Source: https://www.federalregister.gov/documents/2015/04/29/2015-09958/single-family-housing-direct-loan-program
Timestamp: 2017-08-24 00:25:03
Document Index: 350394867

Matched Legal Cases: ['art 3015', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', 'art 1008', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550', '§\u20093550']

A Rule by the Rural Housing Service on 04/29/2015
23673-23680 (8 pages)
RHS-15-SFH-0009
https://www.federalregister.gov/d/2015-09958 https://www.federalregister.gov/d/2015-09958
Start Preamble Start Printed Page 23673
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 Start Printed Page 23674CFR part 3015, subpart V, at 48 FR 29112, June 24, 1983; 49 FR 22675, May 31, 1984; 50 FR 14088, April 10, 1985).
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) requires that OMB approve all collections of information by a Federal agency before they can be implemented. Under the proposed rule, qualified employers were required to provide monthly reports to the Agency outlining the packaging activities of their Agency-certified packager(s). The estimated total annual burden on respondents was 6,300 hours.
After gauging the benefits and limitations of the reporting under the packaging pilot program and in light of public comments received, the monthly reporting requirement outlined in § 3550.75 (b)(2)(iv) was removed. This rule does not impose any new or modified information collection requirements.
Comments on the role of the intermediaries. The Agency received several comments on the role of the intermediaries in the process. As outlined in the proposed rule, intermediaries would perform quality assurance reviews and monitoring activities on individuals seeking or who have been designated as an Agency-certified loan application packager and their qualified employers. Some called for the complete removal of the intermediaries while some called for a tightening of the requirements to become one (i.e. require the organization to demonstrate financial viability, have at least one recommendation from a Rural Development State Office, etc.) and/or expanding their role (i.e. allow them to order critical items, require their involvement in all packaged loan applications, allow them to perform quality assurance reviews on self-help loans, etc.).
The criteria to be an intermediary will be revised to clarify that intermediaries will be required to provide supplemental training, technical assistance, and support to those qualified employers and their Agency-certified packaging staff that are required to funnel their packages through them since one of the primary goals of an intermediary is to cultivate high performance. As further detailed in the program's handbook, supplemental training and technical assistance will address, among other things, any areas Start Printed Page 23675for improvement discovered during the quality assurance reviews and explain any changes to program guidance.
To complement the above, the proficiency requirement outlined in § 3550.75(b)(1)(iv) was removed, although an individual must still meet the requirements in 3550.75(b)(1)(i) through (iv); and the experience requirement outlined in § 3550.75(b)(2)(iii) was removed, although a qualified employer must still meet the requirements in 3550.75(b)(2)(i) through now (v).
Agency Response: The language under § 3550.52 will state that, “The fee may not exceed two percent of the national average area loan limit as determined by the Agency and may be limited further at the Agency's discretion.” However, the program's handbook will initially specify that the fee may be up to, but not exceed, $1,500. If the qualified employer and their certified packaging staff are required to go through an intermediary, the fee will remain the same but they will have to share a portion of the fee with the intermediary. The parties will negotiate how the fee is shared exclusive of any Agency involvement.
Agency Response: Language will be added to § 3550.52, “Loan Purposes”, that states, “Nominal packaging fees not resulting from the certified loan application process are an eligible cost provided the fee is no more than $350; the loan application packager is a nonprofit, tax exempt partner that received an exception to all or part of the requirements outlined in § 3550.75 from the applicable Rural Development State Director; and the packager gathers and submits the information needed for the Agency to determine if the applicant is preliminarily eligible along with a fully completed and signed uniform residential loan application.”
Agency Response: After weighing the comments for and against, it was decided that loans packaged under this process will not receive fourth funding priority unless the Administrator decides that such a temporary classification is necessary nor will they receive processing priority though the Agency will examine the program's guidance to ensure that both tracks (packaged or non-packaged) are treated Start Printed Page 23676equitably. As noted by one commenter, “As it stands today, the items that receive fourth priority ultimately allow the agency to assist more income-limited persons by reducing the agency loan amount for transactions involving sweat equity or supplemental financing from outside sources. Giving fourth priority to applications packaged under this process only benefits a particular borrower and actually places them in a position where this service is not exactly optional.” However, § 3550.55 (c) will be revised to include the following guidance at the end of the paragraph: “Applications received through the certified loan application packaging process do not, by themselves, warrant a higher priority; though the Administrator may temporarily reclassify them as fourth priority when determined appropriate.” Any such reclassification will be published in a Federal Register notice.
Agency Response: The minimum relevant experience requirement (along with the other requirements), helps ensure that Agency-certified packagers have the needed knowledge, skills, and abilities to provide this service. The Agency agrees that experience with affordable housing loan origination and/or affordable housing counseling is more relevant given the nature of the section 502 direct single family housing loan program and the income categories it is designed to serve, and has revised § 3550.75(b)(1)(i) accordingly.
Agency Response: Given the States' HFAs purpose, vision, and structure, the Agency agrees with this comment and is revising § 3550.75(b)(2) and (3) accordingly. A similar allowance will also be extended to tribal housing authorities though this allowance will be limited to serving as qualified employers since tribal housing authorities focus on Indian housing needs and not necessarily statewide housing needs.
Agency Response: As noted in the Paperwork Reduction Act section, the monthly reporting requirement outlined in § 3550.75(b)(2)(iv) was removed and along with it the reference to the SAFE Act. The SAFE Act provides for the licensing and registration of mortgage loan originators, and includes provisions requiring all States to establish a licensing and registration scheme for mortgage loan originators who are not employed by federal agencies or Agency-regulated institutions. The Consumer Financial Protection Bureau published regulations regarding the State requirements at 12 CFR part 1008 (Regulation H).
Agency Response: Reference to a “three-day classroom” session will be removed from the final rule to allow for flexibility in the training's delivery method and guidance will be added to the program's handbook to underscore the Agency's oversight role. In addition, § 3550.75(c)(3) will be changed from “Non-Agency trainers, who will be limited to housing nonprofit organizations . . .” to “Non-Agency trainers, who will generally be limited to housing nonprofit organizations but may in rare cases include public bodies such as public universities . . .” and from “. . . and course materials; and bear the cost of providing the training. The course schedule must be approved by RHS and each session will be attended by a designated Agency staff member. A list of eligible non-Agency trainers will be published on the Agency's Web site . . .” to “. . . and updated course materials; and bear the cost of providing the training though a reasonable tuition fee may be charged the course participants. The course content, schedule, and tuition must be approved by RHS and a designated Agency staff member will typically participate in each training session to ensure accuracy of the program information and to serve as a program resource. A list of eligible non-Agency trainers, which is subject to change based on the non-Agency trainers' performance, will be published by the Agency . . .” These changes are being made to increase the availability of the Start Printed Page 23677training and to clarify how the trainers will be compensated and the oversight that will be provided by the Agency.
In regards to continuing education, § 3550.75(e) states that the Agency will stipulate any training and performance requirements for retaining a designation. Additional guidance on this issue will be provided in the program's handbook.
Agency Response: The Agency agrees, and language was added under § 3550.75(f) to address this comment.
Agency Response: Self-help projects and loans are excluded from the certified loan application process and from charging a packaging fee since grantees receive grant funds to package (among other things) and are provided technical and management assistance. However, a grantee and its staff may participate in the process for non-self-help loans provided they meet all the rule's requirements (i.e., grantees or technical and management assistance contractors and their staff do not automatically qualify as intermediaries, qualified employers, or Agency-certified packagers under the process).
Clarification will be provided in the program's handbook that Agency staff should promptly contact the packager with specific information (e.g., the closing date once scheduled) regardless of the response to the Privacy Act waiver.
While the current waiver notes that the authorization will terminate upon loan closing or Agency denial of the loan application, appropriate changes may be made to extend this authorization beyond closing if/when the program's loan servicing system can be configured to issue servicing (i.e., delinquency) notifications to the packager as well.
Agency Response: While it is expected that the packager would do a preliminary check on a potential applicant's credit history (e.g., by having a process in place to order single repository infile reports at their own expense; by requesting the potential applicant to obtain a free report via www.annualcreditreport.com; etc.), the Agency must order the residential mortgage credit report through the program's loan origination system so that the reported liabilities and score can be automatically populated into the system. Having the credit report file in the system will become even more critical when the program implements an automated underwriting system.
Comments to update the program's loan origination system, give packagers Start Printed Page 23678access to the system, and adopt industry-standard technologies.
The agency is also removing the language concerning packaging fees for section 504 transactions from § 3550.52(d)(6), since this eligible cost is already covered under § 3550.102(d)(5).
Agency-approved intermediary. An affordable housing nonprofit, public agency, or State Housing Finance Agency approved by RHS to perform quality assurance reviews on packages prepared by Agency-certified loan application packagers through their qualified employers. See § 3550.75 for further details.
Agency-certified loan application packager. An individual certified by RHS under this subpart to package section 502 loan applications while employed (either as an employee or as an independent contractor) by a qualified employer. See § 3550.75 for further details.
Qualified employer. An affordable housing nonprofit organization, public agency, tribal housing authority, or State Housing Finance Agency that meets the requirements outlined in § 3550.75(b)(2) and is involved in the certified loan application packaging process under the section 502 program.
(6) Packaging fees resulting from the certified loan application packaging process outlined in § 3550.75. The fee may not exceed two percent of the national average area loan limit as determined by the Agency and may be limited further at the Agency's discretion. Nominal packaging fees not resulting from the certified loan application process are an eligible cost provided the fee is no more than $350; the loan application packager is a nonprofit, tax exempt partner that received an exception to all or part of the requirements outlined in § 3550.75 from the applicable Rural Development State Director; and the packager gathers and submits the information needed for the Agency to determine if the applicant is preliminarily eligible along with a fully completed and signed uniform residential loan application.
(2) Qualified employer. Individuals who have been designated as an Start Printed Page 23679Agency-certified loan application packager must be employed (either as an employee or as an independent contractor) by a qualified employer. To be considered a qualified employer, the packager's employer must meet each of the conditions specified in paragraphs (b)(2)(i) through (v) of this section. Tribal housing authorities and the States' Housing Finance Agencies are eligible and are exempt from the conditions specified in paragraphs (b)(2)(i) through (ii) of this section.
(f) Revocation. The designation as an Agency-certified loan application packager or Agency-approved intermediary is subject to revocation by Start Printed Page 23680the Agency under any of the following conditions: