Source: https://www.federalregister.gov/documents/2006/12/19/06-9763/servicing-and-collections-unauthorized-recipients-of-financial-assistance
Timestamp: 2018-07-20 13:08:40
Document Index: 658157148

Matched Legal Cases: ['art 1951', 'art 1940', 'art 1951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', 'art 11', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951', '§\u20091951']

Federal Register :: Servicing and Collections-Unauthorized Recipients of Financial Assistance
A Rule by the Rural Housing Service, the Rural Business-Cooperative Service, the Rural Utilities Service, and the Farm Service Agency on 12/19/2006
List of Subjects 7 CFR Part 1951
Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs.
https://www.federalregister.gov/d/06-9763 https://www.federalregister.gov/d/06-9763
Start Preamble Start Printed Page 75851
Effective Date: This rule is effective on December 19, 2006.
Bill Hagy, Deputy Administrator, Rural Development Business Programs, USDA, Stop 3220, Room 5811, 1400 Independence Ave., SW., Washington, DC 20250, telephone (202) 720-7287, or internet e-mail “bill.hagy@wdc.usda.gov”.
This action is not subject to the provisions of Executive Order 12866 because it pertains to internal Agency management only. Accordingly, public notice and comment are not warranted, and this action is published as a final rule rather than as a proposed rulemaking.
The Catalog of Federal Domestic Assistance Program numbers assigned to these programs are: 10.352 Value-Added Producer Grants, 10.353 National Rural Development Partnership, 10.767 Intermediary Relending Program, 10.768, Business and Industrial Loans, 10.769 Rural Business Enterprise Grants, 10.771 Rural Cooperative Development Grants, 10.772 Empowerment Zones Program, 10.773 Rural Business Opportunity Grants, 10.775 Renewable Energy Systems and Energy Efficiency Improvements Program, 10.776 Agriculture Innovation Centers, 10.854 Rural Economic Development Loans and Grants, and 10.766 Community Facilities Loans and Grants,
This rule is not subject to the Paperwork Reduction Act.
This document has been reviewed in accordance with 7 CFR part 1940, Subpart G, Environmental Program. It is the determination of the Rural Business and Cooperative Services that this action does not constitute a major Federal action significantly affecting the environment. Therefore, in accordance with the National Environmental Policy Act of 1969, an Environmental Impact Statement is not required.
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the undersigned has determined and certified by signature of this document that this rule will not have a significant economic impact on a substantial number of small entities. The Regulatory Flexibility Act is intended to encourage Federal agencies to utilize innovative administrative procedures in dealing with individuals, small businesses, small organizations, and small governmental bodies that would otherwise be unnecessarily adversely affected by Federal regulations. No regulatory flexibility analysis under the Regulatory Flexibility Act is necessary.
The policies contained in this rule do not have any substantial direct effect on States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Nor does this rule Start Printed Page 75852impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.
This rule revises the servicing regulations that apply when it has been determined that an unauthorized recipient has received financial assistance under the USDA Rural Development Business and Industry Direct Loan program, all other applicable grant and loan programs, and the USDA Rural Development Community Facilities Loan and Grant programs. Those parts of the Code of Federal Regulations that relate solely to internal Agency processes are removed, and procedures that apply to Agency notification to the recipient and decisionmaking with respect the Agency's determination(s) are clarified to state that an account receivable will be established to recover the amounts claimed by the Agency.
Accordingly, chapter VXIII, title 7 of the Code of Federal Regulations, is amended as follows:
2. Subpart O of part 1951 is revised to read as follows:
1951.701 1951.702 1951.703 1951.704-1951.705 1951.706 1951.707 1951.708 1951.709 1951.710 1951.711
1951.712-1951.716
1951.717
1951.718-1951.750
This subpart prescribes the policies and procedures for servicing Community and Business Program loans and/or grants made by Rural Development when it is determined that the borrower or grantee was not eligible for all or part of the financial assistance received in the form of a loan, grant, or subsidy granted, or any other direct financial assistance. It does not apply to guaranteed loans. Loans sold without insurance by Rural Development to the private sector will be serviced in the private sector and will not be serviced under this subpart. The provisions of this subpart are not applicable to such loans. Future changes to this subpart will not be made applicable to such loans.
§ 1951.702
§ 1951.703
§§ 1951.704-1951.705
§ 1951.706
§ 1951.707
§ 1951.708
(2) States the amount of penalties and administrative costs to be paid, the Start Printed Page 75853standards for imposing them, and the date on which they will begin to accrue;
§ 1951.709
(a) Payment in full. If the recipient agrees with Rural Development's determination or will pay the amount in question, Rural Development may allow a reasonable period of time (usually not to exceed 90 days) for the recipient to arrange for repayment. The amount due will be determined according to § 1951.707.
(b) Continuation with recipient. If the recipient agrees with Rural Development's determination or is willing to pay the amount in question but cannot repay the unauthorized assistance within a reasonable period of time, continuation is authorized and servicing actions outlined in § 1951.711 may be taken provided all of the following conditions are met:
(1) The recipient did not provide false information as defined in § 1951.702.
(c) Appeals. Appeals resulting from the letter prescribed in § 1951.708 will be handled according to 7 CFR Part 11. All appeal provisions will be concluded before proceeding with further actions.
(d) Liquidation of loan(s) or legal action to enforce collection. When a case cannot be handled according to the provisions of paragraph (a) or (b) of this section, or if the recipient refuses to execute the documents necessary to establish an obligation to repay the unauthorized assistance as provided in § 1951.711, one or more of the following actions will be taken:
(ii) When all of the conditions of paragraph (a) or (b) of this section are met, but the recipient does not repay or refuses to execute documents to effect necessary account adjustments according of the provisions of § 1951.711, forced liquidation action will be initiated as provided in paragraph (d)(1)(i) of this section.
§ 1951.710
§ 1951.711
When the conditions outlined in § 1951.709(b) are met, the servicing options outlined in this section will be considered.
(1) Unauthorized loan. A loan for the unauthorized amount determined according to § 1951.707(a) will remain accelerated per the demand letter sent in accordance with § 1951.708 unless modified terms are timely reached with the recipient and accrued at the interest rate specified in the outstanding debt instrument or at the present market interest rate, whichever is greater, for the respective Community and Business program area. The loan will be amortized per a repayment schedule satisfactory to Rural Development, but in no event may the revised repayment schedule exceed a period of fifteen (15) years, the remaining term of the original loan, or the remaining useful life of the facility, whichever is shorter.
(2) Unauthorized grant. The unauthorized grant amount determined according to § 1951.707(b) will be converted to an account receivable, with interest payable at the market interest rate for the respective Community Facilities or Business and Industry Program area in effect on the date the financial assistance was provided. In all cases, the receivable will be amortized per a repayment schedule satisfactory to Rural Development, but in no event may the amortization period exceed fifteen (15) years. The recipient will be required to execute a debt instrument to evidence this receivable, and the best security position available to adequately protect Rural Development's interest during the repayment period will be taken as security.
(i) The recipient will be given the option to submit a written request that Start Printed Page 75854the interest rate be corrected to the lower of the rate for which they were eligible that was in effect at the date of loan approval or loan closing.
(ii) Any accrued unauthorized subsidy will be handled in accordance with § 1951.709.
§§ 1951.712-1951.716
§ 1951.717
§§ 1951.718-1951.750
[FR Doc. 06-9763 Filed 12-18-06; 8:45 am]