Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Rules and Regulations 52503

additional evidence or clarification of

the evidence or correction of a

procedural defect is essential for a

proper appellate decision, but would

specify that the Board need not remand

a case to clarify procedural matters

before the Board, such as the choice of

representative, the issues on appeal, or

requests for hearings before the Board.

The proposed rule would not apply to

requests for medical or legal opinions

under 38 CFR 20.901, nor to matters in

which the Board has original

jurisdiction under 38 CFR 20.609

(relating to representatives’ fees) and

§ 20.610 (relating to representatives’

expenses), since those cases, by their

terms, do not involve adjudications by

AOJs.

The public was given 30 days to

submit comments. VA received no

comments.

Accordingly, based on the rationale

set forth in the proposed rule document,

we are adopting without change the

provisions of the proposed rule as a

final rule.

Good cause is found for making this

final rule effective on publication. This

final rule will help avoid unnecessary

remands without causing adverse effects

to claimants.

List of Subjects in 38 CFR Part 19

Administrative practice and

procedure, Claims, Veterans.

Approved: September 26, 1997.

Hershel W. Gober,

Acting Secretary of Veterans Affairs.

For the reasons set out in the

preamble, 38 CFR part 19 is amended as

set forth below:

PART 19—BOARD OF VETERANS’

APPEALS: APPEALS REGULATIONS

1. The authority citation for part 19

continues to read as follows:

Authority: 38 U.S.C. 501(a), unless

otherwise noted.

2. In subpart A, § 19.9 is revised to

read as follows:

§ 19.9 Remand for further development.

(a) General. If further evidence or

clarification of the evidence or

correction of a procedural defect is

essential for a proper appellate decision,

a Member or panel of Members of the

Board shall remand the case to the

agency of original jurisdiction,

specifying the action to be undertaken.

A remand is not required to clarify

procedural matters before the Board,

including appellant’s choice of

representative before the Board, the

issues on appeal, and requests for

hearings before the Board.

(b) Scope. This section does not apply

to:

(1) The Board’s requests for opinions

under Rule 901 (§ 20.901 of this

chapter);

(2) The Board’s supplementation of

the record with recognized medical

treatises; and

(3) Matters over which the Board has

original jurisdiction described in Rules

609 and 610 (sections 20.609 and 20.610

of this chapter).

(Authority: 38 U.S.C. 7102, 7103(c), 7104(a))

[FR Doc. 97–26613 Filed 10–7–97; 8:45 am]

BILLING CODE 8320–01–P

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 36

RIN 2900–AI92

Loan Guaranty: Requirements for

Interest Rate Reduction Refinancing

Loans

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

SUMMARY: This document amends the

Department of Veterans Affairs (VA)

loan guaranty regulations concerning

the requirements for Interest Rate

Reduction Refinancing Loans (IRRRLs)

by generally limiting these loans to

instances where the veteran’s monthly

mortgage payment will decrease, and by

generally requiring that the loans being

refinanced be current in their payments.

This action is necessary to ensure that

these loans are made only when they

provide a real benefit to the veteran, and

to protect the financial interest of the

Government.

DATES: Effective Date: This rule is

effective October 8, 1997. Comments

must be received on or before December

8, 1997.

ADDRESSES: Mail or hand deliver written

comments to: Director, Office of

Regulations Management (02D),

Department of Veterans Affairs, 810

Vermont Avenue, NW, Room 1154,

Washington, DC 20420. Comments

should indicate that they are submitted

in response to ‘‘RIN 2900–AI92.’’ All

written comments received will be

available for public inspection at the

above address, Room 1158, between the

hours of 8:00 a.m. and 4:30 p.m.,

Monday through Friday (except

holidays).

FOR FURTHER INFORMATION CONTACT: Ms.

Judith Caden, Assistant Director for

Loan Policy (264), Loan Guaranty

Service, Veterans Benefits

Administration, Department of Veterans

Affairs, 810 Vermont Avenue, NW,

Washington, DC 20420, (202) 273–7368.

SUPPLEMENTARY INFORMATION: Under the

authority of 38 U.S.C. Chapter 37, VA

guarantees loans made by lenders to

eligible veterans to purchase, construct,

improve, or refinance their homes (the

term veteran as used in this document

includes any individual defined as a

veteran under 38 U.S.C. 101 and 3701

for the purpose of housing loans). This

document amends VA’s loan guaranty

regulations by revising the requirements

for VA-guaranteed Interest Rate

Reduction Refinancing Loans (IRRRLs).

IRRRLs are designed to assist veterans

by allowing them to refinance an

outstanding VA-guaranteed loan with a

new loan at a lower rate. The provisions

of 38 U.S.C. 3703(c)(3) and 3710(e)(1)(C)

allow the veteran to do so without

having to pay any out-of-pocket

expenses. The veteran may include in

the new loan the outstanding balance of

the old loan plus reasonable closing

costs, including up to two discount

points. Over the years, IRRRLs have

provided nearly one million veterans an

opportunity to reduce the interest rates

and, thus, the monthly payments on

their home mortgages.

We have recently learned that a small

number of lenders have been urging

veterans to apply for loans under

conditions that increase the risk of loss

to both the veteran and the Government,

and do not provide the benefit that

IRRRLs were enacted to give. In some

cases, these loans involve exorbitant

costs in relation to the small reduction

in the interest rate. Thus, veterans

actually experience an increase in their

monthly payment notwithstanding the

lower rate. In other cases, lenders are

urging veterans to default on their

current loan, then refinance the

delinquent loan with a new loan

including the past due interest and late

charges.

In one case, a veteran obtained a 30-

year loan for a new home in Florida in

October 1991. The fixed-rate mortgage

was for $95,800 (including funding fee)

at the State bond program interest rate

of 7.99 percent with a principal and

interest payment of $702.28. In March

1995 he obtained an adjustable rate

mortgage (ARM) IRRRL with an initial

interest rate of 7.5 percent. This loan

was for $103,950 and had an initial

payment amount of $726.83. It included

$8,912.54 in closing costs, including 5.5

discount points. In January 1997, the

ARM interest rate had been adjusted to

8.25 percent, and he obtained another

IRRRL for $111,090 at a fixed interest

rate of 8.00 percent and a monthly

payment of $815.14. Thus, in a little
52504 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Rules and Regulations

over 5 years he increased his mortgage

by $15,190 and his payment by $112.84

‘‘ both increased by approximately 16

percent ‘‘ and he still has 30 years to

pay.

In order to assist veterans who were

delinquent on their original loan to

refinance to a lower rate, VA permitted

them to include their past due payments

in the new loan. Because loan

instruments normally provide that any

past due interest and late charges are

capitalized and added to the loan

balance, VA considered such past-due

charges to be part of ‘‘the balance of the

loan being refinanced’’, and, therefore,

eligible to be refinanced under the

provisions of 38 U.S.C. 3710(e)(1). Some

lenders have abused this interpretation

by actually encouraging veterans to skip

a few payments on the old loan and use

the cash saved by not making a timely

payment for other purposes. One lender

went so far as to suggest to prospective

borrowers that they skip a few payments

and use the money for a summer

vacation.

These types of abusive loan practices

do not serve the best interests of the

veterans involved. They also have an

adverse effect on the financial interests

of the Government. Since IRRRLs can

already result in loans in excess of the

value of the property, additional

unwarranted increases in the amount by

which the loan balance exceeds the

market value of the property could

further increase VA’s loss in the event

of default and payment of a claim under

the guaranty. Also, an excessive

increase in the loan amount could cause

a veteran to be unable to sell the home

for an amount sufficient to pay off the

loan balance.

In order to insure that IRRRLs

continue to provide a true benefit to the

veteran, and to protect the financial

interest of the Government, we are

making the following changes to the

IRRRL program by revising the

provisions of 38 CFR 36.4306a and

36.4337(a).

Monthly Payment Reduction

We generally will require that the

monthly payment (principal and

interest) on the new loan must be lower

than the monthly payment on the loan

being refinanced. This will prevent

cases in which the veteran’s monthly

payment actually increases, even though

the interest rate is lowered slightly,

because extensive closing costs are

included in the loan. This requirement

does not apply to four situations where

VA believes that other factors offset the

risk of loss from an increase in monthly

payment. These four situations are cases

in which an ARM is being refinanced

with a fixed-rate loan; cases in which

the term of the new loan is shorter than

the term of the loan being refinanced;

cases in which the increase in monthly

payment is attributable to the inclusion

of energy efficient improvements, as

provided in § 36.4336(a)(4); and cases in

which the Secretary approves the new

loan, on a case-by-case basis, in order to

prevent an imminent foreclosure. With

regard to ARMs, there is already a

possibility that the monthly payment

will increase in future years. The

certainty that the payment on the new

loan will not increase in future years

offsets the increased risk associated

with the immediate increase over the

veteran’s current payment. VA may

establish limits on the amount of such

increase in future rule making.

Although the monthly payments on

shorter term loans are higher, they

amortize faster, thus reducing the risk of

loss to both the veteran and the

Government. In future rule making, VA

may address minimum term reduction.

Current law allows veterans to include

additional costs of energy efficient

improvements in IRRRLs; thus, this

exception merely continues current law.

Finally, with regard to imminent

foreclosure, the risk of loss to the

Government and veteran from such

foreclosure could be greater than

permitting a new loan at a higher

monthly payment. VA would have to

approve each such loan on a case-bycase basis under existing credit

underwriting standards set forth at 38

CFR 36.4337 to ensure that it is in the

best interest of the Government and that

the veteran is able to afford the new

payment.

The Loan Must Be Current

To prevent the lender from

encouraging borrowers to ‘‘skip’’

mortgage payments and include them in

the new loan, we are requiring that in

any case where the loan being

refinanced is delinquent, the new loan

must be submitted to VA for prior

approval. VA must determine that the

veteran qualifies for the new loan under

existing credit standards contained in

38 CFR 36.4337. Under these standards,

a veteran must, among other things,

demonstrate a proper regard for

obligations. If it is found that the

veteran purposely failed to make timely

payment on the loan in order to use the

cash for a vacation or similar

discretionary spending, the new loan is

unlikely to be approved.

We are clarifying existing VA

interpretation that delinquent interest

and late charges are considered part of

the balance of the loan being refinanced.

Credit Underwriting Standards

We are also making a conforming

amendment to 38 CFR 36.4337. That

section contains the current credit

underwriting standards. Currently,

paragraph (a) of that section provides

that the standards do not apply to

IRRRLs. We are amending this to state

the standards do not apply to IRRRLs

unless under 38 CFR 36.4306a the loan

must be submitted to VA for prior

approval. As discussed above, loans to

prevent imminent foreclosure where the

monthly payment on the new loan

exceeds the payments on the loan being

refinanced, and cases where the loan

being refinanced is delinquent, will now

be required to be approved in advance.

Administrative Procedure Act

Pursuant to 5 U.S.C. 553, we have

found good cause to dispense with

notice and comment on this interim

final rule and to dispense with a 30-day

delay of its effective date. These

findings are based on the critical need

to help ensure that veterans are treated

fairly by lenders and to protect the

financial interests of the Government as

guarantor of these loans. Comments are

being solicited for 60 days after

publication of this document. VA may

modify this rule in response to

comments if appropriate.

Executive Order 12866

This proposed rule has been reviewed

by OMB under Executive Order 12866.

Regulatory Flexibility Act

Because no notice of proposed rule

making was required in connection with

the adoption of this interim final rule,

no regulatory flexibility analysis is

required under the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.).

(The Catalog of Federal Domestic Assistance

Program number is 64.114)

List of Subjects in 38 CFR Part 36

Condominiums, Handicapped,

Housing, Indians, Individuals with

disabilities, Loan programs—housing

and community development, Loan

programs-Indians, Loan programs—

veterans, Manufactured homes,

Mortgage insurance, Reporting and

recordkeeping requirements, Veterans.

Approved: August 25, 1997.

Hershel W. Gober,

Acting Secretary of Veterans Affairs.

For the reasons set out in the

preamble, 38 CFR part 36 is amended as

set forth below.

PART 36—LOAN GUARANTY

1. The authority citation for part 36

continues to read as follows:
Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Rules and Regulations 52505

Authority: 38 U.S.C. 501, 3701–3704, 3707,

3710–3714, 3719, 3720, 3729, 3762, unless

otherwise noted.

2. In § 36.4306a, paragraphs (a)(3)

through (a)(5) are revised and

paragraphs (a)(6) and (a)(7) are added, to

read as follows:

§ 36.4306a Interest rate reduction

refinancing loan.

(a) * * *

(3) The monthly principal and interest

payment on the new loan must be lower

than the payment on the loan being

refinanced, except when the term of the

new loan is shorter than the term of the

loan being refinanced; or the new loan

is a fixed-rate loan that refinances a VAguaranteed adjustable rate mortgage; or

the increase in the monthly payments

on the loan results from the inclusion of

energy efficient improvements, as

provided by § 36.4336(a)(4); or the loan

is approved by the Secretary in advance

after determining that the new loan is

necessary to prevent imminent

foreclosure and the veteran qualifies for

the new loan under the credit standards

contained in § 36.4337.

(4) The amount of the refinancing

loan may not exceed:

(i) An amount equal to the balance of

the loan being refinanced, which must

be current, except in cases described in

paragraph (a)(5) of this section, and

such closing costs as authorized by

§ 36.4312(d) and a discount not to

exceed 2 percent of the loan amount; or

(ii) In the case of a loan to refinance

an existing VA-guaranteed or direct loan

and to improve the dwelling securing

such loan through energy efficient

improvements, the amount referred to

with respect to the loan under

paragraph (a)(4)(i) of this section, plus

the amount authorized by

§ 36.4336(a)(4).

(Authority: 38 U.S.C. 3703, 3710)

(5) In any case where the loan being

refinanced is delinquent, the new loan

will be guaranteed only if it is approved

by the Secretary in advance after

determining that the veteran qualifies

for the loan under the credit standards

contained in § 36.4337. In such cases,

the term ‘‘balance of the loan being

refinanced’’ shall include any past due

installments, plus allowable late

charges.

(6) The dollar amount of guaranty on

the 38 U.S.C. 3710(a)(8) or (a)(9)(B)(i)

loan may not exceed the original dollar

amount of guaranty applicable to the

loan being refinanced, less any dollar

amount of guaranty previously paid as

a claim on the loan being refinanced;

and

(7) The term of the refinancing loan

(38 U.S.C. 3710(a)(8)) may not exceed

the original term of the loan being

refinanced plus ten years, or the

maximum loan term allowed under 38

U.S.C. 3703(d)(1), whichever is less. For

manufactured home loans that were

previously guaranteed under 38 U.S.C.

3712, the loan term, if being refinanced

under 38 U.S.C. 3710(a)(9)(B)(i), may

exceed the original term of the loan but

may not exceed the maximum loan term

allowed under 38 U.S.C. 3703(d)(1).

(Authority: 38 U.S.C. 3703(c)(1), 3710(e)(1))

* * * * *

3. In § 36.4337, paragraph (a) is

revised to read as follows:

§ 36.4337 Underwriting standards,

processing procedures, lender

responsibility and lender certification.

(a) Use of standards. The standards

contained in paragraphs (c) through (j)

of this section will be used to determine

that the veteran’s present and

anticipated income and expenses, and

credit history are satisfactory. These

standards do not apply to loans

guaranteed pursuant to 38 U.S.C.

3710(a)(8) except for cases where the

Secretary is required to approve the loan

in advance under § 36.4306a.

(Authority: 38 U.S.C. 3703, 3710)

* * * * *

[FR Doc. 97–26614 Filed 10–7–97; 8:45 am]

BILLING CODE 8320–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 180

[OPP–300552; FRL–5745–2]

RIN 2070–AB78

Glyphosate Oxidoreductase and the

Genetic Material Necessary for Its

Production in All Plants; Exemption

From Tolerance Requirement On All

Raw Agricultural Commodities

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Final rule.

SUMMARY: This document establishes an

exemption from the requirement of a

tolerance for residues of the plantpesticide inert ingredients glyphosate

oxidoreductase (GOX) and the genetic

material necessary for its production in

all plants when used as plant-pesticides

in or on all raw agricultural

commodities (RACs). Monsanto

Company submitted a petition to EPA

under the Federal Food, Drug, and

Cosmetic Act (FFDCA) as amended by

the Food Quality Protection Act of l996

(FQPA) requesting the exemption from

the requirement of a tolerance. This

regulation eliminates the need to

establish a maximum permissible level

for residues of this plant-pesticides in or

on all RACS.

DATES: This regulation is effective on

October 8, 1997. Written objections and

requests for hearings must be received

by EPA on or before December 8, 1997.

ADDRESSES: Written objections and

hearing requests, identified by the

docket control number OPP–300552,

may be submitted to: Hearing Clerk

(1900), Environmental Protection

Agency, Rm. M3708, 401 M St., SW.,

Washington, DC 20460. Fees

accompanying objections and hearing

requests shall be labeled ‘‘Tolerance

Petition Fees’’ and forwarded to: EPA

Headquarters Accounting Operations

Branch, OPP (Tolerance Fees), P.O. Box

360277M, Pittsburgh, PA 15251. A copy

of any objections and hearing requests

filed with the Hearing Clerk should be

identified by the docket control number

OPP–300552 and submitted to: Public

Information and Records Integrity

Branch, Information Resources and

Services Division (7506C), Office of

Pesticide Programs, Environmental

Protection Agency, 401 M St., SW.,

Washington, DC 20460. In person, bring

a copy of objections and hearing

requests to: Rm. 1132, Crystal Mall #2,

1921 Jefferson Davis Highway,

Arlington, VA.

A copy of objections and hearing

requests filed with the Hearing Clerk

may also be submitted electronically by

sending electronic mail (e-mail) to:

opp-docket@epamail.epa.gov.

Copies of objections and hearing

requests must be submitted as an ASCII

file avoiding the use of special

characters and any form of encryption.

Copies of objections and hearing

requests will also be accepted on disks

in WordPerfect in 5.1 file format or

ASCII file format. All copies of

objections and hearing requests in

electronic form must be identified by

the docket control number OPP–300552.

No Confidential Business Information

(CBI) should be submitted through email. Additional information on CBI can

be found in VII. of this document.

Electronic copies of objections and

hearing requests on this rule may be

filed online at many Federal Depository

Libraries. Additional information on

electronic submissions can be found in

Unit VIII. of this document.

FOR FURTHER INFORMATION CONTACT: By

mail: Mike Mendelsohn, Biopesticides

and Pollution Prevention Division,

Office of Pesticide Programs,

Environmental Protection Agency, 401

M St., SW., Washington, DC 20460.

Office location, telephone number, and