[Federal Register Volume 62, Number 230 (Monday, December 1, 1997)]
[Rules and Regulations]
[Page 63454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31369]


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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: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA) 
loan guaranty regulations concerning the requirements for Interest Rate 
Reduction Refinancing Loans (IRRRLs). In a document published in the 
Federal Register on October 8, 1997 (62 FR 52503), VA issued an interim 
final rule which generally limited these loans to instances where the 
veteran's monthly mortgage payment will decrease, and generally 
required that the loans being refinanced be current in their payments. 
The interim final rule stated that it was effective on the date of 
publication. A subsequent administrative issuance delayed the effective 
date of the changes made by the interim final rule until December 1, 
1997. This administrative issuance has caused uncertainty concerning 
the implementation of the interim final rule. Under these 
circumstances, this document rescinds the interim final rule and VA is 
rescinding the administrative issuance. We intend in the near future to 
publish a proposed rule to address the same issues that were addressed 
in the interim final rule. Further, the comments received in response 
to the interim final rule will be considered in the new rulemaking 
proceeding.

DATES: Effective Date: December 1, 1997.

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:

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553, we have found good cause to dispense with 
notice and comment on this final rule and to dispense with a 30-day 
delay of its effective date. Such actions are impracticable, 
unnecessary, and contrary to the public interest. The issues raised by 
the interim final rule will be subjected to notice and comment in a 
future rulemaking proceeding. Further, the final rule is necessary to 
avoid uncertainty regarding the implementation of the interim final 
rule.

Regulatory Flexibility Act

    Because no notice of proposed rule making was required in 
connection with the adoption of this 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: November 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:
    1. The authority citation for part 36 continues to read as follows:

    Authority: 38 U.S.C. 501, 3701-3704, 3707, 3710-3714, 3719, 
3720, 3729, 3762, unless otherwise noted.

    2. In Sec. 36.4306a, paragraphs (a)(6) and (a)(7) are removed and 
paragraphs (a)(3) through (a)(5) are revised, to read as follows:


Sec. 36.4306a  Interest rate reduction refinancing loan.

    (a) * * *
    (3) The amount of the refinancing loan may not exceed:
    (i) An amount equal to the balance of the loan being refinanced and 
such closing costs as authorized by Sec. 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, an amount equal to the sum of the amount 
referred to with respect to the loan under paragraph (a)(3)(i) of this 
section and the amount authorized by Sec. 36.4336(a)(4);

(Authority: 38 U.S.C. 3710(a))

    (4) The dollar amount of the guaranty of the 38 U.S.C. 3710(a)(8) 
or (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
    (5) The term of the refinancing loan (38 U.S.C. 3710(a)(8)) may not 
exceed the original term of the loan being financed 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. 3710(e)(1))

    3. In Sec. 36.4337, paragraph (a) is revised, to read as follows:


Sec. 36.4337  Underwriting standards, processing procedures, lender 
responsibility, and lender certification.

    (a) Use of standards. Except for refinancing loans guaranteed 
pursuant to 38 U.S.C. 3710(a)(8), 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.
* * * * *
[FR Doc. 97-31369 Filed 11-28-97; 8:45 am]
BILLING CODE 8320-01-P