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

14244 

Vol. 72, No. 58 

Tuesday, March 27, 2007 

DEPARTMENT OF AGRICULTURE 

Farm Service Agency 

7 CFR Part 762 

RIN 0560–AH55 

Guaranteed Loans—Number of Days of 

Interest Paid on Loss Claims 

AGENCY: Farm Service Agency, USDA. 

ACTION: Proposed rule. 

SUMMARY: This action proposes to clarify 

and simplify the number of days’ 

interest that may be paid on loss claims. 

The liquidation provisions currently 

provides a timeframe for the interest 

payment based upon ‘‘the date of the 

decision to liquidate’’ which is often 

difficult to determine. In addition, the 

Agency is clarifying the application for 

payment after liquidation and the 

guaranteed lender’s responsibility for 

future recoveries. 

DATES: Comments concerning this 

proposed rule must be submitted by 

May 29, 2007 to be assured of 

consideration. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this rule. Comments should 

reference the volume, date and page 

number of this issue of the Federal 

Register. Comments may be submitted 

by any of the following methods: 

E-mail: Send comments to 

Marilyn.Meese@wdc.usda.gov. 

Fax: Submit comments by facsimile 

transmission to (202) 690–1196. 

Mail: Submit comments to Branch 

Chief, Guaranteed Loan Servicing and 

Inventory Property Branch, Loan 

Servicing and Property Management 

Division, FSA, USDA, 1400 

Independence Avenue, STOP 0523, 

Washington, DC 20250–0523. 

Hand Delivery or Courier: USDA FSA 

DAFLP LSPMD Suite 500, 1250 

Maryland Avenue, SW., Washington, 

DC 20024. 

Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: 

Marilyn Z. Meese, Senior Loan Officer, 

Farm Service Agency; telephone: (202) 

690–4002; Facsimile: (202) 690–1196; Email; Marilyn.Meese@wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: 

Discussion of the Proposed Rule 

This rule proposes changes to the FSA 

guaranteed farm loan program. FSA 

guaranteed loans provide conventional 

agricultural lenders with up to a 95 

percent guarantee of the principal loan 

amount, and accrued interest. The 

lender is responsible for servicing a 

borrower’s account for the life of the 

loan. When a borrower cannot fully 

repay the guaranteed loan, the lender 

submits a loss claim request to the 

Agency for payment of the guaranteed 

percentage of the unpaid debt, if any, 

after liquidation of the collateral. There 

has been confusion for both lenders and 

FSA personnel on how to compute the 

number of days’ interest that may be 

paid on loss claims. The number of days 

should not exceed 210 days from the 

payment due date. As originally 

envisioned and stated in paragraph 355 

of FSA Handbook 2–FLP, Guaranteed 

Loan Making and Servicing, the lender 

was to reach a decision to either 

restructure the loan or liquidate it 

within 120 days after the payment due 

date. It is common for bank regulators 

to require lenders to place a loan on a 

non-accrual basis if it is 90 days in 

default. A decision regarding the credit 

is typically made during this time 

period. The loan defaults at 30 days past 

due and 90 additional days equals 120 

days. FSA then pays interest an 

additional 90 days from this decision to 

liquidate. As a result FSA can pay the 

lender interest for up to 210 days from 

the payment due date. If liquidation is 

estimated to take more than 90 days, the 

lender is to submit an estimated loss 

claim. Whether or not an estimated loss 

claim is filed, however, interest will 

only be paid for another 90 days, for a 

maximum of 210 days. The proposed 

changes incorporate these timeframes 

into the regulation. As a result, 

determinations of the maximum interest 

payable will be made consistently. 

In order to both clarify and simplify 

this issue the proposed rule will allow 

for a maximum of 210 days of accrued 

interest from the payment due date as a 

general rule. The proposed rule places 

renewed emphasis on the expected 

actions of the lenders and FSA 

personnel. All lenders within 150 days 

of the payment due date must prepare 

a liquidation plan under proposed 

§ 762.149(b). Preferred (PLP) lenders 

currently prepare the plan under their 

FSA-approved Credit Management 

Systems, but need not submit them. The 

reference to 150 days will replace the 

current language, ‘‘within 30 days of the 

decision to liquidate,’’ for consistency 

with other changes being proposed in 

this rule. Lenders also must file 

estimated and final loss claims on all 

accounts in a timely manner. 

The new rule will require a zero 

dollar estimated loss claim to be filed if 

the lender expects no loss. This will 

effectively establish in the Agency’s 

financial records that a loss is not 

expected but the account is in 

liquidation. This change would allow 

better monitoring and record-keeping by 

FSA. The estimated loss claim need not 

be filed if the account has already been 

completely liquidated within the 150 

days. In that case, the lender would file 

only the final loss claim. A final loss 

claim also needs to be completed for 

any loan. This will close out the loan on 

the Agency’s financial records as to any 

remaining liability to the lender. In 

some cases it is possible that the final 

loss claim could be for zero dollars. In 

addition, if the loss claim processing 

exceeds 40 days as a result of the 

Agency’s failure to take action on the 

claim the Agency will pay additional 

interest to the lender after the 40 days. 

This change is intended as an incentive 

to Agency personnel to promptly 

process claims and avoid extra cost to 

the lender. 

The Agency is providing clarification 

that the payment of a loss claim to the 

lender does not automatically relieve 

the borrower from any liability for the 

debt owed the lender or the lender of 

responsibility for any future recoveries. 

After payment of a loss claim by the 

Agency, the lender will continue to 

have the responsibility to collect the 

entire loan balance. The lender will 

pursue aggressive collection of the debt 

after payment of the final loss claim 

unless the Agency has approved of a 

lender’s request for release of liability of 

the borrower pursuant to 7 CFR part 

762. FSA also will continue to seek 

reimbursement for its payment from the 


jlentini on PROD1PC65 with PROPOSAL
Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 14245 

borrower under § 762.149(m), but the 

borrower will never pay more than its 

outstanding debt. In § 762.148(d), the 

Agency is proposing to remove the 

provision that the date the borrower 

files for Chapter 7 bankruptcy is the 

date of the decision to liquidate for 

purposes of calculating liquidation time 

frames. These cases will follow the same 

maximum interest policy as other cases. 

If the loan account has been past due 

prior to the Chapter 7 bankruptcy filing 

those days will count towards the 

liquidation timeframes. 

Finally, the Agency is amending 

§ 762.149(i)(1) by stating that as long as 

a loan is accruing interest, the sale 

proceeds from the liquidation of assets 

will be applied to principal first. This 

practice reduces the interest accrual on 

the defaulted loan, resulting in a smaller 

loss payment. Since principal was 

advanced for the collateral it is 

consistent practice to first reduce the 

principal when the collateral is sold. 

Executive Order 12866 

This rule has been determined to be 

not significant and was not reviewed by 

the Office of Management and Budget 

under Executive Order 12866. 

Regulatory Flexibility Act 

The Agency certifies that this rule 

will not have a significant economic 

effect on a substantial number of small 

entities. This rule does require actions 

on the part of the subject program’s 

borrowers or lenders. Borrowers may be 

individuals or entities. No distinction is 

made between small and large entities. 

The Agency will bear most of the 

burden under the proposed regulations. 

The Agency anticipates that the 

proposed rule will require submission 

of no additional information, further 

justifying the conclusion that a 

Regulatory Flexibility Analysis is not 

required. The Agency, therefore, 

concludes that it is not required to 

perform a Regulatory Flexibility 

Analysis as required by the Regulatory 

Flexibility Act, Public Law 96–535, as 

amended (5 U.S.C. 601). 

Environmental Evaluation 

The environmental impacts of this 

proposed rule have been considered in 

accordance with the provisions of the 

National Environmental Policy Act of 

1969 (NEPA), 42 U.S.C. 4321 et seq., the 

regulations of the Council on 

Environmental Quality (40 CFR Parts 

1500–1508), and the FSA regulations for 

compliance with NEPA, 7 CFR parts 

799, and 1940, subpart G. FSA 

completed an environmental evaluation 

and concluded that the rule requires no 

further environmental review. No 

extraordinary circumstances or other 

unforeseeable factors exist which would 

require preparation of an environmental 

assessment or environmental impact 

statement. A copy of the environmental 

evaluation is available for inspection 

and review upon request. 

Executive Order 12988 

This rule has been reviewed in 

accordance with E.O. 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 except that lender servicing under 

this rule will apply to loans guaranteed 

prior to the effective date of the rule to 

the extent permitted by existing 

contracts; and (3) administrative 

proceedings in accordance with 7 CFR 

part 11 must be exhausted before 

requesting 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 and activities within this rule 

are excluded from the scope of 

Executive Order 12372, which requires 

intergovernmental consultation with 

state and local officials. 

Unfunded Mandates 

This rule contains no Federal 

mandates, as defined by title II of 

Unfunded Mandates Reform Act of 1995 

(UMRA), Public Law 104–4, 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 UMRA. 

Executive Order 13132 

The policies contained in this rule do 

not have any substantial direct effect on 

the 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. 

Paperwork Reduction Act 

The amendments to 7 CFR part 762 

contained in this rule require no 

revisions to the information collection 

requirements that were approved by 

OMB under control number 0560–0155. 

Federal Assistance Programs 

These changes affect the following 

FSA programs listed in the Catalog of 

Federal Domestic Assistance: 

10.406—Farm Operating Loans 

10.407—Farm Ownership Loans 

List of Subject in 7 CFR part 762 

Agriculture, Banks, Credit, Loan 

Programs—agriculture. 

Accordingly, 7 CFR part 762 is 

amended as follows: 

PART 762—GUARANTEED FARM 

LOANS 

1. The authority citation for part 762 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989 

§ 762.148 [Amended] 

2. Amend § 762.148(d)(1) by removing 

the second sentence. 

3. In § 762.149, revise paragraphs 

(b)(1) introductory text, (b)(1)(v), (d) 

introductory text, (d)(2), (i)(1) and (i)(5), 

to read as follows: 

§ 762.149 Liquidation. 

* * * * * 

(b) * * * 

(1) Within 150 days after the payment 

due date, all lenders will prepare a 

liquidation plan. Standard eligible and 

CLP lenders will submit a written 

liquidation plan to the Agency which 

includes: 

* * * * * 

(v) An estimated loss claim must be 

filed no later than 150 days past the 

payment due date unless the account 

has been completely liquidated and 

then a final loss claim must be filed. 

* * * * * 

(d) Estimated loss claims. An 

estimated loss claim must be submitted 

by all lenders no later than 150 days 

after the payment due date unless the 

account has been completely liquidated 

and then a final loss claim must be filed. 

The estimated loss will be based on the 

following: 

* * * * * 

(2) The lender will discontinue 

interest accrual on the defaulted loan at 

the time the estimated loss claim is paid 

by the Agency. The Agency will not pay 

interest beyond 210 days from the 

payment due date. If the lender 

estimates that there will be no loss after 

considering the costs of liquidation, an 

estimated loss of zero will be submitted 

and interest accrual will cease upon the 

approval of the estimated loss and never 

later than 210 days from the payment 

due date. The following exceptions 

apply: 

(i) In the case of a Chapter 7 

bankruptcy, in cases where the lender 

filed an estimated loss claim, the 

Agency will pay the lender interest 

which accrues during and up to 45 days 

after the discharge on the portion of the 


jlentini on PROD1PC65 with PROPOSAL
14246 Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 

1 12 U.S.C. 1467a(c)(9). 

2An SLHC generally is any company that directly 

or indirectly controls a savings association, or that 

controls any other company that is a savings and 

loan holding company. See 12 CFR 583.20 and 12 

U.S.C. 1467a(a)(1)(D). 

3 12 U.S.C. 1843(k). 

4 12 U.S.C. 1467a(c)(2). SLHCs that were SLHCs 

on May 4, 1999, and meet certain other 

requirements, are excepted from the activities 

limitations of section 10(c)(9) of the HOLA. See 12 

U.S.C. 1467a(c)(9)(C). The following discussion of 

activities limitations applies only to SLHCs that are 

not excepted from the activities limitations of 

section 10(c)(9). 

5These activities include furnishing or 

performing management services for a savings 

association subsidiary of such company (section 

10(c)(2)(A)); conducting an insurance agency or 

escrow business (section 10(c)(2)(B)); holding, 

managing, or liquidating assets owned or acquired 

from a savings association subsidiary of such 

company (section 10(c)(2)(C)); holding or managing 

properties used or occupied by a savings 

association subsidiary of such company (section 

10(c)(2)(D)); acting as trustee under a deed of trust 

(section 10(c)(2)(E)); and purchasing, holding or 

disposing of stock acquired in a qualified stock 

chattel only secured debt that was 

estimated to be secured but upon final 

liquidation was found to be unsecured, 

and up to 90 days after the date of 

discharge on the portion of real estate 

secured debt that was estimated to be 

secured but was found to be unsecured 

upon final disposition. 

(ii) The Agency will pay the lender 

interest which accrues during and up to 

90 days after the time period the lender 

in unable to dispose of acquired 

property due to state imposed 

redemption rights on any unsecured 

portion of the loan during the 

redemption period, if an estimated loss 

claim was paid by the Agency during 

the liquidation action. 

* * * * * 

(i) Final loss claims. (1) Lenders must 

submit a final loss claim when the 

security has been liquidated and all 

proceeds have been received and 

applied to the account. All proceeds 

shall be applied to principal first and 

then toward accrued interest if the 

interest is still accruing. The application 

of the loss claim payment to the account 

does not automatically release the 

borrower of liability for any portion of 

the borrower’s debt to the lender. The 

lender will continue to be responsible 

for collecting the full amount of the debt 

and sharing these future recoveries with 

the Agency in accordance with 

paragraph (j) of this section. 

* * * * * 

(5) The Agency will notify the lender 

of any discrepancies in the final loss 

claim or, approve or reject the claim 

within 40 days. Failure to do so will 

result in additional interest being paid 

to the lender for the number of days 

over 40 taken to process the claim. 

* * * * * 

Signed at Washington, DC, on March 9, 

2007. 

Teresa C. Lasseter, 

Administrator, Farm Service Agency. 

[FR Doc. E7–5511 Filed 3–26–07; 8:45 am] 

BILLING CODE 3410–05–P 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 584 

[OTS–2007–0007] 

RIN 1550–AC10 

Permissible Activities of Savings and 

Loan Holding Companies 

AGENCY: Office of Thrift Supervision, 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Office of Thrift 

Supervision (OTS) is proposing to revise 

its regulations, at 12 CFR 584.2 and 

584.2–2, to expand the permissible 

activities of savings and loan holding 

companies (SLHCs) to the full extent 

permitted under the Home Owners’

Loan Act (HOLA). In addition, OTS 

proposes to amend 12 CFR 584.4 to 

conform the regulation to the statute 

that it is intended to implement by 

replacing the absolute prohibition on 

certain SLHC transactions that is 

currently in the regulation with a prior 

approval requirement. The proposed 

regulation sets forth standards that OTS 

will use to evaluate applications 

submitted pursuant to the application 

requirement. 

DATES: Comments must be received by 

April 26, 2007. 

ADDRESSES: You may submit comments, 

identified by OTS–2007–0007, by any of 

the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. select 

‘‘Office of Thrift Supervision’’ from the 

agency drop-down menu, then click 

submit. Select Docket ID ‘‘OTS–2007–

0007’’ to submit or view public 

comments and to view supporting and 

related materials for this interim rule. 

The ‘‘User Tips’’ link at the top of the 

page provides information on using 

Regulations.gov, including instructions 

for submitting or viewing public 

comments, viewing other supporting 

and related materials, and viewing the 

docket after the close of the comment 

period. 

• Mail: Regulation Comments, Chief 

Counsel’s Office, Office Of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552, Attention: OTS–

2007–0007. 

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Regulation 

Comments, Chief Counsel’s Office, 

OTS–2007–0007. 

Instructions: All submissions received 

must include the agency name and 

docket number for this rulemaking. All 

comments received will be entered into 

the docket and posted on 

Regulations.gov without change, 

including any personal information 

provided. Comments, including 

attachments and other supporting 

materials received are part of the public 

record and subject to public disclosure. 

Do not enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

Viewing Comments Electronically: Go 

to http://www.regulations.gov, select 

‘‘Office of Thrift Supervision’’ from the 

agency drop-down menu, then click 

‘‘Submit.’’ Select Docket ID ‘‘OTS–

2007–0007’’ to view public comments 

for this notice of proposed rulemaking. 

View Comments On-Site: You may 

inspect comments in the Public Reading 

Room, 1700 G Street, NW., by 

appointment. To make an appointment, 

call (202) 906–5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906–

6518. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request. 

FOR FURTHER INFORMATION CONTACT: 

Donald W. Dwyer, Director, 

Applications, Examination and 

Supervision-Operations, (202) 906–

6414; or Kevin A. Corcoran, (202) 906–

6962, Deputy Chief Counsel for 

Business Transactions, Office of Chief 

Counsel; Office of Thrift Supervision, 

1700 G Street, NW., Washington, DC 

20552. 

SUPPLEMENTARY INFORMATION: 

I. Holding Company Activities 

A. Background 

Under section 10(c)(9) of the HOLA,1

SLHCs 2 generally are permitted to 

engage only in activities that are 

permissible for financial holding 

companies under section 4(k) of the 

Bank Holding Company Act,3 or 

activities that are listed in section 

10(c)(2) of the HOLA.4 The activities 

listed in section 10(c)(2) of the HOLA 

include certain specific activities.5 In 


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