[Federal Register Volume 65, Number 90 (Tuesday, May 9, 2000)]
[Notices]
[Pages 26809-26815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11508]


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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service


Invitation for Applications of Interest To Sell Intermediary 
Relending Program (IRP) Loans Under an Expanded Pilot--Extension of 
Time and Clarification of Issues

AGENCY: Rural Business-Cooperative Service (RBS), U.S. Department of 
Agriculture (USDA).

ACTION: Notice.

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SUMMARY: On November 12, 1999 (64 FR 61575), RBS announced an expanded 
pilot sale of IRP intermediary loans made to third parties. The 
intended effect of the notice was to solicit applications of interest 
from intermediaries who wished to consider participation in the Fiscal 
Year (FY) 2000 loan sale. RBS stated that it would competitively select 
and authorize several intermediaries to sell an aggregate amount of 
approximately $50 million of the existing IRP portfolios in FY 2000 
from among those intermediaries who have advanced at least 95 percent 
of IRP funding received by the intermediary. That announcement was also 
intended to provide notice to potential purchasers and other parties 
interested in structuring the sale of ultimate recipient notes. This 
notice restates and clarifies language in the November 12, 1999, notice 
and extends the length of time available to submit an application, due 
date for submission, and date by which any sale of loans is required to 
be complete.
    None of the intermediaries which submitted an application were able 
to meet all basic criteria for eligibility. Several other interested 
parties communicated with RBS that, although they were potentially 
interested in participating in the sale, they did not intend to respond 
to the invitation due to the short 45-day deadline for responses during 
the December 1999

[[Page 26810]]

holiday season. The Agency is concerned that many intermediaries made a 
basic examination of their portfolios during the earlier 45-day period 
and determined preparation time was inadequate.
    RBS believes that the expanded pilot sale is necessary to allow the 
Agency to: (1) Test whether there is a sufficient market for a large 
amount of these loans, whether sold as whole loans or in some other 
structure; and (2) give the Agency sufficient data to evaluate the 
effectiveness and long-term program impact of allowing such sales.
    Therefore, RBS has decided to reopen consideration for entities to 
participate. There is no expectation by the Agency that, after 
receiving approval to participate from RBS, any or all intermediaries 
will determine that it is ultimately in their interest to negotiate or 
consummate a sale in the required time frame. If RBS determines after 
the pilot program that sufficient interest exists, the Agency intends 
to begin the formal rule-making process.

DATES: The deadline for receipt of the applications of interest in the 
third-party sale in the applicable Rural Development State Office (see 
ADDRESSES below) is 4:00 P.M. Eastern Time on July 10, 2000. 
Applications received after that date will not be considered for 
participation in the expanded pilot sale. Any application of interest 
already submitted by potential buyers for those portfolios, and 
offerors of other services to buyers or sellers, shall remain valid and 
need not be resubmitted by those parties. However, parties which 
submitted applications of interest may revise or withdraw those 
applications if they so choose. New applications from additional 
parties will also be allowed, although an application only facilitates 
contact between intermediaries, service providers, and purchasers, and 
is not required for an entity to either provide services or purchase 
loans.
    A deadline for completion of any sale resulting from an 
intermediary is hereby established as December 31, 2000, to allow a 
timely evaluation of the pilot sale and permit the start of formal rule 
making. None of the basic criteria for eligibility have been revised 
from the November 12, 1999, notice. However, certain language in the 
original invitation has been clarified.

ADDRESSES: Applications to participate in the expanded pilot sale 
should be mailed to the Rural Development State Office for the State in 
which the intermediary is headquartered. Listed below are the following 
addresses for Rural Development State Offices:

Alabama
USDA Rural Development State Office, Sterling Center, Suite 601, 
4121 Carmichael Road, Montgomery, AL 36106-3683, (334) 279-3400
Alaska
USDA Rural Development State Office, 800 West Evergreen, Suite 201, 
Palmer, AK 99645-6539, (907) 761-7600
Arizona
USDA Rural Development State Office, 3003 North Central Avenue, 
Suite 900, Phoenix, AZ 85012-2906, (602) 280-8700
Arkansas
USDA Rural Development State Office, 700 West Capitol Avenue, Room 
3416, Little Rock, AR 72201-3225, (501) 301-3200
California
USDA Rural Development State Office, 430 G Street, Agency 4169, 
Davis, CA 95616-4169, (530) 792-5800
Colorado
USDA Rural Development State Office, 655 Parfet Street, Room E-100, 
Lakewood, CO 80215, (303) 236-2801
Delaware-Maryland
USDA Rural Development State Office, 4607 South DuPont Highway, 
Camden, DE 19934-9998, (302) 697-4300
Florida/Virgin Islands
USDA Rural Development State Office, 4440 NW. 25th Place, 
Gainesville, FL 32614-7010, (352) 338-3400
Georgia
USDA Rural Development State Office, Stephens Federal Building, 355 
E. Hancock Avenue, Athens, GA 30601-2768, (706) 546-2162
Hawaii
USDA Rural Development State Office, Federal Building, Room 311, 154 
Waianuenue Avenue, Hilo, HI 96720, (808) 933-8380
Idaho
USDA Rural Development State Office, 9173 West Barnes Drive, Suite 
A1, Boise, ID 83709, (208) 378-5600
Illinois
USDA Rural Development State Office, Illini Plaza, Suite 103, 1817 
South Neil Street, Champaign, IL 61820, (217) 398-5235
Indiana
USDA Rural Development State Office, 5975 Lakeside Boulevard, 
Indianapolis, IN 46278, (317) 290-3100
Iowa
    USDA Rural Development State Office, Federal Building, Room 873, 
210 Walnut Street, Des Moines, IA 50309, (515) 284-4663
Kansas
    USDA Rural Development State Office, 1200 SW. Executive Drive, 
Topeka, KS 66615, (785) 271-2701
Kentucky
    USDA Rural Development State Office, 771 Corporate Drive, Suite 
200, Lexington, KY 40503, (606) 224-7300
Louisiana
    USDA Rural Development State Office, 3727 Government Street, 
Alexandria, LA 71302, (318) 473-7920
Maine
    USDA Rural Development State Office, 444 Stillwater Avenue, 
Suite 2, Bangor, ME 04402-0405, (207) 990-9106
Massachusetts/Rhode Island/Connecticut
    USDA Rural Development State Office, 451 West Street, Amherst, 
MA 01002, (413) 253-4300
Michigan
    USDA Rural Development State Office, 3001 Coolidge Road, Suite 
200, East Lansing, MI 48823, (517) 324-5100
Minnesota
    USDA Rural Development State Office, 410 AgriBank Building 375 
Jackson Street, St. Paul, MN 55101-1853, (651) 602-7800
Mississippi
    USDA Rural Development State Office, Federal Building, Suite 831 
100 West Capitol Street, Jackson, MS 39269, (601) 965-4316
Missouri
    USDA Rural Development State Office, 601 Business Loop 70 West, 
Parkade Center, Suite 235, Columbia, MO 65203, (573) 876-0976
Montana
    USDA Rural Development State Office, 900 Technology Blvd., Unit 
1, Suite B, Bozeman, MT 59715, (406) 585-2580
Nebraska
    USDA Rural Development State Office, Federal Building, Room 152, 
100 Centennial Mall N, Lincoln, NE 68508, (402) 437-5551
Nevada
    USDA Rural Development State Office, 1390 South Curry Street, 
Carson City, NV 89703-9910, (775) 887-1222
New Jersey
    USDA Rural Development State Office, Tarnsfield Plaza, Suite 22, 
790 Woodlane Road, Mt. Holly, NJ 08060, (609) 265-3600
New Mexico
    USDA Rural Development State Office, 6200 Jefferson Street, NE., 
Room 255, Albuquerque, NM 87109, (505) 761-4950
New York
    USDA Rural Development State Office, The Galleries of Syracuse 
441 South Salina Street, Suite 357, Syracuse, NY 13202-2541, (315) 
477-6400
North Carolina
    USDA Rural Development State Office, 4405 Bland Road, Suite 260, 
Raleigh, NC 27609, (919) 873-2000
North Dakota
    USDA Rural Development State Office, Federal Building, Room 208 
220 East Rosser, Bismarck, ND 58502-1737, (701) 530-2037
Ohio
    USDA Rural Development State Office, Federal Building, Room 507, 
200 North High Street, Columbus, OH 43215-2477, (614) 255-2500
Oklahoma
    USDA Rural Development State Office, 100 USDA, Suite 108, 
Stillwater, OK 74074-2654, (405) 742-1000
Oregon
    USDA Rural Development State Office, 101 SW Main Street, Suite 
1410, Portland, OR 97204-3222, (503) 414-3300
Pennsylvania
    USDA Rural Development State Office, One Credit Union Place, 
Suite 330, Harrisburg, PA 17110-2996, (717) 237-2299

[[Page 26811]]

Puerto Rico
    USDA Rural Development State Office, New San Juan Office 
Building, Room 501,159 Carlos E. Chardon Street, Hato Rey, PR 00918-
5481, (787) 766-5095
South Carolina
    USDA Rural Development State Office, Strom Thurmond Federal 
Building, 1835 Assembly Street, Room 1007, Columbia, SC 29201, (803) 
765-5163
South Dakota
    USDA Rural Development State Office, Federal Building, Room 210, 
200 4th Street, SW. Huron, SD 57350, (605) 352-1100
Tennessee
    USDA Rural Development State Office, 3322 West End Avenue, Suite 
300, Nashville, TN 37203-1084, (615) 783-1300
Texas
    USDA Rural Development State Office, Federal Building, Suite 
102, 101 South Main, Temple, TX 76501, (254) 742-9700
Utah,
    USDA Rural Development State Office, Wallace F. Bennett Federal 
Building, 125 South State Street, Room 4311, Salt Lake City, UT 
84147-0350, (801) 524-4320
Vermont/New Hampshire
    USDA Rural Development State Office, City Center, 3rd Floor, 89 
Main Street, Montpelier, VT 05602, (802) 828-6000
Virginia
    USDA Rural Development State Office, Culpeper Building, Suite 
238, 1606 Santa Rosa Road, Richmond, VA 23229, (804) 287-1550
Washington
    USDA Rural Development State Office, 1835 Black Lake Boulevard, 
SW., Suite B, Olympia, WA 98512-5715, (360) 704-7740
West Virginia
    USDA Rural Development State Office, Federal Building, 75 High 
Street, Room 320, Morgantown, WV 26505-7500, (304) 284-4860
Wisconsin
    USDA Rural Development State Office, 4949 Kirschling Court, 
Stevens Point, WI 54481, (715) 345-7600
Wyoming
    USDA Rural Development State Office, 100 East B, Federal 
Building, Room 1005, Casper, WY 82602, (307) 261-6300


FOR FURTHER INFORMATION CONTACT: David W. Lewis, Rural Business-
Cooperative Service, USDA, Room 6858-S, Mail Stop 3224, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC 
20250-3224, Telephone (202) 690-0797.

SUPPLEMENTARY INFORMATION: IRP regulations published in 7 CFR part 
4274, subpart D, and section 1323 of the Food and Security Act of 1985 
(Public Law 99-198) (7 U.S.C. 1932 note), as amended by Public Law 99-
425, authorized the Secretary to make loans to entities for the 
purposes and subject to the terms and conditions specified in the 
first, second, and last sentences of section 623(a) of the Community 
Economic Development Act of 1981 (42 U.S.C. 9812(a)). The intermediary 
loans previously approved and administered by the U.S. Department of 
Health and Human Services under 45 CFR part 1076, which were 
transferred to the USDA under the provisions of section 1323 of the 
Food Security Act of 1985, are not eligible for participation in the 
pilot sale.
    The Agency initiated a pilot program, through a Memorandum of 
Understanding with the Colorado Housing and Finance Authority (CHFA) in 
May 1997 to allow CHFA to sell its ultimate recipient portfolio on the 
secondary market. CHFA was created to address the critical funding 
needs of community-based development lenders in Colorado. In 
consultation with the Office of Management and Budget (OMB) and the 
U.S. Department of the Treasury, RBS has decided to expand the pilot 
sale, on a limited basis, in order to gather additional information and 
experience for consideration in establishing a permanent sales program.
    Selected applicants will be posted on the Agency web site and 
notified in writing. The benefit of this loan sale to the intermediary 
will be an increase in portfolio liquidity, allowing the intermediary 
to re-loan money back into the community. The Agency advances loans to 
eligible intermediaries that subsequently re-loan to eligible 
applicants, including individuals, public or private organizations, or 
other legal entities with authority to incur debt and carry out the 
purpose of the loan. During the application process for this pilot 
sale, an intermediary will express interest in selling its seasoned 
portfolio. The initial screening of the intermediaries and their 
portfolios will be the responsibility of the Rural Development State 
Offices. State Offices will make recommendations to the National 
Office, and the National Office will evaluate the applications of 
interest, along with State Office recommendations, and make final 
selections for loan sales.
    RBS will maintain lists of intermediaries expressing interest in 
offering their portfolios for sale, potential buyers for those 
portfolios, and offerors of other services to buyers or sellers, e.g., 
financial advisors. However, only intermediaries selected through the 
invitation of applications of interest process will be authorized to 
sell third-party loans. Intermediary applications of interest must 
include: (1) A history of the intermediary; (2) its latest audited 
financial statement; (3) summary data on each loan in the portfolio 
including original and current amount, interest rate, terms, loan 
maturities, and loan performance; (4) delinquency rate on all loans in 
its portfolio; (5) reserves for loan payments; (6) the number of jobs 
created or saved; (7) the Standard Industrial Code for each loan 
recipient; (8) write-off of bad debts history; (9) a proposal that 
illustrates how the sale of the intermediary's portfolio supports Rural 
Development Mission Area target objectives, i.e., rural areas suffering 
fundamental, physical and economic stress, persistent poverty, out-
migration, or as identified in the Rural Development State Strategic 
Plan; (10) non-federal fund leveraging of past or potential loans; and 
(11) the documentation of the need for added capital and unmet loan 
demand. It is important that the performance history of the overall 
portfolio, including any portion not proposed for sale, be fully 
detailed, including the volume and frequency of any delinquencies or 
default. It is equally important that intermediaries expedite the 
Agency review of their application of interest by responding to each of 
the questions in this notice in a format which allows a rapid 
evaluation of their response and minimizes the possibility that the 
reviewer will misunderstand the information provided.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, the Agency 
has received emergency approval and clearance by OMB for the reporting 
and record keeping requirements contained in this Notice. The OMB 
control number for this information collection is 0570-0036.

Criteria for Participation in the Ultimate Recipient Portfolio Sale

    The expansion of the pilot sale will be conducted on a competitive 
basis and under criteria set by RBS. The following criteria must be met 
(with adequate documentation provided) to be considered under this 
pilot sale.
    1. Intermediaries must express interest in selling their entire 
ultimate recipient portfolio classified as seasoned loans (loans 
outstanding for at least 12 months).
    The following qualifications also apply:
    a. The ultimate recipient loans to be sold must be current 
according to their promissory notes and other agreements.
    b. The current 30-day or more delinquency rate for the entire IRP 
portfolio, including the portion not proposed to be offered for sale, 
must not

[[Page 26812]]

exceed 3 percent of the outstanding loan balance.
    c. In the aggregate, loans will be sold at ``hold'' or ``market'' 
value, which are synonymous terms.
    d. Notes will be sold to the purchasers without recourse to the 
intermediary.
    e. Annual portfolio writeoffs by the intermediary of its loans will 
not exceed an average of 1 percent of the outstanding loan balances 
over the past 3 years in the same portfolio, measured as the percentage 
of outstanding loan balances of the total seasoned portfolio. 
Intermediary applications for the pilot program will be evaluated on 
the RBS point scoring system on a nationwide basis.
    f. All due diligence expenses in connection with the sale will be 
paid by the purchaser and reflected in any sales contract entered into 
between intermediary and purchaser.
    g. Due diligence expenses will only be authorized by the Agency to 
be paid if the intermediary portfolio is selected for the loan sale. 
The intermediary will be released from any subsequent liability in 
regard to the sale of notes sold as non-recourse loans. The due 
diligence process does not need to be complete at the time the 
application of interest is filed.
    h. Intermediaries agree to use sale proceeds only to make new loans 
under 7 CFR part 4274, subpart D, except, as shown below, the 
intermediary may use sale proceeds to continue to pay its debt service 
to RBS.
    i. The sales proceeds will be tracked separately and will be 
deposited into the intermediary's revolving loan fund, recapitalizing 
the fund for the purpose of making new loans in accordance with the 
eligible purposes outlined in the current Agency regulations, work 
plan, and loan agreements.
    j. Any sale of ultimate recipient loans must be completed by 
December 31, 2000.
    2. Intermediaries, who have advanced at least 95 percent of the 
aggregate total funds loaned them by RBS under this program and who 
meet the stated criteria, are eligible to apply for participation in 
this expanded pilot. The intermediary must provide documentation for 
the unmet demand for third-party loans and its ability to re-lend all 
of the proceeds to eligible projects within 3 years from the date of 
the loan sale before it will be considered for participation in this 
expanded pilot. This documentation must include a list of loans turned 
down for lack of funds, the aggregate number and amount of viable loans 
considered but not made, and the policies under which the intermediary 
establishes rates and terms for the new loans to be made. [As one 
illustration, interest rate policy might be loans that will be at: (a) 
2 percent interest if secured by a standby letter of credit from a 
financial institution; and (b) 5 percent if secured by other 
collateral. Another illustration might be to make loans at some rate in 
relation to Wall Street Journal Prime. Similarly, it is expected that 
the intermediary has some policy for setting maturities and balloon 
structures.] The intermediary may provide a survey indicating demand 
for additional funds. The intermediary must provide documentation 
evidencing project cost leveraging, reserves for losses, and loans made 
in Rural Development mission areas, targeted areas, and population. 
Refer to State Offices for details on target areas. The intermediary 
must reloan 95 percent of the replenished capital within the 3-year 
period following loan sale closing or at the end of the 3-year period 
must immediately make extra principal repayments on its IRP loans in 
the full amount of the undisbursed portion as required by current IRP 
regulations. Intermediaries selected to participate in the expanded 
third-party sale must maintain their IRP loans with the Agency in a 
current status. There will be no moratorium or deferment of payments 
granted on the loan to the intermediary from RBS to advance the new 
funds, and proceeds from the sale can be used for Agency debt service. 
Intermediaries must have sufficient alternative sources of funds to 
ensure IRP loan repayment and pay their administrative costs. 
Intermediaries permitted to sell their loan portfolios will be 
ineligible to apply for further IRP loans from RBS unless 95 percent of 
funds received from the sale have been advanced as loans. Upon 
selection of the IRP application for the loan sale, all pending IRP 
applications for funding for those applicants selected from the annual 
Agency appropriation cycle will be held in suspense. If the 
intermediary is unable to sell its loans under terms approved by RBS, 
the suspended IRP applications for funding will be reactivated for 
further funding consideration under the available Agency appropriation.
    3. If there is Community Reinvestment Act credit associated with 
the loans, the amount of such credit is to be permanently noted, as it 
may influence the value to a final purchaser. RBS considers any 
financial contribution by the intermediary, other than meeting its own 
expenses associated with the sale, as potentially weakening the 
financial strength of the intermediary to meet its long-term obligation 
to RBS. Intermediary affiliate resources or contributions from private 
sources, used in ``hold'' or ``market'' value sale of the ultimate 
recipient portfolio, will not be either a debt or a contingent 
liability of the intermediary and will be closely scrutinized by the 
Agency to assure the sale does not weaken the intermediary financially. 
Only intermediaries selected for the loan sale are authorized to sell 
their ultimate recipient portfolio and, even if selected by RBS, they 
are under no obligation to ultimately consummate a sale.
    4. RBS may authorize the non-recourse sale of less than a total 
portfolio if, in RBS's opinion, a partial sale of the portfolio is 
financially sound and benefits program objectives. The sale may be 
structured as a sale of whole loans or as any related structure.
    5. The intermediary will advertise the sale of its loans in media 
with significant national distribution, to attract the greatest 
possible interest from a diverse client base. Advertising costs may be 
shared on a cooperative basis with other participating intermediaries 
to assist in defraying advertising expenses. Such cost will be the 
responsibility of the intermediary. It is the intent of RBS to develop 
a coordinated approach to soliciting interest from eligible 
intermediaries and potential purchasers of the portfolio to ensure an 
equitable opportunity to participate and to obtain the best prices for 
the portfolios.
    6. Intermediaries, as authorized by the Agency, may retain or offer 
to retain servicing rights to their portfolio loans sold in the pilot 
loan sale. In the event the intermediary retains servicing rights, the 
intermediary shall analyze the portfolio it manages, the staffing and 
processing, it maintains to make and service loans in each portfolio, 
and the steps it expects to take to maintain adequate staffing to 
service and make loans and present such analysis to RBS, in writing, as 
part of its application. If selected under the pilot sale, the 
intermediary will be required to obtain certification, from the 
purchaser, that the sale of servicing will not result in an 
acceleration of ultimate recipient loans and that appropriate and 
adequate servicing will continue following the loan sale.
    7. Recapitalized funds realized from the loan sale will be reloaned 
for eligible purposes in accordance with current IRP regulations found 
at 7 CFR part 4274, subpart D, and 7 CFR part 1951, subpart R; the 
approved work plan; and the same processing procedure as third-party 
loans made

[[Page 26813]]

from Agency (Federal) funds. Recapitalized funds resulting from the 
sale, even though not Agency IRP loan funds, will be administered in 
accordance with current regulations and the approved work plan. The 
Agency will exercise the same oversight responsibilities as required 
for projects receiving IRP Federal funds directly from the Agency. 
These responsibilities include Agency review of individual third-party 
loans prior to approval, conduct of environmental reviews, and the 
requirement that 25 percent of the loan amount for all third-party 
loans be financed from other sources until funds have revolved. 
Proceeds from the sale shall only be used for recapitalization of the 
IRP revolving fund and will not be co-mingled with funds from other 
programs until funds have revolved. As previously stated, funds may be 
used for servicing the intermediary's debt with RBS.
    8. All reserves and other cash in the IRP revolving fund not 
immediately needed, for loans to ultimate recipients or other 
authorized uses, will be deposited in Federal Deposit Insurance 
Corporation (FDIC)-insured accounts in banks or other financial 
institutions. Such accounts will be fully covered by FDIC insurance or 
fully collateralized with U.S. Government obligations and must be 
interest bearing. Any interest earned thereon remains a part of the IRP 
revolving fund.

IRP Ranking Criteria

    Priority points are determined as follows:
    (MAXIMUM NUMBER OF POINTS INCLUDING ADMINISTRATOR PRIORITY POINTS: 
110)
    1. Percent of Portfolio Loaned--Maximum Points: 10.
    a. Intermediary that has loaned out all of the IRP Federal funds 
(10 points).
    b. Intermediary that has loaned out between 97-99 percent of the 
IRP Federal funds (8 points).
    c. Intermediary that has loaned out 95 up to 97 percent of the IRP 
Federal funds (5 points).
    2. Delinquencies--Maximum Points: 10.
    a. Intermediary that has no ultimate recipient delinquency in its 
portfolio (10 points).
    b. Intermediary that has 1 percent or less delinquencies in its 
portfolio based on outstanding loan balances (8 points).
    c. Intermediary that has more than 1 percent but less than 2 
percent delinquencies in its portfolio based on outstanding loan 
balances (5 points).
    d. Intermediary that has between 2 percent up to and including 3 
percent portfolio delinquency rate inclusive on outstanding loan 
balances (3 points).
    3. Writeoffs of Bad Loans--Maximum Points: 10.
    a. Intermediary that has no writeoffs of ultimate recipient loans 
over the past 3 fiscal years (10 points).
    b. Intermediary that has written off 1 percent or less of the loan 
balances of its ultimate recipient loans over the past 3 fiscal years 
(8 points).
    4. Maturity of Loans--Maximum Points: 10.
    a. Intermediary that has an average ultimate recipient loan 
portfolio maturity of 10 years or more (10 points).
    b. Intermediary that has an average ultimate recipient loan 
portfolio maturity of at least 7 but less than 10 years (8 points).
    c. Intermediary that has an average ultimate recipient loan 
portfolio maturity of at least 5 but less than 7 years (5 points).
    d. Intermediary that has an average ultimate recipient loan 
portfolio with maturity of at least 3 but less than 5 years (3 points).
    e. Intermediary that has an average ultimate recipient loan 
portfolio maturity of at least 1 but less than 3 years (1 point).
    5. Leverage: Intermediary that has Obtained Non-Federal Loan or 
Grant Funds to Pay a Portion of the Cost of the Ultimate Recipient 
Projects--Maximum Points: 10.
    a. Fifty percent or more of the total project cost (10 points).
    b. At least 25 percent but less than 50 percent of the total 
project cost (8 points).
    c. At least 10 percent but less than 25 percent of the total 
project cost (5 points).
    6. Rural Area--Maximum Points: 10.
    a. Intermediary that has made two or more ultimate recipient loans 
or made 25 percent of the total loans, whichever is the greater, to 
ultimate recipients in unincorporated areas, and cities or towns with 
populations of 10,000 or less based on 1990 census data (10 points).
    b. Intermediary that has made ultimate recipient loans in 
unincorporated areas, and cities or towns with a population of more 
than 10,000, up to and including 20,000, based on 1990 census data (5 
points).
    7. Reserves for Loan Payments--Maximum Points: 10. Intermediary 
that has established a cash reserve to make RBS loan payments:
    a. Greater than 21 months (10 points).
    b. Greater than 18 months but not exceeding 21 months (8 points).
    c. Greater than 15 months but not exceeding 18 months (5 points).
    d. Any reserve level equal to or greater than 12 months but not 
exceeding 15 months (3 points).
    8. Community Reinvestment Act Requirements--Maximum Points: 10.
    Intermediary's ultimate recipient loans that meet Community 
Reinvestment Act (CRA) requirements (10 points). The intermediary must 
determine, based on applicant information, which loans may qualify as 
Community Development Investments under the provisions of the CRA 
requirements. RBS is interested in how the intermediary made this 
determination and quantified the potential credits. RBS intends to 
assure that the intermediary obtains the maximum value from its 
portfolio and does not weaken its financial structure, as some 
potential purchasers may be willing to pay a premium for CRA credits of 
specific types in specific states. If the intermediary calls this to 
the attention of potential purchasers, a higher price may result. The 
Agency will rely on the applicant's submission of CRA data to assess 
the credibility of the applicant's submission.
    a. Greater than 50 percent of portfolio principal meets CRA 
requirements (10 points).
    b. Greater than 25 percent but not exceeding 50 percent of 
portfolio principal (8 points).
    c. Greater than 10 percent but not exceeding 25 percent of 
portfolio principal (5 points).
    d. Any dollar value greater than $0 but not exceeding 10 percent of 
portfolio principal (3 points).
    9. Loans Sold at Par Value--Maximum Points: 5.
    A par sale is defined as a sale in the aggregate which results in 
the receipt of sufficient funds from the sale of all principal and 
interest outstanding on the loans sold to third parties, which, 
together with funds already revolved, will allow the intermediary to 
meet its loan obligation to RBS. Note, this is not necessarily a sale 
which nominally sells each of the individual loans at or above the face 
value of the loan. Face value is defined as the note balance of an 
individual loan at the time of assessment.
    10. Presidential/Administration Priority Areas: Empowerment Zones/
Enterprise Communities, Pacific Northwest/Alaskan Initiative, Rural 
Development Mission Area, Targeted Areas and Population--Maximum 
Points: 15.
    a. Intermediary that has loaned between 50 and 75 percent of its 
IRP funds in these targeted area populations (15 points).

[[Page 26814]]

    b. Intermediary that has loaned between 25 up to 50 percent in 
these targeted area populations (10 points).
    c. Intermediary that has loaned less than 25 percent of its IRP 
funds in targeted area populations (5 points).
    11. Administrator's Priority Points--Maximum Points: 10. For 
purposes of evaluation of the proposals by intermediaries, this factor 
is based on the following sub-elements, each with a maximum number of 
points, which, in the aggregate, may reach up to a maximum of 10 points 
which the RBS Administrator may assign for proposals which present 
superior approaches to the stated criteria above, or which will lead to 
better geographic balance of intermediary loans, which would be 
included in the sale.
    a. Geographic balance of the areas served by the intermediaries 
selected to participate in the sale (Maximum = 6 points).
    b. Support of Rural Development Objectives: Does the proposal 
illustrate how the sale of the intermediary's portfolio supports Rural 
Development Mission Area target objectives, i.e., Presidential or 
administration priority areas, rural areas suffering fundamental, 
physical and economic stress, persistent poverty, out migration, or as 
identified in the Rural Development State Strategic Plan? What 
percentage of RBS funds to this intermediary have gone into these 
targeted areas or to targeted populations? An exceptional effort by the 
intermediary to successfully lend over 75 percent in targeted areas in 
their present portfolio demonstrates their ability to do the same with 
revolved funds (Maximum = 4 points).

Additional Application Requirements

    The intermediary's application must also include the following:
    1. Intermediary Name, Street Address (or other postal delivery 
information), Contact Person, Telephone and Fax Numbers, appropriate E-
Mail addresses for making contact, and, if the entity has a web site, 
the Uniform Resource Locator (URL) address for that site.
    2. History of the Intermediary.
    3. Modified Work Plan, Detailing Mission or Goals, Outreach Service 
Plan.
    4. Summarize Each Ultimate Recipient Loan in the Format Outlined in 
Form RD 1951-4:
    a. Name and address of ultimate recipient.
    b. Type of business.
    c. Use of loan funds.
    d. Original amount of loan.
    e. Date of loan.
    f. Unpaid balance.
    g. Interest rate.
    h. Terms of loan/date of final payment.
    i. Collateral, including lien position.
    j. Loan status.
    k. Number of consecutive loan payments ultimate recipient has made 
in accordance with the promissory note.
    l. Standard Industrial Code on the ultimate recipient loan.
    5. Summarize the Intermediary Ultimate Recipient Portfolio.
    a. Range and average interest rates.
    b. Range and average repayment term.
    c. Percent of loans made for which intermediary received first 
lien.
    d. Percent of loans made with real estate collateral.
    e. Percent of loans made with machinery and equipment collateral.
    f. Percent of outstanding loan balances with current repayment 
status on report date.
    g. Percent of loan balances written off.
    h. Percent of loans made with one or more payments late by 30 days 
or more.
    i. Percent of loans made for which terms have been renegotiated.
    j. Use of leverage on each ultimate recipient loan.
    k. Population where ultimate recipient loans were made.
    l. Identify loans in mission area targeted areas.

Selections Announcement

    The Agency will announce on its Internet web site, 45 days after 
the end of the solicitation period, the intermediaries selected to 
participate in the expanded pilot sale, potential purchasers, and third 
parties interested in structuring the sale of ultimate recipient notes. 
The Business Programs web site is located at www.rurdev.usda.gov/rbs/busp/bpdir.htm. Click on ``IRP 3rd Party Sale.'' Click on 
``application'' in paragraph four to receive a copy of the invitation 
for application and subsequent updates on this loan sale via the 
Internet (e-mail and web site hot links included). The information will 
provide updated lists of interested intermediaries, third-party 
advisors, and third-party purchasers. RBS employees will be notified of 
loan sale selections via memorandum and the Agency Intranet. All 
intermediaries making an application of interest under the pilot 
program will also be notified, in writing, of their selection or non-
selection and of third-party purchaser and financial advisor interest. 
To be included in the published listings, interested third parties 
(purchasers and advisors) must provide the following information:

Third-Party Purchaser Requirements

    Third-party purchasers will provide the company name, address, 
contact person, telephone and fax numbers, e-mail address, and URL 
address (web site). The expression of interest must be in writing. A 
written letter accompanying the company history, expertise, examples, 
and references from the purchasers is required and will be submitted to 
the National Office, Attention: David Lewis, Loan Specialist, Business 
Programs Servicing Division, Rural Business-Cooperative Service, Rural 
Development, USDA, Stop 3224, 1400 Independence Avenue, SW., 
Washington, DC 20250-3224.

Advisors--Structuring the Sale

    Advisors will provide the company name, address, contact person, 
telephone and fax numbers, e-mail address, and URL address (web site). 
The expression of interest must be in writing. A written letter 
accompanying the company history, expertise, examples, and references 
from the advisors is required and will be submitted to the National 
Office, Attention: David Lewis, Loan Specialist, Business Programs 
Servicing Division, Rural Business-Cooperative Service, Rural 
Development, USDA, Stop 3224, 1400 Independence Avenue, SW., 
Washington, DC 20250-3224.

Other Matters

    1. Environmental Finding. A Finding of No Significant Impact, with 
respect to the environment, has been made by the Agency in accordance 
with RBS regulations at 7 CFR part 1940, subpart G, or its successor 
regulation.
    2. Civil Rights Impact Analysis. It is the policy within the Rural 
Development mission area to ensure that the consequences of any 
proposed project approval do not negatively or disproportionately 
affect program beneficiaries by virtue of race, color, sex, national 
origin, religion, age, disability, sexual orientation, and marital or 
familial status, or because all or part of an individual's income is 
derived from any public assistance program. To ensure that any proposal 
under this demonstration program complies with these objectives, the 
RBS approval official will complete Form RD 2006-38, ``Civil Rights 
Impact Analysis Certification.''
    3. Executive Order 13132, dated August 4, 1999, Federalism. The 
Agency has determined that the policies and procedures contained in 
this Notice will not have substantial direct effects on States or their 
political subdivisions, or the relationship between the Federal 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. As a result, 
the

[[Page 26815]]

Notice is not subject to review under the Order.
    4. Prohibition Against Advance Information on Funding Decisions. 
RBS employees involved in the review of applications and in the making 
of funding decisions are restricted from providing advance information 
to any person (other than an authorized employee of RBS) concerning 
funding decisions, or from otherwise giving any applicant an unfair 
competitive advantage.

    Dated: May 2, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 00-11508 Filed 5-8-00; 8:45 am]
BILLING CODE 3410-XY-P