75746 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

1As part of the 2013 regulatory review process, 

NCUA also reviewed parts 711, 712, 713, 714, 715, 

716, 717, 721, 723, 724, 725, 740, 741, 745, and 747 

of NCUA’s regulations. 

2For purposes of this rulemaking, these agencies 

are the Board of Governors of the Federal Reserve 

System, Federal Deposit Insurance Corporation, and 

Office of the Comptroller of Currency. 

servicer of a loan described in paragraph 

(a) of this section within 60 days after 

the effective date of the change. This 

notice may be provided electronically if 

electronic transmission is satisfactory to 

the Director of FEMA’s designee. Upon 

any change in the servicing of a loan 

described in paragraph (a) of this 

section, the duty to provide notice 

under this paragraph (b) shall transfer to 

the transferee servicer. 

Appendix A to Part 339—Sample Form 

of Notice of Special Flood Hazards and 

Availability of Federal Disaster Relief 

Assistance 

We are giving you this notice to inform you 

that: 

The building or mobile home securing the 

loan for which you have applied is or will 

be located in an area with special flood 

hazards. 

The area has been identified by the 

Director of the Federal Emergency 

Management Agency (FEMA) as a special 

flood hazard area using FEMA’s Flood 

Insurance Rate Map or the Flood Hazard 

Boundary Map for the following community: 

llll. This area has at least a one percent 

(1%) chance of a flood equal to or exceeding 

the base flood elevation (a 100-year flood) in 

any given year. During the life of a 30-year 

mortgage loan, the risk of a 100-year flood in 

a special flood hazard area is 26 percent 

(26%). 

Federal law allows a lender and borrower 

jointly to request the Director of FEMA to 

review the determination of whether the 

property securing the loan is located in a 

special flood hazard area. If you would like 

to make such a request, please contact us for 

further information. llllllllll

The community in which the property 

securing the loan is located participates in 

the National Flood Insurance Program 

(NFIP). Federal law will not allow us to make 

you the loan that you have applied for if you 

do not purchase flood insurance. The flood 

insurance must be maintained for the life of 

the loan. If you fail to purchase or renew 

flood insurance on the property, federal law 

authorizes and requires us to purchase the 

flood insurance for you at your expense. 

• Flood insurance coverage under the 

NFIP may be purchased through an insurance 

agent who will obtain the policy either 

directly through the NFIP or through an 

insurance company that participates in the 

NFIP. Flood insurance also may be available 

from private insurers that do not participate 

in the NFIP. 

• At a minimum, flood insurance 

purchased must cover the lesser of: 

(1) The outstanding principal balance of 

the loan; or 

(2) the maximum amount of coverage 

allowed for the type of property under the 

NFIP. Flood insurance coverage under the 

NFIP is limited to the overall value of the 

property securing the loan minus the value 

of the land on which the property is located. 

• Federal disaster relief assistance (usually 

in the form of a low-interest loan) may be 

available for damages incurred in excess of 

your flood insurance if your community’s 

participation in the NFIP is in accordance 

with NFIP requirements. 

llllllllllFlood insurance 

coverage under the NFIP is not available for 

the property securing the loan because the 

community in which the property is located 

does not participate in the NFIP. In addition, 

if the non-participating community has been 

identified for at least one year as containing 

a special flood hazard area, properties 

located in the community will not be eligible 

for federal disaster relief assistance in the 

event of a federally-declared flood disaster. 

PART 391—FORMER OFFICE OF 

THRIFT SUPERVISION REGULATIONS 

■ 2. The authority citation for Part 391 

is revised to read as follows: 

Authority: 12 U.S.C. 1819. 

Subpart A also issued under 12 U.S.C. 

1462a; 1463; 1464; 1828; 1831p-1; 1881– 

1884; 15 U.S.C. 1681w; 15 U.S.C. 6801; 6805. 

Subpart B also issued under 12 U.S.C. 

1462a; 1463; 1464; 1828; 1831p-1; 1881– 

1884; 15 U.S.C.1681w; 15 U.S.C. 6801; 6805. 

Subpart C also issued under 12 U.S.C. 

1462a; 1463; 1464; 1828; 1831p-1; and 1881– 

1884; 15 U.S.C. 1681m; 1681w. 

Subpart E also issued under 12 U.S.C. 

1467a; 1468; 1817; 1831i. 

Subpart D—[Removed and Reserved] 

■ 3. Remove and reserve Subpart D 

consisting of §§ 391.30 through 391.39 

and the Appendix to Subpart D. 

Dated at Washington, DC, this 16th day of 

December 2014. 

By Order of the Board of Directors, Federal 

Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2014–29761 Filed 12–18–14; 8:45 am] 

BILLING CODE P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 701 and 722 

RIN 3133–AE36 

Appraisals—Availability to Applicants 

and Requirements for Transactions 

Involving an Existing Extension of 

Credit 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: As part of NCUA’s Regulatory 

Modernization Initiative, the NCUA 

Board (Board) is revising two of NCUA’s 

regulations regarding appraisals. In 

response to a recent amendment to the 

Consumer Financial Protection Bureau’s 

(CFPB) Regulation B, the Board is 

eliminating from NCUA’s regulations 

the now duplicative requirement that 

federal credit unions (FCUs) make 

available, to any requesting member, a 

copy of the appraisal used in connection 

with that member’s application for a 

loan secured by a first lien on a 

dwelling. Also, the Board is amending 

NCUA’s appraisal regulations by 

expanding the current exemption for 

certain transactions involving an 

existing extension of credit. More 

specifically, under the expanded 

exemption, a federally insured credit 

union (FICU) will be permitted to 

refinance or modify a real estate-related 

loan held by the FICU, without having 

to obtain another appraisal, if there is no 

advancement of new monies or if there 

is adequate collateral protection even 

with the advancement of new monies. 

Lastly, the Board is making a minor 

technical amendment to the definition 

of the term ‘‘application.’’ 

DATES: This rule is effective January 20, 

2015. 

FOR FURTHER INFORMATION CONTACT: 

Pamela Yu, Senior Staff Attorney, Office 

of General Counsel, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314–3428 

or telephone (703) 518–6593. 

SUPPLEMENTARY INFORMATION: 

I. Background and Proposal 

II. Final Rule 

III. Regulatory Procedures 

I. Background and Proposal 

A. Background 

Each year, NCUA reviews one-third of 

its regulations for substance and to 

ensure they are clear, current, and 

appropriate in scope. NCUA notifies the 

public of those regulations under review 

so that the public may have an 

opportunity to provide comments on 

those regulations. 

In 2013, NCUA reviewed part 722, 

along with several other parts of 

NCUA’s regulations.1 Part 722 sets forth 

the appraisal requirements for federallyrelated transactions involving real 

estate. The appraisal requirements in 

part 722 are generally equivalent to the 

appraisal requirements of the other 

federal financial regulatory agencies.2

However, NCUA received numerous 

comments during the public comment 

period requesting a specific change to 

§ 722.3(a)(5) to better align NCUA’s 

appraisal requirements with those of the 


tkelley on DSK3SPTVN1PROD with RULES
Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75747 

3 79 FR 36248 (June 26, 2014). 

other federal financial regulatory 

agencies. Specifically, commenters 

requested that NCUA expand the 

current appraisal exemption for existing 

extensions of credit to allow a FICU to 

refinance or modify a real estate-related 

loan held by that FICU without having 

to obtain an additional appraisal. 

In addition, a number of commenters 

requested that NCUA eliminate the now 

duplicative portion of § 701.31(c)(5) of 

NCUA’s regulations, which requires an 

FCU to retain the appraisal used in 

connection with a real estate-related 

loan application for a period of 25 

months and to make a copy of the 

appraisal available to the applicant 

upon request. A recent amendment to 

§ 1002.14 of CFPB’s Regulation B 

requires that all creditors, including 

FCUs, automatically provide applicants 

free copies of all appraisals and other 

written valuations developed in 

connection with an application for a 

loan to be secured by a first lien on a 

dwelling. As a result of this amendment 

to Regulation B, the requirements of 

§ 701.31(c)(5) of NCUA’s regulations 

and § 1002.14 of Regulation B overlap 

with respect to providing copies of 

appraisals used in connection with an 

application for a loan secured by a first 

lien on a dwelling. 

B. June 2014 Proposed Rule 

In June 2014, as part of NCUA’s 

regulatory review and in response to 

public comments received, the Board 

issued a proposed rule to amend two of 

NCUA’s regulations regarding 

appraisals.3 Consistent with NCUA’s 

Regulatory Modernization Initiative, the 

proposed amendments improve NCUA’s 

regulations by better aligning them with 

the current marketplace, reduce costs 

for FICUs and their members, and 

remove outdated regulatory 

requirements. 

Specifically, the Board proposed to 

make the following three changes to 

NCUA’s regulations. First, as requested 

by the public, the Board proposed to 

eliminate the now duplicative 

requirement in NCUA’s regulations that 

requires FCUs to make available, to any 

requesting member, a copy of the 

appraisal used in connection with that 

member’s application for a loan secured 

by a first lien on a dwelling. FCUs 

would still be required to provide a 

borrower with a copy of the appraisal 

used for a loan involving a subordinate 

lien on a dwelling. 

Additionally, the Board proposed to 

amend § 722.3(a)(5) of NCUA’s appraisal 

regulations to better align this appraisal 

exemption for existing extensions of 

credit with that applicable to banks. The 

current provision exempts from the 

appraisal requirement transactions that 

involve an existing extension of credit at 

the FICU, provided that: (i) There is no 

advancement of new monies, other than 

funds necessary to cover reasonable 

closing costs, and (ii) there has been no 

obvious and material change in market 

conditions or physical aspects of the 

property that threatens the adequacy of 

the credit union’s real estate collateral 

protection after the transaction. Under 

the current regulation, for a transaction 

involving an existing extension of credit 

to be exempt from the general 

requirement to obtain an appraisal, the 

transaction must satisfy both the criteria 

in paragraph (i) and the criteria in 

paragraph (ii) of current § 722.3(a)(5). 

The revised provision will allow 

FICUs to refinance or modify existing 

real estate-related loans without 

obtaining an appraisal if (1) there is no 

advancement of new monies; or (2) in 

transactions where there is an 

advancement of new monies, if there is 

no obvious and material change in 

market conditions or physical aspects of 

the property. In addition to achieving 

parity with banking regulations, the 

amendment gives FICUs more latitude 

to modify or refinance existing real 

estate loans for distressed borrowers 

without having to obtain an appraisal. 

Finally, the Board proposed to make 

a minor technical amendment to correct 

and update the definition of the term 

‘‘application’’ in § 701.31(a)(1) of 

NCUA’s regulations. Current 

§ 701.31(a)(1) defines the term 

‘‘application’’ for purposes of part 701 

as carrying the same ‘‘meaning of that 

term as defined in 12 CFR 1002.2(f) 

(Regulation B)’’ and then provides a 

parenthetical quoting the text of the 

Regulation B definition of application, 

which has since been revised. As a 

result, the definition of application in 

§ 1002.2(f) no longer matches the quote 

in § 701.31(a)(1). The technical 

amendment to § 701.31(a)(1) will update 

the definition. 

II. Final Rule 

NCUA received thirteen comments on 

the proposed rule. Two comments were 

received from trade associations 

representing credit unions, seven from 

state credit union leagues, one from an 

FCU, and three from federally insured, 

state-chartered credit unions. 

All of the comments were supportive 

of the proposal. Commenters generally 

indicated that the proposed 

amendments will provide greater parity 

and consistency among federal financial 

regulations, eliminate redundancies, 

and benefit credit unions and their 

members by easing administrative and 

cost impediments to successful loan 

modifications. Several commenters, 

however, requested clarification of 

current regulatory requirements or 

offered comments beyond the scope of 

the June 2014 proposal. 

For example, two commenters 

suggested eliminating the current 

requirement that FCUs make available, 

to any requesting member, a copy of the 

appraisal used in connection with that 

member’s application for a dwelling 

secured by a subordinate lien. The 

Board, however, proposed only to 

eliminate the portion of the current 

requirement in § 701.31(c)(5) relative to 

loans secured by a first lien on a 

dwelling because it is duplicative of 

Regulation B. The Board did not 

propose to eliminate those current 

protections provided under 

§ 701.31(c)(5) for FCU members 

regarding loans secured by subordinate 

liens because that portion of NCUA’s 

regulations are not duplicative of 

Regulation B. 

As stated in the proposed rule, the 

consumer protections provided by 

NCUA’s regulation and Regulation B do 

not overlap entirely. Under current 

§ 701.31(c)(5), FCUs are required under 

certain circumstances to provide copies 

of appraisals used in connection with an 

application for a real estate-related loan, 

which includes any loan to be secured 

by a first lien or a subordinate lien on 

a dwelling. The protections provided in 

§ 1002.14 of Regulation B extend to 

appraisals developed in connection 

with an application for a loan secured 

by a first lien on a dwelling. Despite 

this, the Board continues to believe the 

requirements of § 701.31(c)(5) relating to 

appraisals used in connection with a 

loan secured by a subordinate lien on a 

dwelling must be retained as a 

consumer protection for FCU members. 

Several commenters asked for 

additional amendments to modify or 

clarify existing definitions or other 

current regulatory requirements. For 

example, one commenter requested 

clarification of the scope and meaning 

of the term ‘‘dwelling’’ in § 701.31(a)(2)) 

of NCUA’s regulations. The Board notes 

that the proposed rule did not modify 

any existing definitions or impose any 

new requirements on credit unions. All 

definitions in the current regulation 

have the same meaning under this final 

rule as they do under the current 

regulation. The Board also emphasizes 

that this final rule does not modify the 

2010 Federal Financial Institutions 

Examination Council’s interagency 

appraisal and evaluation guidelines and 

credit unions may continue to rely on 

that guidance. 


tkelley on DSK3SPTVN1PROD with RULES
75748 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

4 5 U.S.C. 601 et seq. 

5 78 FR 4032 (Jan. 18, 2013). 

6 44 U.S.C. 3507(d); 5 CFR part 1320. 

7Public Law 104–121, 110 Stat. 857 (1996). 

8 5 U.S.C. 551. 

Accordingly, the Board is adopting 

the June 2014 proposed rule as final 

without change. 

III. Regulatory Procedures 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 4

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a rule may have on a substantial 

number of small entities (defined for 

purposes of the RFA to include credit 

unions with assets less than $50 

million).5 The amendments to parts 701 

and 722 will only reduce regulatory 

impacts on credit unions by exempting 

them from certain regulatory 

requirements. Accordingly, the Board 

certifies the final rule will not have a 

significant economic impact on a 

substantial number of small credit 

unions. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) applies to rulemakings in which 

an agency by rule creates a new 

paperwork burden on regulated entities 

or increases an existing burden.6 For 

purposes of the PRA, a paperwork 

burden may take the form of a reporting 

or recordkeeping requirement, both 

referred to as information collections. 

This final rule would not impose or 

expand upon any existing reporting or 

recordkeeping requirements. 

Accordingly, this final rule would not 

create new paperwork burdens or 

increase any existing paperwork 

burdens. 

C. Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. NCUA, an 

independent regulatory agency, as 

defined in 44 U.S.C. 3502(5), voluntarily 

complies with the executive order to 

adhere to fundamental federalism 

principles. The final rule would not 

have substantial direct effects on the 

states, on the relationship between the 

national government and the states, or 

the distribution of power and 

responsibilities among the various 

levels of government. NCUA has, 

therefore, determined that this final rule 

does not constitute a policy that has 

federalism implications for purposes of 

the executive order. 

D. Assessment of Federal Regulations 

and Policies on Families 

NCUA has determined that this final 

rule will not affect family well-being 

within the meaning of § 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

E. Small Business Regulatory 

Enforcement Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 7

(SBREFA) provides generally for 

congressional review of agency rules. A 

reporting requirement is triggered in 

instances where NCUA issues a final 

rule as defined by Section 551 of the 

Administrative Procedure Act.8 NCUA 

does not believe this final rule is a 

‘‘major rule’’ within the meaning of the 

relevant sections of SBREFA because it 

will only reduce regulatory burden on 

credit unions by exempting them from 

certain regulatory requirements. NCUA 

has submitted the rule to the Office of 

Management and Budget for its 

determination in that regard. 

List of Subjects 

12 CFR Part 701 

Advertising, Aged, Civil rights, Credit, 

Credit unions, Fair housing, Individuals 

with disabilities, Insurance, Marital 

status discrimination, Mortgages, 

Religious discrimination, Reporting and 

recordkeeping requirements, Sex 

discrimination. 

12 CFR Part 722 

Appraisals, Credit unions, Mortgages, 

Reporting and recordkeeping 

requirements. 

By the National Credit Union 

Administration Board on December 11, 2014. 

Gerard Poliquin, 

Secretary of the Board. 

For the reasons discussed above, the 

NCUA Board amends 12 CFR parts 701 

and 722 as follows: 

PART 701—ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

UNIONS 

■ 1. The authority citation for part 701 

continues to read as follows: 

Authority: 12 U.S.C. 1752(5), 1755, 1756, 

1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 

1782, 1784, 1786, 1787, 1789. Section 701.6 

is also authorized by 15 U.S.C. 3717. Section 

701.31 is also authorized by 15 U.S.C. 1601 

et seq.; 42 U.S.C. 1981 and 3601–3610. 

Section 701.35 is also authorized by 42 

U.S.C. 4311–4312. 

§ 701.31 [Amended] 

■ 2. Amend § 701.31 as follows: 

■ a. In paragraph (a)(1), remove the 

words ‘‘, which is as follows:’’ and 

remove the indented definition 

parenthetical ‘‘An oral or written 

request for an extension of credit that is 

made in accordance with procedures 

established by a creditor for the type of 

credit requested’’. 

■ b. In paragraph (c)(5) in the first 

sentence, remove the words ‘‘a copy of 

the appraisal used in connection with 

that member’s real estate-related loan 

application’’ and add in their place the 

words ‘‘a copy of the appraisal used in 

connection with that member’s 

application for a loan to be secured by 

a subordinate lien on a dwelling’’, and, 

in the second sentence, remove the 

words ‘‘real estate-related loan 

application’’ and add in their place the 

words ‘‘application for a loan to be 

secured by a subordinate lien on a 

dwelling’’. 

PART 722—APPRAISALS 

■ 3. The authority citation for part 722 

continues to read as follows: 

Authority: 12 U.S.C. 1766, 1789 and 3339. 

§ 722.3 [Amended] 

■ 4. Amend § 722.3 as follows: 

■ a. In paragraph (a)(5) introductory text 

add the word ‘‘lending’’ before the 

words ‘‘credit union’’; 

■ b. In paragraph (a)(5)(i) remove the 

word ‘‘and’’ and add in its place the 

word ‘‘or’’; and 

■ c. In paragraph (a)(5)(ii) add the words 

‘‘, even with the advancement of new 

monies’’ to the end of the paragraph. 

[FR Doc. 2014–29635 Filed 12–18–14; 8:45 am] 

BILLING CODE 7535–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 52 and 81 

[EPA–R04–OAR–2014–0267; FRL–9920–60– 

Region 4] 

Approval of Implementation Plans and 

Designation of Areas; Georgia; 

Redesignation of the Georgia Portion 

of the Chattanooga, 1997 PM2.5

Nonattainment Area to Attainment 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: On September 14, 2012, the 

Georgia Department of Natural 

Resources, through the Georgia 

Environmental Protection Division (GA 


tkelley on DSK3SPTVN1PROD with RULES