
existing Rural Development eight (8) tiered income structure into a
simplified two (2) tiered structure. This modification will simplify
program requirements and the qualification process.
DATES: This rule is effective January 20, 2009, unless we receive
written adverse comments or written notices of intent to submit adverse
comments on or before January 5, 2009.
FOR FURTHER INFORMATION CONTACT: Joaqu[iacute]n Tremols, Acting
Director, Single Family Housing Guaranteed Loan Division, USDA, Rural
Development, 1400 Independence Avenue, SW., Room 2250, Stop 0784,
Washington, DC 20250, telephone (202) 720-1465, e-mail:
joaquin.tremols@wdc.usda.gov.
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be non-significant by the Office
of Management and Budget (OMB) under Executive Order 12866 and,
therefore, has not been reviewed by OMB.
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this rule: (1) 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; and
(3) administrative proceedings in accordance with the regulations of
the National Appeals Division of USDA at (7 CFR Part 11), must be
exhausted before bringing suit in court challenging action taken under
this rule unless those regulations specifically allow bringing suit at
an earlier date.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1996 (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 this rule. This rule contains no
Federal mandates (under the regulatory provisions of Title II of the
UMRA) for
[[Page 65504]]
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 Rural
Development 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 not required.
Federalism Assessment--Executive Order 13132
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 States 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-
602) the undersigned has determined and certified by signature of this
document that this rule will not have a significant impact on a
substantial number of lenders or 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 on loans made to individuals.
Intergovernmental Consultation
This program/activity is excluded from the provisions of Executive
Order 12372 which require intergovernmental consultation with State and
local officials. (See the Notice related to 7 CFR part 3015, subpart V,
at 48 FR 29112, June 24, 1983; 49 FR 22675, May 31, 1984; 50 FR 14088,
April 10, 1985).
Programs Affected
This program is listed in the Catalog of Federal Domestic
Assistance under 10.410, Very low- to Moderate-Income Housing Loans
(Section 502 Rural Housing Loans).
Paperwork Reduction Act
This rule does not revise or impose any new information collection
or recordkeeping requirements.
E-Government Act Compliance
The RHS 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.
Background
On April 10, 2008 [73 FR 19433], RHS published an advanced notice
of proposed rule making with request for comments on the existing
income limits structure.
Instead of eligible adjusted income based on households ranging
from 1-8 persons according to 7 CFR Sec. 1980.345(a) and RD
Instruction 1980-D, Exhibit C, a two-tier income structure consisting
of a 1-4 member household and a 5-8 member household is adopted. The
new adjusted income limit for the 1-4 member household, for example,
would be the current adjusted income limit for the 4-member household.
The present add-on income limits for larger households will remain
unchanged. Eight percent is added to the limit for each person in
excess of 8 persons. The present eight-tier income limits (1-8 persons)
are cumbersome, and the proposed consolidation is expected to simplify
program delivery as well as allow the agency to serve additional
qualified homebuyers. The SFHGLP is in partnership with many State
Housing Agencies throughout the United States. The majority of these
agencies already maintain a two-tier income structure, and this change
would allow a seamless integration of the respective programs. This
policy would not apply to other Rural Development housing programs. RHS
therefore adopts a two-tier income structure, and current policy on
determining moderate income according to statutory requirements and
raising the income limit for families in excess of 8 persons. RD
Instruction 1980-D, Exhibit C, listing the specific dollar limits for
areas by state is being revised to adopt the two-tier system also.
Moderate income figures continue to be provided by the United States
Department of Housing and Urban Development (HUD). Rural Development
only modifies the HUD figures for the state of Alaska to comply with
Public Law 110-5, Section 754 (February 15, 2007). That law provides in
the case of a high-cost isolated rural area in Alaska not connected to
a road system, the maximum level for single family housing assistance
will be 150 percent of the median household income level in the
nonmetropolitan area of the state, and 115 percent of all other
eligible areas of the state. RHS considers this rule to be
noncontroversial and unlikely to result in adverse comments.
Discussion of Comments
Rural Development received comments from 429 respondents. Comments
were from mortgage lenders, mortgage brokers, secondary market sources,
realtors, employee groups, builder organizations and agency employees,
and various other interest groups.
There were 420 respondents in favor of the income limit
modification and that it was:
1. Beneficial to the homebuyer as the change would allow an
increased number of families to participate in the program, allowing
more families to be able to obtain the American dream of homeownership,
and that this program improvement is needed because it is the only true
100% loan program available to non-veterans. (383 comments)
2. Beneficial to the lender in that it would simplify the process
and make the lending limits more consistent with the state housing
agencies across the country and all were pleased with the two-level
income modification. (174 comments)
3. Beneficial to the rural area itself as the change would bring
much needed workers and their families to underserved areas, create
more homeownership opportunities for working middle class families in
rural America, provide a positive change to the much troubled housing
and mortgage industry in rural America, help build and stimulate a more
robust and solid economy in the rural areas and lastly, open the rural
housing market to more individuals. (94 comments)
Nine respondents simply stated that the proposed change would be
for the good of the program.
Six respondents thought the proposed change would be beneficial in
one or more of the above categories; however, they had additional
concerns.
One respondent commented that both the lender and the borrower
would benefit from the proposed changes, but was concerned that there
should also be an increase in our funding levels.
Response: The SFHGLP depends on appropriated funds each year to
continue the program. The Administration each year proposes a budget to
the United States Congress.
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After considering the Administration's budget, Congress appropriates
funding and sends an appropriation bill to the President for review and
concurrence. Any increase in funding is beyond the scope of this
regulation. No action is taken based upon this comment.
One respondent commented that the borrower would benefit from the
program but that the income limits were overly restrictive because they
are too low.
Response: Section 502(h)(3) of the Housing Act of 1949, as amended,
however, requires that the program be delivered only to low- and
moderate-income borrowers whose incomes do not exceed 115 percent of
the median income of the area as determined by the Secretary. This
limit is met if the borrower's income does not exceed 115 percent of
the median family income of the United States under Section 751 of
Public Law 106-387 (October 28, 2000). In certain areas of Alaska, the
limit is 150 percent of the median household income level in the
nonmetropolitan areas of the state pursuant to Sec. 754 of Public Law
110-5 (February 15, 2007). No action, therefore, can be taken to exceed
the statutory limits.
Two respondents stated that rural areas would greatly benefit from
the proposed changes, but that we should have no income limits at all.
Response: Once again, the Housing Act of 1949, as amended, requires
that the program be delivered only to low- and moderate-income
borrowers. By statute, the income limits cannot be made higher than
low- and moderate-income levels. No action is taken based upon these
comments.
One respondent commented that the Agency should consider the
possibility of refinancing any type of loan into our program.
Response: Under Section 502(h)(14) of the Housing Act of 1949, as
amended, only Section 502 Guaranteed and Direct loans may be refinanced
with a Section 502 Guarantee. Refinance limitations are statutory and
beyond the scope of this rule. No action is taken based upon this
comment.
One respondent commented that the Agency is too strict with debt-
to-income ratios and should be more flexible in this regard.
Response: USDA Rural Development already allows lenders to exceed
the baseline ratio thresholds with documented compensating factors and
Agency concurrence. This comment also is beyond the scope of this rule
making. No action is taken based on this comment.
One respondent stated that borrowers would benefit from the
program, but was hoping RHS would still allow income adjustments for
day care expenses, a $480 deduction for dependents.
Response: This proposed income limit change will not affect
eligible deductions currently allowed, and the adjustment referred by
the commentator will still be permissible. No action is taken based on
this comment.
Of the entire 429 comments received, each one had one or more
positive comments. There were no negative responses.
Dated: October 23, 2008.
Russell T. Davis,
Administrator, Rural Housing Service.
[FR Doc. E8-25849 Filed 11-3-08; 8:45 am]
BILLING CODE 3410-XV-P