11950 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 

(xii) Plantlets of Solanum 

lycopersicum from Mexico must also 

meet the following conditions: 

(A) The plantlets must be produced in 

accordance with § 319.37–5(r)(3); 

(B) The plantlets can only be 

imported into the continental United 

States, and may not be imported into 

Hawaii or the territories of the United 

States; and 

(C) The plantlets must be imported 

from Mexico directly into a greenhouse 

in the continental United States, the 

owner or owners of which have entered 

into a compliance agreement with 

APHIS. The required compliance 

agreement will specify the conditions 

under which the plants must enter and 

be maintained within the greenhouse, 

and will prohibit the plantlets from 

being moved from the greenhouse 

following importation, other than for the 

appropriate disposal of dead plantlets. 

(D) If all of the above requirements are 

correctly complied with, then the 

tomato fruit produced from the 

imported greenhouse plantlets may be 

shipped from the greenhouses for 

commercial sale within the United 

States. 

* * * * * 

Done in Washington, DC, this 2nd day of 

March 2015. 

Kevin Shea, 

Administrator, Animal and Plant Health 

Inspection Service. 

[FR Doc. 2015–05058 Filed 3–4–15; 8:45 am] 

BILLING CODE 3410–34–P 

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

7 CFR Part 3555 

RIN 0575–AD00 

Single Family Housing Guaranteed 

Loan Program 

AGENCY: Rural Housing Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Rural Housing Service 

(RHS or Agency) proposes to amend the 

current regulation for the Single Family 

Housing Guaranteed Loan Program 

(SFHGLP) on the subjects of lender 

indemnification, principal reduction, 

refinancing, and qualified mortgage 

requirements. 

DATES: Written or email comments on 

the proposed rule must be received on 

or before May 4, 2015. 

ADDRESSES: You may submit comments 

on this proposed rule by any one of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

electronically. 

• 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 Ave. SW., Washington, 

DC 20250–0742. 

• Hand Delivery/Courier: Submit 

written comments via Federal Express 

mail, or other 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, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at the 300 7th Street 

SW., 7th Floor address listed above. 

FOR FURTHER INFORMATION CONTACT: 

Lilian Lipton, Loan Specialist, Single 

Family Housing Guaranteed Loan 

Division, STOP 0784, Room 2250, 

USDA Rural Development, South 

Agriculture Building, 1400 

Independence Avenue SW., 

Washington, DC 20250–0784, telephone: 

(202) 260–8012, email is lilian.lipton@

wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: RHS 

proposes to amend the current 

regulation for the Single Family 

Housing Guaranteed Loan Program 

(SFHGLP) on the subjects of lender 

indemnification, principal reduction, 

refinancing, and qualified mortgage 

requirements. 

Indemnification: The Agency seeks to 

expand its lender indemnification 

authority for loss claims in the case of 

fraud, misrepresentation, or 

noncompliance with applicable loan 

origination requirements. This action is 

taken to continue the Agency’s efforts to 

improve and expand the risk 

management of the SFHGLP. The 

proposed change is in accordance with 

the recommendations in the Office of 

Inspector General Report 04703–003– 

HY, from October 2012. 

Principal Reduction: The Agency is 

proposing to amend its regulations at 7 

CFR 3555.10 and 3555.304 to add a new 

special loan servicing option to the 

SFHGLP that lenders may utilize while 

still maintaining the SFHGLP loan 

guarantee. The Agency will allow 

lenders to reduce the principal balance 

on behalf of borrowers in amounts up to 

30 percent of the unpaid principal 

balance of the loan as of the date of 

default, inclusive of any Mortgage 

Recovery Advance (MRA), after the 

lender has exhausted all other 

traditional loss mitigation options such 

as a loan modification or forbearance. 

Refinance: The Agency is proposing 

to amend its refinancing provisions at 

3555.101(d)(3) to remove the 

requirement that the new interest rate be 

at least 100 basis points below the 

original loan rate. The interest rate 

reduction requirement of 

3555.101(d)(3)(i) is being revised to 

simply require that the new interest rate 

not exceed the interest rate on the 

original loan. 

The Agency is also proposing to 

amend its regulations at 7 CFR 3555.101 

to add a new refinance option, 

‘‘streamlined-assist,’’ which was 

formerly the Rural Refinance Pilot 

(pilot), to the SFHGLP. The streamlinedassist refinance differs from the 

traditional refinance options in that 

there is no appraisal or credit report 

requirement in most instances, as long 

as the borrower has not defaulted on 

their first mortgage during the previous 

12 months. Appraisals are still required 

for refinancing direct loans where the 

borrower has received a subsidy, for 

purposes of calculating subsidy 

recapture. 

Qualified Mortgage: The agency 

intends to amend its regulation to 

indicate that a loan guaranteed by RHS 

is a Qualified Mortgage if it meets 

certain requirements set forth by the 

Consumer Protection Finance Bureau 

(CFPB). The CFPB published a Qualified 

Mortgage rule (12 CFR 1026) which 

implements in part the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act of 2010 (P.L. 111–203). 

The CFPB rule includes a sunset 

provision that presumes RHS 

guaranteed loans are Qualified 

Mortgages until January 10, 2021, or 

until USDA publishes its own Qualified 

Mortgage rule, whichever comes first. 

Classification 

This proposed rule has been 

determined to be non-significant by the 

Office of Management and Budget 

(OMB) under Executive Order 12866. 

Executive Order 12988, Civil Justice 

Reform 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. Except where specified, all 

State and local laws and regulations that 

are in direct conflict with this rule will 

be preempted. Federal funds carry 

Federal requirements. No person is 

required to apply for funding under this 

program, but if they do apply and are 

selected for funding, they must comply 

with the requirements applicable to the 

Federal program funds. This rule is not 

retroactive. It will not affect agreements 

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Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 11951 

entered into prior to the effective date 

of the rule. Before any judicial action 

may be brought regarding the provisions 

of this rule, the administrative appeal 

provisions of 7 CFR part 11 must be 

exhausted. 

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 effect of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

the Agency generally must prepare a 

written statement, including a costbenefit 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 the 

Agency to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

most cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. 

This proposed 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. 

Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ It 

is the determination of the Agency 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, neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

required. 

Executive Order 13132, Federalism 

The policies contained in this rule do 

not have any substantial direct effect on 

States, on the relationship between the 

national government and 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. 

Regulatory Flexibility Act 

In compliance with the Regulatory 

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

undersigned has determined and 

certified by signature of this document 

that this rule change will not have a 

significant impact on a substantial 

number of small entities. This rule does 

not impose any significant new 

requirements on Agency applicants and 

borrowers, and the regulatory changes 

affect only Agency determination of 

program benefits for guarantees of loans 

made to individuals. 

Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

This executive order imposes 

requirements on RD in the development 

of regulatory policies that have Tribal 

implications or preempt tribal laws. RD 

has determined that the proposed rule 

does not have a substantial direct effect 

on one or more Indian Tribe(s) or on 

either the relationship or the 

distribution of powers and 

responsibilities between the Federal 

Government and Indian Tribes. Thus, 

this rule is not subject to the 

requirements of Executive Order 13175. 

If a Tribe determines that this rule has 

implications of which RD is not aware 

and would like to engage with RD on 

this rule, please contact RD’s Native 

American Coordinator at (720) 544– 

2911 or AIAN@wdc.usda.gov. 

Executive Order 12372, 

Intergovernmental Consultation 

This program/activity is not subject to 

the provisions of Executive Order 

12372, which require intergovernmental 

consultation with State and local 

officials. (See the Notice related to 7 

CFR part 3015, subpart V, at 48 FR 

29112, June 24, 1983; 49 FR 22675, May 

31, 1984; 50 FR 14088, April 10, 1985). 

Programs Affected 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

Number 10.410, Very Low to Moderate 

Income Housing Loans (Section 502 

Rural Housing Loans). 

Paperwork Reduction Act 

The information collection and record 

keeping requirements contained in this 

regulation have been approved by OMB 

in accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.). The assigned OMB control 

number is XXXX–XXXX. 

E-Government Act Compliance 

The Rural Housing Service 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. 

Non-Discrimination Policy 

The U.S. Department of Agriculture 

(USDA) prohibits discrimination against 

its customers, employees, and 

applicants for employment on the bases 

of race, color, national origin, age, 

disability, sex, gender identity, religion, 

reprisal, and where applicable, political 

beliefs, marital status, familial or 

parental status, sexual orientation, or all 

or part of an individual’s income is 

derived from any public assistance 

program, or protected genetic 

information in employment or in any 

program or activity conducted or funded 

by the Department. (Not all prohibited 

bases will apply to all programs and/or 

employment activities.) 

If you wish to file a Civil Rights 

program complaint of discrimination, 

complete the USDA Program 

Discrimination Complaint Form (PDF), 

found online at http://www.ascr.usda.

gov/complaint_filing_cust.html, or at 

any USDA office, or call (866) 632–9992 

to request the form. You may also write 

a letter containing all of the information 

requested in the form. Send your 

completed complaint form or letter to us 

by mail at U.S. Department of 

Agriculture, Director, Office of 

Adjudication, 1400 Independence 

Avenue SW., Washington, DC 20250– 

9410, by fax (202) 690–7442 or email at 

program.intake@usda.gov. 

Individuals who are deaf, hard of 

hearing or have speech disabilities and 

you wish to file either an EEO or 

program complaint please contact 

USDA through the Federal Relay 

Service at (800) 877–8339 or (800) 845– 

6136 (in Spanish). 

Persons with disabilities who wish to 

file a program complaint, please see 

information above on how to contact us 

by mail directly or by email. If you 

require alternative means of 

communication for program information 

(e.g., Braille, large print, audiotape, etc.) 

please contact USDA’s TARGET Center 

at (202) 720–2600 (voice and TDD). 

Background Information 

Indemnification: In the Office of 

Inspector General (OIG) Report 04703– 

003–HY, SFH GL Loss Claims, the 

Agency was requested to re-evaluate the 

timeframe in which the Government can 

seek indemnification for noncompliance 

with regulations in loan origination. 

Present language in 7 CFR 

3555.108(d)(1) limits the 

indemnification to losses if the payment 

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11952 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 

under the guarantee was made within 

24 months of loan closing. Origination 

defects which depart from Agency 

requirements, however, may cause 

defaults beyond 24 months from loan 

closing. Similarly, claims arising from 

defective originations may occur several 

years after loan closing. The proposed 

change will trigger indemnification if 

the default occurs within 5 years from 

origination, the Agency concludes the 

default arose because the originator did 

not underwrite the loan according to 

Agency standards and guidelines, and 

regardless of when the claim is paid. 

This is similar to how HUD and other 

federal agencies operate. 

The Agency may also seek 

indemnification if the Agency 

determines that fraud or 

misrepresentation occurred in 

connection with the origination of the 

loan, regardless of when the loan closed. 

7 CFR 3555.108(d)(2). This provision is 

being clarified to state that the Agency 

may seek indemnification in cases of 

fraud or misrepresentation regardless of 

when the loan closed or when the 

default occurred. 

In addition, the definition of 

‘‘default’’ has been added to section 

3555.10 to clarify that default is when 

an account is more than 30 days 

overdue. This is consistent with how 

the term is used in the mortgage 

industry. 

Principal Reduction Advance (PRA): 

The Helping Families Save Their Homes 

Act of 2009 was signed into law on May 

20, 2009. Section 101 of this law 

amended section 502(h) of the Housing 

Act of 1949 (42 U.S.C. 1472(h)), which 

authorizes the SFHGLP. The 

amendments gave RHS the authority to 

establish a program for the payment of 

partial claims to approved guaranteed 

lenders who agree to apply the claim 

amount to the payment of a loan in 

default or facing imminent default 

under Section 502(h)(14) of the Housing 

Act. RHS published a final rule under 

this authority on August 26, 2010 (see 

75 FR 52429). 

Under this authority, the Agency 

proposes to add paragraph 7 CFR 

3555.304(e) to reimburse lenders for 

PRAs made on behalf of borrowers in 

default or facing imminent default. The 

lender must consider all other 

traditional loan servicing options, 

including forbearances and loan 

modifications, prior to requesting a 

PRA. The Agency proposes that the 

MRA will continue to include the sum 

of arrearages not exceeding 12 months 

of PITI, annual fees, legal fees, and 

foreclosure costs related to a cancelled 

foreclosure action, but will no longer 

include any principal deferments or 

reductions. A PRA will follow an MRA 

if necessary to bring the borrower’s total 

monthly mortgage payment to 31 

percent of gross monthly income. The 

PRA cannot be issued without an MRA; 

the MRA may be issued independently 

of a PRA. The purpose of the PRA is to 

ensure the modified loan is affordable to 

the borrower with the potential of also 

addressing housing market pricing 

imbalances that impact borrowers in 

default or in imminent danger of 

default. The PRA cannot be extended 

more than once to provide borrower 

relief. Lenders must receive written 

approval from RHS prior to servicing a 

borrower’s account with a PRA. As with 

other special servicing options, the 

Lender must submit a servicing plan to 

RHS pursuant to 7 CFR 3555.301(h) 

when a borrower’s account is 90 days 

delinquent and a method other than 

foreclosure is recommended to resolve 

the delinquency. Use of special loan 

servicing does not change the terms of 

the loan note guarantee. 

Section 502(h)(14) of the Housing Act 

of 1949 limits the amount of the partial 

claim to no more than 30 percent of the 

unpaid principal balance of the 

mortgage plus any costs that are 

approved by the Secretary. The 

maximum principal reduction amount 

that can be achieved through a 

combination of both the MRA and PRA 

can therefore not exceed 30 percent of 

the unpaid principal balance as of the 

date of default. The PRA is only 

permitted in cases when all special 

servicing requirements are met, notably, 

that the mortgage payment-to-income 

ratio after special servicing is reduced to 

31 percent or a proximate value 

extremely close to, but not less than, 31 

percent, and the total debt-to-income 

ratio after special servicing is not more 

than 55 percent. The trial payment plan 

described in paragraph 3555.304(b) is 

also applicable when PRAs take place. 

In order to provide principal reductions 

for borrowers who purchased properties 

at unrealistically inflated values during 

the period from 2001 to 2009, PRAs will 

be limited to loans originated and 

closed on or after January 1, 2001 

through January 1, 2010. 

Section 3555.304(e)(2) discusses how 

the amount of a PRA must be subject to 

an unsecured promissory note which is 

interest and payment free, due three 

years from the date of the principal 

reduction advance, and may be forgiven 

at the end of three years if the borrower 

and loan account are in good standing. 

To be in good standing, the account may 

not have been more than 60 days 

delinquent at any time after the date of 

the PRA. If the debt is forgiven, RHS 

must report this amount to the Internal 

Revenue Service as income for the 

borrower. 

Section 3555.304(e)(3) discusses how 

a Lender files a claim with RHS for 

reimbursement of a principal reduction 

advance. First, a claim for 

reimbursement must be submitted to 

RHS within 60 days of the advance 

being executed by the borrower through 

his or her signature on the promissory 

note. When filing the claim for 

reimbursement with RHS, the Lender 

must submit the original promissory 

note with the other supporting 

documentation for the claim. 

In order to avoid confusion between 

the MRA and PRA, the Agency proposes 

to remove references to principal 

reduction or deferment in the MRA 

regulations. Revisions to the definition 

of MRA in 7 CFR 3555.10 and the MRA 

provisions in 7 CFR 3555.304(d)(1) and 

(3) reflect that proposed change. This 

rule also amends 7 CFR 3555.10, 

‘‘Definitions and Abbreviations,’’ to 

include the terms introduced in 7 CFR 

3555.304(e). 

Refinance: There are currently two 

refinance options available to Section 

502 borrowers, and the Agency wishes 

to add a third option which has been 

successfully tested in a pilot. The 

Agency is proposing to amend section 

3555.101(d)(3)(i) to remove the 

requirement that the interest rate of a 

refinanced loan be at least 100 basis 

points below the original rate, and 

instead to require that the new interest 

rate not exceed the original interest 

loan’s interest rate. The interest rate 

reduction requirement has proven 

problematic in rising rate environments. 

For example, in the case of divorce, the 

borrower may not be able to refinance 

as required by their divorce decree or 

judgment because they cannot secure an 

interest rate at least 1 percent lower 

than the first one. The definition of 

‘‘streamlined-assist refinance’’ is being 

added to 7 CFR 3555.10. On February 1, 

2012 RHS created a refinancing pilot 

known as the ‘‘Rural Refinance Pilot.’’ 

The pilot was published in 

Administrative Notice numbers 4634, 

4704, 4720, and 4749. The streamlinedassist refinance differs from the 

traditional refinance options in that 

there is no appraisal or credit report 

requirement in most instances, as long 

as the borrower has been current on 

their first mortgage for the previous 12 

months and their new interest rate is at 

least 1 percent lower than their first one. 

A new appraisal is required for direct 

loan borrowers who received a subsidy 

for the purposes of calculating subsidy 

recapture. 

The pilot was designed to assist 

existing Section 502 direct or 

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Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 11953 

guaranteed loan borrowers in 

refinancing their homes with greater 

ease in thirty-five eligible states where 

steep home price declines, 

unemployment and persistent poverty 

rates made refinancing a current 

mortgage into more affordable terms 

difficult or impossible. Due to the 

success of the pilot program, RHS will 

implement the pilot as a refinance 

option for existing Section 502 direct or 

guaranteed loan borrowers nationwide 

in addition to the two traditional 

refinance loan options of streamlined 

and non-streamlined. The special 

refinance loan option will be called 

‘‘streamlined-assist.’’ 

This rule proposes to amend 7 CFR 

3555.101(d)(vi) to include ‘‘streamlinedassist’’ as one of three available 

refinance loan options in addition to the 

traditional ‘‘streamlined’’ and ‘‘nonstreamlined’’ refinance loans. Section 

3555.101(d)(vi) discusses eligibility 

requirements for each streamlined and 

non-streamlined refinance loan. The 

streamlined-assist refinance will have 

the same features as the Rural Refinance 

Pilot described above. Additional 

eligibility criteria for refinance loans is 

discussed in Section 3555.101(d)(3). 

Qualified Mortgage: The agency 

proposes a rule change to Section 

3555.109, to indicate that a loan 

guaranteed by RHS meeting certain 

CFPB requirements is a ‘‘Qualified 

Mortgage.’’ 

The CFPB published a ‘‘Qualified 

Mortgage’’ rule (12 CFR part 1026) 

which became effective January 10, 

2014 and implemented in part the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (Pub. 

L. 111–203). This rule requires creditors 

to make a reasonable, good faith 

determination of a consumer’s 

repayment ability for any consumer 

credit transaction secured by a dwelling, 

and establishes a safe harbor from 

liability for transactions that meet the 

requirements for ‘‘qualified mortgages.’’ 

Currently, SFHGLP loans are considered 

to be qualified mortgages if they meet 

the requirements in 12 CFR 

1026.43(e)(2)(i)–(iii) and the points and 

fees limits in 12 CFR 1026.43(e)(3) until 

RHS promulgates its own rules 

regarding qualified mortgages, or 

January 10, 2021, whichever is earlier. 

(See 12 CFR 1026.43(e)(4)). 

RHS guaranteed loans currently meet 

these requirements. Therefore, section 

3555.109 will clarify that RHS 

guaranteed loans which meet the CFPB 

requirements in 12 CFR 

1026.43(e)(2)(i)–(iii) and 12 CFR 

1026.43(e)(3) are considered qualified 

mortgages. Also, the definition of 

‘‘qualified mortgage’’ will be added to 7 

CFR 3555.10. 

List of Subjects in 7 CFR Part 3555 

Home improvement, Loan programs— 

Housing and community development, 

Mortgage insurance, Mortgages, Rural 

areas. 

For the reason stated in the preamble, 

Chapter XVIII, Title 7 of the Code of 

Federal Regulations is proposed to be 

amended as follows: 

PART 3555—GUARANTEED RURAL 

HOUSING PROGRAM 

■ 1. The authority citation for part 3555 

continues to read as follows: 

Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 42 

U.S.C. 1480, and Subpart E of 7 U.S.C. 

1932(a). 

Subpart C—Loan Requirements 

■ 2. Amend § 3555.10 by adding in 

alphabetical order the definition for 

‘‘Default,’’ revising the definition of 

‘‘Mortgage recovery advance,’’ and 

adding in alphabetical order definitions 

for ‘‘Principal reduction advance,’’ 

‘‘Qualified mortgage,’’ and 

‘‘Streamlined-assist refinance’’ to read 

as follows: 

§ 3555.10 Definitions and abbreviations. 

* * * * * 

Default. A loan is considered in 

default when a payment has not been 

paid after 30 days from the date it was 

due. 

* * * * * 

Principal reduction advance. A 

principal reduction advance is funds 

advanced by the Lender on behalf of a 

borrower to reduce the principal 

balance of the loan. 

* * * * * 

Mortgage recovery advance. A 

mortgage recovery advance is funds 

advanced by the lender on behalf of a 

borrower to satisfy the borrower’s 

arrearage, and pay legal fees and 

foreclosure costs related to a cancelled 

foreclosure action. 

* * * * * 

Qualified mortgage. A qualified 

mortgage is a guaranteed loan under this 

part which meets all Agency 

requirements as well as the restrictions 

in 12 CFR 1026.43(e)(2)(i) through (iii) 

and the points and fees limits in 12 CFR 

1026.43(e)(3). 

* * * * * 

Streamlined-assist refinance. A 

streamlined-assist refinance is an 

abbreviated method of refinancing 

which does not require a credit report, 

or the calculation of loan-to-value or 

debt-to-income ratios. Lenders must 

verify that the borrower has been 

current on their existing loan for the 

preceding 12 month period. 

* * * * * 

■ 3. Section 3555.101 is amended by: 

■ a. Revising paragraphs (d)(3)(i) and 

(ii). 

■ b. Removing paragraph (d)(3)(iv). 

■ c. Re-designating paragraphs (d)(3)(v) 

through (x) as (d)(3)(iv) through (ix) 

respectively. 

The revisions read as follows: 

§ 3555.101 Loan Purposes. 

* * * * * 

(d) * * * 

(3) * * * 

(i) Three options for refinancing may 

be offered: Streamlined, nonstreamlined, and streamlined-assist. 

Other than provided in this paragraph, 

no cash out is permitted for any 

refinance. Documentation costs and 

underwriting requirements of subparts 

D, E, and F of this part apply to 

streamlined and non-streamlined 

refinances. 

(A) Lenders may offer a streamlined 

refinance for existing Section 502 

Guaranteed loans, which does not 

require a new appraisal. The lender will 

pay off the balance of the existing 

Section 502 Guaranteed loan. The new 

loan amount cannot include any closing 

costs or lender fees. 

(B) Lenders may offer nonstreamlined refinancing for existing 

Section 502 Guaranteed or Direct loans, 

which requires a new and current 

market value appraisal. The amount of 

the new loan must be supported by 

sufficient equity in the property as 

determined by an appraisal. The 

appraised value may be exceeded by the 

amount of up-front guarantee fee 

financed, if any, when using the nonstreamlined option. 

(C) A streamlined-assist refinance 

loan is a special refinance option 

available to existing Section 502 direct 

and guaranteed loan borrowers. 

Applicants must meet the income 

eligibility requirements of § 3555.151(a), 

and must not have had any defaults 

during the 12 month period prior to the 

refinance loan application. There are no 

debt-to-income calculation 

requirements, no credit report 

requirements, no property inspection 

requirements, and no loan-to-value 

requirements. There is no appraisal 

requirement except for Section 502 

direct loan borrowers who have 

received a subsidy. 

(ii) The interest rate of the new loan 

must be fixed and must not exceed the 

interest rate of the original loan being 

refinanced. 

* * * * * 

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11954 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 

■ 4. Amend § 3555.108 by revising 

paragraph (d) to read as follows: 

§ 3555.108 Full faith and credit. 

* * * * * 

(d) Indemnification. If the Agency 

determines that a Lender did not 

originate a loan in accordance with the 

requirements in this part, and the 

Agency pays a claim under the loan 

guarantee, the Agency may revoke the 

lender’s eligibility status in accordance 

with subpart B of this part and may also 

require the lender: 

(1) To indemnify the Agency for the 

loss, if the default leading to the 

payment of loss claim occurred within 

five (5) years of loan closing, and the 

default arose from failure to originate 

the loan in accordance with agency 

requirements; or: 

(2) To indemnify the Agency for the 

loss regardless of how long ago the loan 

closed or the default occurred, if the 

Agency determines that fraud or 

misrepresentation was involved with 

the origination of the loan. 

(3) In addition, the Agency may use 

any other legal remedies it has against 

the Lender. 

* * * * * 

■ 5. Add § 3555.109 to read as follows: 

§ 3555.109 Qualified mortgage. 

A qualified mortgage is a guaranteed 

loan meeting the requirements of this 

part and applicable Agency guidance, as 

well as the requirements in 12 CFR 

1026.43(e)(i) through (iii) and 12 CFR 

1026.43(e)(3). 

■ 6. Section 3555.304 is amended by: 

■ a. Revising paragraph (d)(1). 

■ b. Removing paragraph (d)(3). 

■ c. Re-designating paragraphs (d)(4) 

through (8) as (d)(3) through (7) 

respectively. 

■ d. Adding paragraph (e). 

The revisions read as follows: 

§ 3555.304 Special servicing options. 

* * * * * 

(d) * * * 

(1) The maximum amount of a 

mortgage recovery advance is the sum of 

arrearages not to exceed 12 months of 

PITI, annual fees, legal fees and 

foreclosure costs related to a cancelled 

foreclosure action. 

* * * * * 

(e) Principal reduction advance. A 

principal reduction advance cannot be 

issued independently of a mortgage 

recovery advance, and the amount of the 

principal reduction advance, when 

combined with the mortgage recovery 

advance, cannot exceed 30 percent of 

the unpaid principal balance as of the 

date of default. Principal reduction 

advances can be considered only for 

loans originated and closed on or after 

January 1, 2001 through January 1, 2010. 

(1) After a mortgage recovery advance 

has been calculated, the principal 

reduction amount for the modified 

mortgage is determined by calculating 

how much principal reduction advance 

is needed to achieve a mortgage 

payment-to-income ratio that is 31 

percent or a proximate value extremely 

close to, but not less than, 31 percent, 

while ensuring that the total debt-toincome ratio does not exceed 55 percent 

and that the combined mortgage 

recovery advance and principal 

reduction advance does not exceed 30 

percent of the unpaid principal balance. 

(2) The Lender must have the 

borrower execute an unsecured 

promissory note payable to RHS for the 

amount of the principal reduction 

advance. 

(3) The following terms apply to the 

repayment of principal reduction 

advances: 

(i) The principal reduction advance 

debt under the promissory note shall be 

interest-free. 

(ii) Borrowers are not required to 

make any monthly or periodic payments 

on the principal reduction advance 

note; however, borrowers may 

voluntarily submit partial payments 

without incurring any prepayment 

penalty. 

(iii) The due date for the principal 

reduction advance note shall be three 

years from the date of the note. Prior to 

the due date on the principal reduction 

note, payment in full under the note is 

due should the borrower transfer title to 

the property by voluntary or involuntary 

means within three years of the 

principal reduction advance. 

(iv) At the conclusion of three years, 

RHS will review the account and 

determine if it is in good standing. An 

account will be deemed in good 

standing if it has not been 60 days or 

more delinquent over the past three 

years. If the debt is forgiven, RHS must 

report this amount to the Internal 

Revenue Service in accordance with 

applicable law and regulations. 

(v) If the account is in good standing 

at the conclusion of the three year 

period, RHS will forgive the principal 

reduction advance note and the 

borrower will be released of all liability 

from the principal reduction advance 

promissory note. 

(vi) If the account is not in good 

standing, the principal reduction 

advance note will be payable and due in 

full. The Agency will collect this 

Federal debt from the borrower by any 

available means if the principal 

reduction advance is not repaid based 

on the terms outlined in the promissory 

note. 

(4) The lender may request 

reimbursement from the Agency for a 

principal reduction advance. A fully 

supported and documented claim for 

reimbursement must be submitted to the 

Agency within 60 days of the advance 

being completed. To be complete, the 

lender must provide the original 

promissory note to the Agency. 

(5) The loss claim filed by the lender 

will be adjusted by any amount of 

principal recovery advance reimbursed 

to the lender by the Agency. 

* * * * * 

Dated: January 20, 2015. 

Tony Hernandez, 

Administrator, Rural Housing Service. 

[FR Doc. 2015–03711 Filed 3–4–15; 8:45 am] 

BILLING CODE 3410–XV–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 791 

RIN 3133–AE45 

Promulgation of NCUA Rules and 

Regulations 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule and interpretive 

ruling and Policy Statement 15–1 with 

request for comments. 

SUMMARY: The NCUA Board (Board) 

proposes to amend Interpretive Ruling 

and Policy Statement (IRPS) 87–2, as 

amended by IRPS 03–2 and 13–1. The 

amended IRPS would increase the asset 

threshold used to define small entity 

under the Regulatory Flexibility Act 

(RFA) from $50 million to $100 million 

and, thereby, provide transparent 

consideration of regulatory relief for a 

greater number of credit unions in 

future rulemakings. The proposed rule 

and IRPS also make a technical change 

to NCUA’s regulations in connection 

with NCUA’s procedures for developing 

regulations. 

DATES: Comments must be received on 

or before May 4, 2015. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web site: http://www.ncua.

gov/Legal/Regs/Pages/PropRegs.aspx. 

Follow the instructions for submitting 

comments. 

• Email: Address to regcomments@

ncua.gov. Include ‘‘[Your name]— 

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