This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

10194 

Vol. 75, No. 43 

Friday, March 5, 2010 

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

7 CFR Part 3550 

RIN 0575–AC81 

Direct Single Family Housing Loans 

and Grants 

AGENCY: Rural Housing Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: Through this action, the Rural 

Housing Service (RHS) is proposing to 

amend its regulations for the Direct 

Single Family Housing Loans by 

reinstating language to enable full 

repayment of the entire subsidy in event 

of foreclosure or deed-in-lieu of 

foreclosure (voluntary conveyance). 

This action will clarify that in the event 

of foreclosure or deed-in-lieu of 

foreclosure (voluntary conveyance) the 

RHS will recapture the full subsidy from 

the value of the property. 

DATES: Written comments must be 

received on or before May 4, 2010 to be 

assured for consideration. 

ADDRESSES: You may submit comments 

to this rule by any of the following 

methods: Agency Web Site: http:// 

www.rurdev.usda.gov/regs/. Follow the 

instructions for submitting comments 

on the Web Site. 

• E-Mail: comments@wdc.usda.gov. 

Include the RIN number (0575–AC81) in 

the subject line of the message. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Submit written comments via 

the U.S. Postal Service to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, STOP 0742, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

written comments via Federal Express 

Mail or another mail courier service 

requiring a street address to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Suite 701, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at the 300 7th Street, 

SW., address listed above. 

FOR FURTHER INFORMATION CONTACT: 

Janet L. Carter, Senior Loan Specialist, 

Rural Housing Service, Stop 0783, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0783, 

Telephone: 202–720–1489. 

SUPPLEMENTARY INFORMATION: 

Classification 

This rule has been determined to be 

not significant and was not reviewed by 

the Office of Management and Budget 

(OMB) under Executive Order 12866. 

Paperwork Reduction Act of 1995 

There are no new reporting and 

recordkeeping requirements associated 

with this rule. 

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. 

Civil Justice Reform 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. In accordance with that 

Executive Order: (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 time. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (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 the private 

sector. Under section 202 of the UMRA, 

2 U.S.C. 1532, RHS 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 RHS 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. Therefore, this rule is 

not subject to the requirements of 

sections 202 and 205 of the UMRA. 

Programs Affected 

The programs affected by this 

proposed rule are 10.410, Low to 

Moderate Income Housing Loans and 

10.417, Very Low-Income Housing 

Repair Loans and Grants. 

Intergovernmental Consultation 

For the reasons set forth in the final 

rule related Notice to 7 CFR part 3015, 

subpart V, these programs are not 

subject to Executive Order 12372 which 

requires intergovernmental consultation 

with State and local officials. 

Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ It 

is the determination of RHS 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, an Environmental 

Impact Statement is not required. 

Regulatory Flexibility Act 

This 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 of 

this document that this rule will not 

have a significant economic impact on 

a substantial number of small entities. 

This rule reinstates a requirement on 

Agency applicants and borrowers; 

however, the requirement of full 

subsidy recapture in event of 

foreclosure or voluntary conveyance 

will apply solely to the individual 

applicants and borrowers of Section 502 


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Federal Register / Vol. 75, No. 43 / Friday, March 5, 2010 / Proposed Rules 10195 

Direct Single Family Housing financing 

and will not apply to small entities. 

There will be no significant information 

collection, or regulatory requirements 

imposed on small entities under this 

proposed rule. 

Federalism 

The policies contained in this rule do 

not have any substantial direct effect on 

States, 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 a substantial direct compliance 

cost on State and local Governments. 

Therefore, consultation with the States 

is not required. 

Background 

In the event of a foreclosure or deedin-lieu of foreclosure (voluntary 

conveyance), the original recapture 

regulation promulgated on October 1, 

1979 provided for recapture of the full 

amount of subsidy granted in 

determining the balance owed. 

However, when the Section 502 SFH 

direct loan program was restructured on 

November 22, 1996, the revised 

recapture regulation, 7 CFR 3550.162, 

this provision was omitted. Therefore, 

because of the omission of the critical 

language in the regulation, full recovery 

is not currently supported by regulatory 

authority. 

Foreclosure or deed-in-lieu of 

foreclosure (voluntary conveyance) is a 

last resort to protect the government’s 

interest after all other servicing actions 

have failed. Recovery of some or the 

entire payment subsidy provided to 

direct single family housing borrowers 

or ‘‘recapture’’ is provided for by statute 

in 42 U.S.C. 1490a(a)(1)(D). The statute 

gives the Secretary broad discretion in 

determining the amount of the subsidy 

recapture. 

Currently, there is no clear regulatory 

authority in 7 CFR 3550 for full recovery 

of the payment assistance subsidy that 

the borrower receives as was provided 

for in the original regulation. In 

addition, prior to the revision of the 

original recapture regulation in 1996, 

the Subsidy Repayment Agreement also 

provided that the full amount of the 

subsidy was repayable in the event of a 

foreclosure or deed in lieu of foreclosure 

(voluntary conveyance). The current 

Subsidy Repayment Agreement only 

provides for the formula calculation of 

the subsidy for repayment. Further, 

there was no discussion in the preamble 

implementing the proposed and final 

rules regarding an intent to change this 

provision. This rule will clarify the 

subsidy repayment requirement in event 

of foreclosure or deed-in-lieu of 

foreclosure (voluntary conveyance) by 

restoring the original regulatory 

authority and policy of full recovery of 

the subsidy in these foreclosure 

situations. The current Subsidy 

Repayment agreement will be revised to 

reflect the language of the regulation 

once the proposed regulation is 

finalized. Recovery of the subsidy will 

only come from proceeds from the sale 

of the property. The borrower will not 

be personally liable for any deficiency 

in repayment of the full subsidy to the 

Agency as a result of this action and the 

Agency will not seek to recover unpaid 

subsidy from assets of the borrower 

other than the property which was 

security for the loan. 

List of Subjects in 7 CFR Part 3550 

Administrative practice and 

procedure, Conflict of interests, 

Environmental impact statements, Equal 

credit opportunity, Fair housing, 

Accounting, Housing, Loan programs— 

Housing and community development, 

Low and moderate income housing, 

Manufactured homes, Reporting and 

recordkeeping requirements, Rural 

areas, Subsidies. 

For the reasons stated in the 

preamble, chapter XXXV, Title 7 of the 

Code of Federal Regulations, is 

proposed to be amended as follows: 

PART 3550—DIRECT SINGLE FAMILY 

HOUSING LOANS AND GRANTS 

1. The authority citation for part 3550 

continues to read as follows: 

Authority: 5 U.S.C. 301; 42 U.S.C. 1480. 

Subpart A—General 

2. Section 3550.162 is revised to read 

as follows: 

§ 3550.162 Recapture. 

(a) Recapture policy. Borrowers with 

loans approved or assumed on or after 

October 1, 1979, will be required to 

repay subsidy amounts received through 

payment subsidy or deferred mortgage 

assistance. Amounts to be recaptured 

are due and payable in the event of 

foreclosure or when the borrower 

transfers title or ceases to occupy the 

property. The real estate that secures the 

loan is the only security for the 

repayment of the subsidy granted on the 

loan. The repayment of subsidy is not a 

personal obligation of the borrower and 

no amount attributed to subsidy shall be 

included in any deficiency sought to be 

collected from a borrower after a 

voluntary conveyance or foreclosure. 

(b) Amount to be recaptured. (1) The 

maximum amount to be recaptured is 

the amount of principal reduction 

attributed to subsidy and the lesser of: 

(i) The amount of subsidy received; or 

(ii) 50 percent of the value 

appreciation. 

(2) Foreclosure or deed-in-lieu of 

foreclosure (voluntary conveyance). 

Notwithstanding the provisions of 

paragraph (b)(1) of this section the 

unpaid balance of loans being 

liquidated by deed-in-lieu of foreclosure 

(voluntary conveyance) to the 

government or foreclosure shall include 

the total amount of subsidy that has 

been granted on the loan. 

(3) The value appreciation of property 

with a cross-collateralized loan is based 

on the market value of the dwelling and 

lot. If located on a farm, the lot size 

would be a typical lot for a single family 

housing property. 

(4) Interest reduced from the 

promissory note rate to six percent 

under the Service member Civil Relief 

Act (SCRA) is not subject to recapture. 

Dated: January 28, 2010. 

Tammye Trevin ̃ o, 

Administrator, Rural Housing Service. 

[FR Doc. 2010–4495 Filed 3–4–10; 8:45 am] 

BILLING CODE 3410–XV–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2010–0081] 

RIN 1625–AA08 

Special Local Regulations for Marine 

Events; Chester River, Chestertown, 

MD 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

establish special local regulations 

during the reenactment portion of the 

‘‘Chestertown Tea Party Festival,’’ a 

marine event to be held on the waters 

of the Chester River, Chestertown, MD 

on May 29, 2010. These special local 

regulations are necessary to provide for 

the safety of life on navigable waters 

during the event. This action is 

intended to temporarily restrict vessel 

traffic in a portion of the Chester River 

during the event. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before April 5, 2010. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2010–0081 using any one of the 

following methods: 


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