Source: https://www.federalregister.gov/documents/2005/10/12/05-20357/disbursement-of-funds
Timestamp: 2017-10-23 08:54:33
Document Index: 9362286

Matched Legal Cases: ['art.\n1', 'art 1902', 'art 2018', '§\u20091902', '§\u20091902', '§\u20091902', 'art 1930', '§\u20091902', '§\u20091902', '§\u20091902', '§\u20091902', '§\u20091902', '§\u20091902', 'art.\n11', '§\u20091902', '§\u20091902', '§\u20091902']

Federal Register :: Disbursement of Funds
A Rule by the Rural Housing Service, the Rural Business-Cooperative Service, the Rural Utilities Service, and the Farm Service Agency on 10/12/2005
70 FR 59224
59224-59229 (6 pages)
05-20357
https://www.federalregister.gov/d/05-20357 https://www.federalregister.gov/d/05-20357
The Agencies are revising their disbursement of funds regulations. This action is necessary since existing regulations do not accurately reflect the current disbursement methodologies employed by the Agencies. The intended effect is to simplify and update the regulations; to eliminate reference to the obsolete Loan Disbursement System; clarify Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) insurance coverage; and eliminate reference to the now defunct Federal Savings and Loan Insurance Corporation (FSLIC). These amended regulations are to ensure the Agencies' field offices have current guidance on the disbursement methods available and supervised bank accounts.
Ronald Gianella, Staff Accountant, Office of the Deputy Chief Financial Officer, Policy and Internal Review Division, U.S. Department of Agriculture, STOP 33, P.O. Box 200011, St. Louis, Missouri 63120, telephone: (314) 457-4298.
10.353—National Rural Development Partnership
10.444—Direct Housing Natural Disaster Loans and Grants
10.445—Direct Housing Natural Disaster
10.446—Rural Community Development Initiative
10.761—Technical Assistance and Training Grants
10.762—Solid Waste Management Grants
10.763—Emergency Community Water Assistance Grants
10.769—Rural Business Enterprise Grants
10.775—Renewable Energy Systems and Energy Efficiency Improvements Program
Programs with Catalog of Federal Domestic Assistance numbers 10.353, 10.405, 10.411, 10.415, 10.420, 10.421, 10.427, 10.433, 10.760, 10.763, 10.766, 10.767, 10.768, 10.769, 10.770, 10.771, 10.773, and 10.854 are subject to the provisions of Executive Order 12372 which requires intergovernmental consultation with State and local officials.
Programs with Catalog of Federal Domestic Assistance numbers 10.410, 10.417, 10.438, 10.441, 10.442, 10.444, 10.445, 10.446, 10.761, 10.762, 10.772, 10.775 are excluded from the scope of Executive Order 12372.
The information collection requirements contained in this rule have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and were assigned OMB control number 0575-0184 in accordance with the Paperwork Reduction Act of 1995. No person is required to respond to a collection of information unless it displays a valid OMB control number. This rule does not impose any new Start Printed Page 59225information collection requirements from those approved by OMB.
The Agencies are committed to compliance with GPEA, which requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under Section 202 of the UMRA, the Agencies generally must prepare a written statement, including a cost-benefit 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 1 year. When such a statement is needed for a rule, Section 205 of the UMRA generally requires the agencies to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective, or least burdensome alternative that achieves the objectives of the rule. This 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. Thus, the rule is not subject to the requirements of Sections 202 and 205 of the UMRA.
The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, this rule does not impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.
7 CFR 1902, subpart A, is being revised to eliminate procedures servicing officials should follow in ordering loan and grant disbursements. These procedures are in 7 CFR 2018, subpart D. 7 CFR 1902, subpart A, is being revised to clarify FDIC and NCUA insurance coverage and eliminate reference to the now defunct FSLIC. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 abolished the insolvent FSLIC. The FDIC insures deposits in banks and savings associations and insures each person's share in all joint accounts at an institution up to $100,000. The NCUA insures deposits in Federal credit unions and insures each person's share in all joint accounts at an institution up to $100,000.
The Farm Service Agency (FSA) disbursement policies are established in internal agency handbooks. While disbursements under some FSA programs were processed according to 7 CFR 1902, subpart A, prior to the USDA Reorganization Act, FSA no longer utilizes this subpart.
1. The authority citation for part 1902 is revised to read as follows:
2. The title of subpart A is revised to read as set forth above.
3. Section 1902.1 is revised to read as follows:
This subpart prescribes the policies and procedures in establishing and using supervised bank accounts, and in placing Multi-Family Housing (MFH) reserve accounts in supervised bank accounts. 7 CFR part 2018, subpart D, provides the procedures Servicing Officials should follow in ordering loan and grant disbursements.
4. Section 1902.2 is revised to read as follows:
§ 1902.2
Policies concerning disbursement of funds.
(a) Generally, loan and grant disbursements may be requested on an as needed basis, thereby reducing the need for supervised bank accounts. For Start Printed Page 59226all construction loans and those loans using multiple advances, only the actual amount to be disbursed at loan closing will be requested through the automated systems. Subsequent disbursements will be ordered as needed. However, supervised bank accounts may be used in certain circumstances. For example:
5. Section 1902.3, is amended by revising paragraphs (a), (b) introductory text, and (c) to read as follows:
§ 1902.3
Procedures to follow in fund disbursement.
(c) When necessary, and only under the circumstances listed in § 1902.2, the Servicing Official will establish, or cause to be established, a supervised bank account. Funds deposited in a supervised bank account are to be recorded and accounted for on Form RD 402-2, “Statement of Deposits and Withdrawals”.
6. Section 1902.4 is amended by revising paragraphs (a)(3), (a)(5), and (b)(1) to read as follows:
(5) Financial institutions. The reserve account must be maintained in authorized financial institutions set out in subpart C of part 1930 of this chapter; e.g., banks, savings associations, credit unions, brokerage firms, mutual funds. Generally, any financial institution may be used provided invested or deposited funds are insured to protect against theft and dishonesty. The reserve account funds need not be Federally insured, but must be otherwise covered by non-Federal insurance against theft and dishonesty.
(1) Deposits. Generally, Rural Development will not require the review or approval of deposits or the use of Form RD 402-1 or 402-2.
7. Section 1902.6, is amended by revising paragraphs (a), (b)(3), (c), (d), (e), and (f) to read as follows:
§ 1902.6
Establishing supervised bank accounts.
(d) For each borrower, if the amount of any loan and grant funds, plus any borrower contributions and funds from other sources to be deposited in the supervised bank account will exceed $100,000, the financial institution will be required to pledge collateral for the excess over $100,000 before the deposit is made (see § 1902.7 of this subpart). If the supervised bank account is a joint account, any amount over the FDIC- or NCUA-insured limit must be collateralized.
8. Section 1902.7, is amended by revising paragraphs (a), (b) introductory
§ 1902.7
Pledging collateral for deposit of funds in supervised bank accounts.
(a) Funds in excess of $100,000 per financial institution, deposited for borrowers in supervised bank accounts, must be secured by pledging acceptable collateral with the Federal Reserve Bank (FRB) in an amount not less than the excess. If the supervised bank account is a joint account, any amount over the FDIC- or NCUA-insured limit must be collateralized.
9. Section 1902.8, is added to read as follows:
§ 1902.8
Authority to establish and administer supervised bank accounts.
Servicing Officials are authorized to establish supervised bank accounts, deposit loan checks and other funds, countersign checks, close accounts, and execute all forms in connection with supervised bank account transactions and redelegate this authority to a person under their supervision who is considered capable of exercising such authority. State Directors will make written demand upon the bank for withdrawals outlined in § 1902.16.
10. Section 1902.9, is amended by revising paragraphs (a)(1), (a)(2), (a)(3), (a)(5), (b) introductory text, and (b)(2) to read as follows:
(1) Checks made payable solely to the Federal Government or any Agency thereof, and a joint check when the Treasurer of the United States is a joint payee, may not be deposited in a supervised bank account.
(2) Funds other than loan or grant funds may be deposited by the borrower in those exceptional instances where an agreement is reached between the Servicing Official and the borrower, whereby the borrower will make deposits of income from any source directly into the supervised bank account. In such instances the borrower will be instructed to prepare the deposit slip in the manner described in § 1902.9 (a)(5) of this subpart.
11. Section 1902.10, is amended by revising paragraph (a), revising paragraphs (d)(2) through (d)(5), and removing paragraph (d)(6) to read as follows:
“Countersigned,” not as co-maker or endorser.
12. Section 1902.11 is revised to read as follows:
§ 1902.11
Servicing Office records.
13. Section 1902.14 is revised to read as follows:
§ 1902.14
14. Section 1902.15 is amended by revising paragraph (b), removing paragraph (c), redesignating paragraph (d) as paragraph (c) and revising newly designated paragraphs (c)(1)(i) introductory text, (c)(2) introductory text, (c)(2)(iii), and (c)(4) to read as follows:
15. Section 1902.50 is revised to read as follows:
§ 1902.50
16. Exhibit B of this subpart is amended by revising the prefix for the
[FR Doc. 05-20357 Filed 10-11-05; 8:45 am]