[Federal Register: January 9, 2003 (Volume 68, Number 6)]
[Proposed Rules]
[Page 1170-1172]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja03-13]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
Rural Business-Cooperative Service
Rural Housing Service
Rural Utilities Service
7 CFR Parts 1951, 1962, and 1965
RIN 0560-AG50
Farm Loan Programs Account Servicing Policies--Elimination of 30-
Day Past-Due Period
AGENCY: Farm Service Agency, USDA.
ACTION: Proposed rule.
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SUMMARY: The Farm Service Agency (FSA) proposes to amend its
regulations to eliminate the 30-day past-due period prior to a
determination that the borrower is delinquent and clarify the use of
the terms ``delinquent'' and ``past due'' with regard to direct loan
servicing and offset. Because the regulation only allows debt writedown
after a borrower becomes delinquent, this proposed change would allow
Farm Loan Program (FLP) borrowers to receive debt writedown on the day
after a missed payment, assuming all other primary loan servicing
criteria are met, instead of waiting 31 days.
DATE: Comments on this rule must be submitted by March 10, 2003, to be
assured consideration.
ADDRESSES: Submit written comments to Director, Farm Loan Programs,
Loan Servicing and Property Management Division, United States
Department of Agriculture, Farm Service Agency, STOP 0523, 1400
Independence Avenue, SW., Washington, DC 20250-0523. Comments will be
available for public inspection weekdays from 8 a.m. to 4:15 p.m.,
eastern standard time, at the above address.
FOR FURTHER INFORMATION CONTACT: Michael Cumpton, telephone (202) 690-
4014; electronic mail: mike_cumpton@wdc.fsa.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant and has been
reviewed by the Office of Management and Budget under Executive Order
12866.
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 economic impact on
a substantial number of small entities. This rule will allow borrowers
in financial difficulty to work with the Agency to cure the delinquency
at an earlier time. New provisions included in this rule will not
impact a substantial number of small entities to a greater extent than
large entities. Therefore, a regulatory flexibility analysis was not
performed.
Environmental Evaluation
It is the determination of FSA that this action is not a major
Federal action significantly affecting the environment. Therefore, in
accordance with the National Environmental Policy Act of 1969, and 7
CFR part 1940, subpart G, an Environmental Impact Statement is not
required.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988, Civil Justice Reform. In accordance with this Executive Order:
(1) All State and local laws and regulations that are in conflict with
this rule will be preempted; (2) except as specifically stated in this
rule, no retroactive effect will be given to this rule; and (3)
administrative proceedings in accordance with 7 CFR part 11 must be
exhausted before seeking judicial review.
Executive Order 12372
For reasons contained in the notice related to 7 CFR part 3015,
subpart V (48 FR 29115 June 24, 1983) the programs within this rule are
excluded from the scope of E.O. 12372, which requires intergovernmental
consultation with State and local officials.
The Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires Federal agencies to assess the effects of their regulatory
actions on State, local, and tribal governments or the private sector
of $100 million or more in any 1 year. When such a statement is needed
for a rule, section 205 of the UMRA requires FSA to prepare a written
statement, including a cost and benefit assessment, for proposed and
final rules with ``Federal mandates'' that may result in such
expenditures for State, local, or tribal governments, in the aggregate,
or to the private sector. UMRA generally requires agencies to consider
alternatives and adopt the most cost effective or least burdensome
alternative that achieves the objectives of the rule.
This rule contains no Federal mandates, as defined under title II
of the UMRA, for State, local, and tribal governments or the private
sector. Thus, this rule is not subject to the requirements of sections
202 and 205 of UMRA.
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 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.
[[Page 1171]]
Paperwork Reduction Act
The amendments to 7 CFR part 1951 contained in this rule require no
revisions to the information collection requirements that were
previously approved by OMB under control numbers 0575-0119 and 0560-
0161 according to the provisions of 44 U.S.C. chapter 35. The
information collections currently approved by OMB under control number
0560-0171 include the amendment to 7 CFR part 1962 contained in this
rule. The amendment to 7 CFR part 1965 contained in this rule requires
no revision to the information collection requirements that were
previously approved by OMB and assigned control number 0560-0158.
Federal Assistance Programs
These changes affect the following FSA programs as listed in the
Catalog of Federal Domestic Assistance:
10.404--Emergency Loans
10.406--Farm Operating Loans
10.407--Farm Ownership Loans
Discussion of the Proposed Rule
Currently, borrowers are considered ``past-due'' for 30 days after
a scheduled FLP payment is not made, after which they are considered
``delinquent''. This is not consistent with the terminology used by FSA
Farm Programs (FP) where no ``past-due'' period exists prior to
delinquency. For consistency, FSA proposes to amend 7 CFR part 1951,
subparts C and S, 7 CFR part 1962, subpart A, and 7 CFR part 1965,
subpart A to eliminate the 30-day ``past-due'' period prior to a
borrower becoming delinquent. Because 7 CFR part 1951, subpart S only
allows debt writedown after a borrower becomes delinquent, this change
would allow FLP borrowers to receive debt writedown on the day after a
missed payment, assuming all other primary loan servicing criteria are
met, instead of waiting 31 days. This will allow servicing to be
completed earlier with no additional loss to the government, as the
additional accrued interest during the 30 day period is often simply
added to the writedown which would have been calculated on the first
day the account was ``past-due''. This proposal also will change the
definition of the word ``delinquent'' with regard to all servicing and
offsets. The rule will not affect the ``90 days past due'' criteria
that is currently used to determine initial notice of primary loan
servicing under 7 CFR part 1951 subpart S, as this requirement is
statutory (7 U.S.C. 1981d).
List of Subjects
7 CFR Part 1951
Account servicing, Credit, Debt restructuring, Loan programs--
agriculture, Loan programs-housing and community development.
7 CFR Part 1962
Agriculture, Bankruptcy, Loan programs-agriculture, Loan programs-
housing and community development.
7 CFR Part 1965
Loan programs-agriculture, Loan programs-housing and community
development, Low and moderate income housing.
Accordingly, 7 CFR chapter XVIII is amended as follows:
PART 1951--SERVICING AND COLLECTIONS
1. The authority citation for part 1951 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 31 U.S.C. 3716; 42
U.S.C. 1480.
Subpart C--Offsets of Federal Payments to USDA Agency Borrowers
2. Amend Sec. 1951.102 to:
a. Revise paragraph (b)(6)
b. Revise the third sentence of paragraph (b)(13), to read as
follows:
Sec. 1951.102 Administrative Offset.
* * * * *
(b) * * *
(6) Delinquent or past-due means a payment that was not made by the
due date.
* * * * *
(13) * * * To be feasible the debt must exist and be 90 days past
due or the borrower must be in default of other obligations to the
Agency, which can be cured by the payment.
* * * * *
Subpart S--Farm Loan Programs Account Servicing Policies
3. Amend Sec. 1951.906 by removing the definition of ``Delinquent
borrower'' and adding in its place the definition of ``Delinquent or
past-due borrower''.
Sec. 1951.906 Definitions.
* * * * *
Delinquent or past-due borrower: A borrower who has failed to make
all or part of a payment by the due date.
* * * * *
4. Amend the second sentence of Sec. 1951.907 paragraph (c) to
read as follows:
Sec. 1951.907 Notice of loan service programs.
* * * * *
(c) * * * FLP borrowers who are at least 90 days past due will be
sent exhibit A of this subpart with Attachments 1 and 2 by certified
mail, return receipt requested.* * *
* * * * *
PART 1962--PERSONAL PROPERTY
5. 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
6. Amend Sec. 1962.40 to revise the first sentence of paragraph
(b)(2) to read as follows:
Sec. 1962.40 Liquidation.
* * * * *
(b) * * *
(2) In Farm Loan Programs loan cases, borrowers who are 90 days
past due on their payments must receive exhibit A with attachments 1
and 2 or attachments 1, 3, and 4 of exhibit A of subpart S of part 1951
of this chapter in cases involving nonmonetary default.
* * * * *
PART 1965--REAL PROPERTY
7. 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 A--Servicing of Real Estate Security for Farm Loan Programs
Loans and Certain Note-Only Cases
8. Amend Sec. 1965.26 to revise the first sentence of paragraph
(b)(2) to read as follows:
Sec. 1965.26 Liquidation action.
* * * * *
(b) * * *
(2) In Farm Loan Programs loan cases, borrowers who are 90 days
past due on their payments, must receive Exhibit A with attachments 1
and 2, or attachments 1, 3, and 4 of exhibit A of subpart S of part
1951 of this chapter in cases involving nonmonetary default.
* * * * *
[[Page 1172]]
Dated: December 31, 2002.
J.B. Penn,
Under Secretary for Farm and Foreign Agricultural Services.
Dated: January 3, 2003.
Thomas C. Dorr,
Under Secretary for Rural Development.
[FR Doc. 03-394 Filed 1-8-03; 8:45 am]
BILLING CODE 3410-05-P