Spring 2024 Unified Regulatory Agenda Published

Highlights of the Spring 2024 Unified Regulatory Agenda:
The information contained herein is being provided as a courtesy only and does not constitute financial or legal advice nor is it intended to be relied upon as such.  The information is general in scope. Please note that there may be additional facts, circumstances or jurisdictional considerations not addressed in this communication.

What is the Spring 2024 Regulatory Agenda:
It presents agency statements of regulatory priorities and additional information about the most significant regulatory activities planned for the coming year. The activities included in individual agency agendas are primarily those currently planned to have an Advance Notice of Proposed Rulemaking (ANPRM), a Notice of Proposed Rulemaking (NPRM), or a Final Rule issued within the next 12 months. 

PLG Summary:
Most of the items are not new items, however the final rule publication dates are worth noting and reviewing as it relates to some of the industry items we have seen proposed rulemaking on.  Items that we would like to highlight outside of the below summaries are:  

• FHA is proposing Streamlining and Revising HUD's Free Assumability and Conveyance Restrictions for Federal Housing Administration (FHA) Mortgages (FR-6052);
• Final Rule on FHA’s Modernization of Engagement With Single Family Mortgagors in Default (FR-6353) is scheduled for August 2024;
• The NPRM  for FHA is scheduled for December 2024 on Single Family Mortgage Insurance Updates to Claims Procedures, Curtailment of Interest and Disallowance of Certain Expenses Incurred Beyond Established Timeframes, and Claim Filing Deadlines (FR-6206) 
• The NPRM on Mortgage Servicing by the CFPB is scheduled for July 2024;
• The NPRM on Service of Process on the Federal Housing Finance Agency is scheduled for July 2024;
• Proposed rulemaking is scheduled by  USDA on:
  7 CFR 3555, Section 502- Single Family Housing Guaranteed Loan Programs (September 2024)
  7 CFR 3555--Single Family Housing Guaranteed Loan Program (SFHGLP)--Establishment of a Lender Review Board (October 2024)
• Final Rule on 7 CFR 3555.304--Section Changes to the Special Mortgage Recovery Advances (MRA) for the Single-Family Housing Guaranteed Loan Program is scheduled for July 2024.

Applicable Definitions:

• NPRM- “A Notice of Proposed Rulemaking is the document an agency issues and publishes in the Federal Register that describes and solicits public comments on a proposed regulatory action. Under the Administrative Procedure Act (5 U.S.C. 553), an NPRM must include (at a minimum): A statement of the time, place, and nature of the public rulemaking proceeding, a reference to the legal authority under which the rule is proposed, and either the terms or substance of the proposed rule or a description of the subjects and issues involved.”
• ANPRM – “ An Advance Notice of Proposed Rulemaking is a preliminary notice, published in the Federal Register, announcing that an agency is considering a regulatory action. The agency issues an ANPRM before it develops a detailed proposed rule. The ANPRM describes the general area that may be subject to regulation and usually asks for public comment on the issues and options being discussed. An ANPRM is issued only when an agency believes it needs to gather more information before proceeding to a notice of proposed rulemaking.”
• RIN -- “The Regulation Identifier Number is assigned by the Regulatory Information Service Center to identify each regulatory action listed in the Unified Agenda and The Regulatory Plan, as directed by Executive Order 12866 (section 4(b)). Additionally, OMB has asked agencies to include RINs in the headings of their Rule and Proposed Rule documents when publishing them in the Federal Register to make it easier for the public and agency officials to track the publication history of regulatory actions throughout their development.”

Highlights of Regulatory Actions Listed by VA, USDA, FHFA, CFPB and FHA:
Department of Veterans Affairs:

• Loan Guaranty: Adjustable Rate Mortgages, Hybrid Adjustable Rate Mortgages, and Temporary Buydown Agreements:
  • RIN: 2900-AS08
  • Summary:
    • “The Department of Veterans Affairs (VA) proposes to amend its rules on interest rates for adjustable rate mortgage (ARM) loans and hybrid adjustable rate mortgage (h-ARM) loans. The proposed rule would ensure VA’s existing interest rate regulation reflects current statutory requirements regarding these loans, in a way that makes the loans a more viable, safe product for Veterans. The proposed rule would also solidify requirements for temporary buydown agreements to help Veterans temporarily reduce their interest rates and, in effect, lower their monthly mortgage payments for a specific period of time.”
  • Projected NPRM Published Date:  August 2024
• Loan Guaranty: Revisions to VA-Guaranteed or Insured Interest Rate Reduction Refinancing Loans
  • RIN: 2900-AR58
  • Summary:
    • “The Department of Veterans Affairs (VA) amending its rules on VA-backed interest rate reduction refinancing loans (IRRRLs). The Economic Growth, Regulatory Relief, and Consumer Protection Act and the Protecting Affordable Mortgages for Veterans Act of 2019 outlined the circumstances in which VA may guarantee or insure refinance loans, by setting forth net tangible benefit, recoupment, and seasoning standards. The final rule would update VA’s existing IRRRL regulation to current statutory requirements.’
  • Final Action Proposed Date: May 2025.​

Department of Housing and Urban Development:

• Federal Housing Administration (FHA): Single-Family Loan Sale Program; Notice of Proposed Rulemaking (FR-6051)
  • RIN: 2502-AJ47
  • Summary:
    • “On May 6, 2019, HUD issued an Advanced Notice of Proposed Rulemaking (ANPRM) seeking comments on the practices and procedures which HUD could improve in codifying HUD’s loan sales program. This rule proposes to codify the FHA Single-Family Loan Sale program for assigning defaulted Single-Family mortgage loans to FHA and disposing of the assigned loans through competitive loan sales. The proposed rule takes into consideration comments provided by the public on the ANPRM to streamline and ensure best practices in the loan sale program.”
  • NPRM Scheduled for:  August 2024
• Single Family Mortgage Insurance Updates to Claims Procedures, Curtailment of Interest and Disallowance of Certain Expenses Incurred Beyond Established Timeframes, and Claim Filing Deadlines (FR-6206):
  • RIN: 2502-AJ53
  • Summary: 
    • “Over the past decade, the costs associated with servicing both performing and non-performing mortgages throughout the industry have increased significantly. This adversely impacts servicers as well as borrowers who have the costs passed onto them in the form of higher mortgage fees. This proposed rule would streamline the requirements related to curtailment of interest and other expenses incurred for missing certain servicing deadlines when filing a claim to HUD. These changes would reduce costs for forward mortgage servicers significantly. This rule also proposes to establish deadlines that define FHA’s liability for claim payments for insurance benefits. This change would protect communities by reducing neighborhood blight caused by properties that sit vacant for extended periods of time and improve HUD's ability to manage the MMI Fund.”
  • NPRM Scheduled for:  December 2024
• Streamlining and Revising HUD's Free Assumability and Conveyance Restrictions for Federal Housing Administration (FHA) Mortgages (FR-6052):
  • RIN:  2502-AJ41
  • Summary:
    • “HUD’s regulations currently include complex prohibitions and exceptions to restrictions on conveyances and assumability of FHA mortgages. The Housing Opportunity Through Modernization Act of 2016, (Pub. L. 114-201) (HOTMA), requires that HUD’s regulations on private transfer fees, previously prohibited as restrictions on conveyances, conform with the policy imposed by the Federal Housing Finance Agency (FHFA) for loans purchased by Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Additionally, such prohibitions may be burdensome to implement for programs designed to promote affordable homeownership. This rule proposes to revise HUD’s requirements on conveyances and assumability to conform with the FHFA requirements for private transfer fees and further streamline the process to allow for free assumability in a less costly and burdensome fashion.”
  • NPRM Scheduled for: December 2024
• Revision of Time Restrictions on Property Re-sales (FR-6354)
  • RIN: 2502-AJ67
  • Summary:
    • “This rule proposes to revise HUD’s time restrictions on re-sales of forward mortgages eligible to be secured by FHA-insured mortgage financing. Currently, if the re-sale date of the property is 90 days or less following the date of acquisition by the seller, the property is not eligible for a mortgage insured by FHA. Prohibiting the use of FHA mortgage insurance for a re-sale within 90 days of acquisition adversely impacts the availability of affordable housing and does not align with other market participants approach to manage this risk with technology. In addition, HUD’s requirements for re-sales occurring between 90 and 180 days in all cases where re-sales exceed certain price change thresholds may result in unnecessary operational burden to industry participants. HUD has demonstrated the ability to successfully leverage new technology to manage property valuation and flipping risks through the implementation of a collateral risk assessment tools and targeted documentation requirements in its Home Equity Conversion Mortgage (HECM) program and seeks to update its requirements in recognition of such experience.”
  • NPRM Scheduled for:  September 2024
• Modernization of Engagement With Single Family Mortgagors in Default (FR-6353)
  • RIN: 2502-AJ66
  • Summary:
    • “This rule will modernize HUD’s regulations that require a face-to-face interview with mortgagors in default by updating the regulations to recognize advances in technology and align with borrower engagement preferences while preserving consumer protections. The rule will amend the regulation to allow mortgagees to employ alternative methods (e.g., telephone and video conferencing) to conduct meetings with borrowers prior to foreclosure. Because FHA is providing additional flexibility to mortgagees in conducting meetings with the borrower, this rule will also eliminate the exemption that mortgagees are not required to conduct a meeting when the mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either. This rule will not affect the existing face-to-face requirement for the section 248 program.”
  • Final Action Scheduled for:  August 2024
• Modernizing the Delivery of Housing Counseling Services (FR-6388)
  • RIN: 2502-AJ70
  • Summary:
    • “This rule will modernize HUD’s regulations that require participating agencies to provide in-person counseling to clients that prefer this format by updating the regulations to reflect advances in technology, to align with client engagement preferences, and to preserve consumer protections. The rule will allow housing counseling agencies to use alternative communication methods, including virtual and/or telephonic meeting tools, in lieu of or in addition to providing in-person services. Participating agencies that choose not to provide in-person services would continue to be required to refer clients to local providers that provide such services, when requested. This rule also eliminates the costly requirement to maintain multiple physical office space in every location where services are provided and instead allow participating agencies to use co-working spaces, libraries, and other community facilities if the participating agency does not maintain a facility in the area but wishes to continue to provide in-person services.”
  • Final Action Scheduled for:  July 2024
• Strengthening the Section 184A Native Hawaiian Loan Guarantee Program (FR-6391)
  • RIN: 2577-AD19
  • Summary:
    • “This proposed rule would strengthen the Section 184A Native Hawaiian Loan Guarantee Program by, among other things, updating the regulations to codify current practices, clarify the loan guarantee process, and update the program consistent with current industry standards. These changes would ensure program sustainability, decrease risk to the federal government, and provide clarity for new and existing lenders who participate in the program.
  • NPRM Scheduled for:  March 2025

Consumer Financial Protection Bureau:

• Mortgage Closing Costs
  • RIN:  3170-AB22
  • Summary:
    • “The CFPB is considering rulemaking or guidance to address mortgage refinancing and closing costs imposed by lenders on homebuyers and homeowners.”
  • Pre-Rule Activity Schedule for: December 2024
• Fair Credit Reporting Act Rulemaking
  • RIN:  3170-AA54
  • Summary:
    • “Congress enacted the Fair Credit Reporting Act (FCRA) to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy. The law and its implementing regulations (Regulation V) impose legal duties on consumer reporting agencies, users of consumer reports, and furnishers of information to consumer reporting agencies. The consumer credit reporting industry has consistently been a major source of consumer complaints, and, since the FCRA’s enactment in 1970, advances in technology have led, particularly in recent years, to a rapid evolution of the consumer reporting marketplace, including the emergence of companies using business models that rely on newer technologies and novel methods to collect and sell consumer data. The CFPB is considering proposals to regulate many activities of such data brokers as covered under the FCRA and to address other issues that have arisen in the years since the FCRA’s enactment. In light of recent events and research, the CFPB is also considering whether medical debts are necessary and appropriate for consideration by creditors in underwriting decisions to protect legitimate operational, transactional, risk, consumer, and other needs, such that they should continue to be covered by a regulatory exemption allowing their consideration by creditors. The CFPB is further considering whether medical debts should be included in consumer reports provided to creditors.”
  • NPRM Scheduled for:  July 2024
• Mortgage Servicing:
  • RIN:  3170-AB04
  • Summary:
    • In January 2013, the CFPB issued final mortgage servicing rules implementing numerous provisions of the Real Estate Settlement Procedures Act and the Truth in Lending Act, as amended by title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB has since made various corrections, clarifications, and other amendments to those rules. During and after the COVID-19 pandemic, the CFPB observed that there were places where the rules could be revised to reduce unnecessary complexity. In 2022, the Bureau asked the public for input on ways to reduce risks for borrowers who experience disruptions in their ability to make mortgage payments, including input on the mortgage forbearance options available to borrowers. In particular, the CFPB sought input on the features of COVID-19 pandemic-related forbearance programs and whether there are ways to automate and streamline long-term loss mitigation assistance. The CFPB is considering ways to simplify and streamline the mortgage servicing rules.”
  • NPRM:  July 2024
• Overdraft Lending: Very Large Financial Institutions:
  • RIN: 3170-AA42
  • Summary:
    • “Financial institutions offer various types of overdraft services, some of which are subject to Regulation Z and some of which are not. Whether Regulation Z applies depends on whether fees imposed in connection with those services (overdraft fees) are considered finance charges. When the Federal Reserve Board first adopted Regulation Z in 1969, it created special rules for determining whether overdraft fees are considered finance charges. While the nature of overdraft services, including how accounts can be overdrawn and how financial institutions determine whether to advance funds to pay the overdrawn amount, has significantly changed since 1969, the special rules remain largely unchanged. Over time, additional special rules for overdraft that is subject to Regulation Z have been adopted in Regulations Z and E. On January 17, 2024, the CFPB proposed to update those special rules for very large financial institutions to ensure that extensions of overdraft credit adhere to consumer protections required of similarly situated products, unless the overdraft fee is a small amount that only recovers applicable costs and losses.”
  • Final Rule Scheduled for:  January 2025
• Property Assessed Clean Energy Financing:
  • RIN:  3170-AA84
  • Summary:
    • “Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) amended the Truth in Lending Act (TILA) to require the CFPB to prescribe regulations relating to "Property Assessed Clean Energy” (PACE) financing. As defined in EGRRCPA section 307, PACE financing results in a tax assessment on a consumer’s real property and covers the costs of home improvements. The required regulations must carry out the purposes of TILA’s ability-to-repay (ATR) requirements, currently in place for residential mortgage loans, with respect to PACE financing, and apply TILA’s general civil liability provision for violations of the ATR requirements the CFPB will prescribe for PACE financing. The EGRRCPA directs that such requirements account for the unique nature of PACE financing and specifically authorizes the collection of data and information necessary to support a PACE rulemaking. In May 2023, the CFPB issued a proposed rule to implement EGRRCPA section 307 and make other adjustments to Regulation Z to account for the unique nature of PACE financing.”
    •  Final Rule scheduled for:  May 2025 
• Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders:
  • RIN:  3170-AB13
  • Summary:
    • “On January 30, 2023, the CFPB proposed a rule under its authorities at 12 U.S.C. 5512(b) and (c) and 5514(b) that would require certain nonbank covered persons that are under certain final public enforcement orders to register with the CPFB via a public registry that the CFPB would create for such purposes; to submit copies of public orders to the same; and, where certain such persons are supervised by the CFPB, to prepare and submit written statements regarding such orders for use in connection with the CFPB’s supervisory functions. Under the proposal, the public registry created by the CFPB would identify institutions subject to registration and include public enforcement orders and information regarding those orders.”
  • Final Rule scheduled for: July 2024
• Registry of Supervised Nonbank That Use Form Contracts to Impose Terms And Conditions That Seek To Waive Or Limit Consumer Legal Protections:
  • RIN:  3170-AB14
  • Summary:
    • “On February 1, 2023, the CFPB proposed a rule that would require certain supervised nonbank entities to register with the CFPB and provide information about their use of certain terms and conditions in standard-form contracts for consumer financial products or services that seek to waive or limit consumer rights or legal protections. In particular, the proposed rule would collect information on these standard terms and conditions used in form contracts that are not subject to negotiation. Under the proposal, the CFPB would establish a publicly accessible registry that identifies registrants and, subject to applicable law, publish information that registrants submit to the registry about their use of covered terms and conditions.”
  • Final Rule Scheduled: July 2024
• Fees for Instantaneously Declined Transactions:
  • RIN:  3170-AB16
  • Summary: 
    • “Consumers using deposit accounts sometimes engage in transactions that exceed their accounts’ balances. Sometimes the depository institution will pay that transaction, resulting in an overdraft, but in many situations the depository institution will decline to pay the transaction and charge the consumer a "non-sufficient fund” (NSF) fee. Until recently, NSF fees were a significant source of fee revenue from deposit accounts for depository institutions; lately some financial institutions have voluntarily stopped charging such fees. The CFPB released a proposed rule that preliminarily identified the assessment of NSF fees in certain circumstances as an abusive act or practice under section 1031(b) of the Consumer Financial Protection Act and would impose requirements to prevent such acts or practices.”
  • Final Rule Scheduled for:  October 2024
• Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications:
  • RIN: 3170-AB17
  • Summary:
    • “Under section 1024 of the Consumer Financial Protection Act (CFPA), the CFPB is authorized to supervise certain nonbank covered persons for compliance with federal consumer financial laws and for other purposes. Under section 1024(a)(1)(B) of the CFPA, for certain markets, the supervision program generally will apply only to "larger participant[s]" of these markets as defined by rule. The CFPB has previously defined larger participants in several markets and has released a proposed rule to define larger participants in a market for general-use digital consumer payment applications. Under the proposal, larger participants of this market would be subject to the CFPB’s supervisory authority under the CFPA.”
  • Final Rule Scheduled for:  September 2024

Federal Housing Finance Agency:

• Service of Process on the Federal Housing Finance Agency
  • RIN:  2590-AB25
  • Summary:
    • “The proposed rule would establish the procedure for serving FHFA with service of process.  Service of process is a jurisdictional prerequisite to instituting a private action. A plaintiff’s failure to properly serve a defendant may result in dismissal of the lawsuit.  The proposed rule is intended to assist the public by identifying the approved way to serve FHFA with process when FHFA is named in a lawsuit while also addressing FHFA’s due process rights to receive notice of pending litigation.  The proposed rule would create a procedure that the public may follow to satisfactorily comply with the requirements of the United States Constitution to provide the required due process when seeking to assert claims against FHFA.”
  • NPRM Scheduled for: July 2024
• Enterprise Return on Capital Requirements for Single-family Mortgage Acquisitions:
  • RIN: 2590-AB39
  • Summary:
    • “The proposed rule would establish standards for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) related to returns on capital for aggregate new single-family mortgage acquisitions and maintaining the key functions they provide to the market without causing financial instability.”
  • NPRM Scheduled for:  July 2024
• Federal Home Loan Bank Housing Goals Amendments:
  • RIN:  2590-AB43
  • Summary:
    • “Section 10C of the Federal Home Loan Bank Act (12 U.S.C. 1430c) requires the Director to establish annual housing goals for mortgage purchases by the Federal Home Loan Banks (FHLBank), if any. This proposed rule would amend the existing FHLBank housing goals regulation to establish a minority census tract goal for the FHLBanks.  The Federal Housing Finance Agency established a similar minority census tract sub-goal through 2021 amendments to the Enterprise Affordable Housing Goals regulation at 12 CFR part 1282.”
  • NPRM Scheduled for:  September 2024

 
Department of Agriculture: 

• Modernizing Program Regulations
  • RIN: 0570-AB03
  • Summary: 
    • “This final rule with request for comment is intended to implement the provisions of the Agriculture Improvement Act of 2018 (2018 Farm Bill) related to section 10102 for the Value-Added Producer Grant (VAPG) Program and section 7608 for the Agriculture Innovation Center (AIC) Program and modernize section 6412 for the Rural Cooperative Development Grant Program (RCDG). In addition, this action will support ways to simplify and streamline Rural Development (RD) program delivery by removing outdated and ineffective definitions, requirements and scoring criterion for the grant regulations (programs) under 7 CFR 4284.”
  • Final Rule Scheduled for:  September 2024
• 7 CFR 3555, Section 502- Single Family Housing Guaranteed Loan Programs:
  • RIN: 0575-AD38
  • Summary:
    • “The Rural Housing Service (RHS) intends to issue a proposed rule to make the following changes to 7 CFR 3555:
    • (1)  Amend the current regulation for 7 CFR 3555.151(i)(3)(iv) to add a seven-year timeframe when a prior Agency loss is considered significant derogatory credit. The Agency believes the proposed timeframe is reasonable to allow former borrowers the opportunity to create a better financial situation for themselves and their family by re-establishing credit and providing evidence of acceptable payment histories.
    • (2)  Amend 7 CFR 3555.101(d)(3)(i)(A), (B), and (C) to clarify the streamlined and non-streamlined refinanced loan options do not have a 12-month seasoning requirement, to change the current 12 month seasoning requirement for streamlined-assist refinance loans to a six month seasoning period, and specify the borrower must have no delinquencies greater than 30 days on the mortgage account being refinanced for 180 days prior to loan application.  The intent of the proposed change would allow borrowers to refinance their current, eligible Rural Development loan when it is most beneficial for the borrower to do so.  Limiting the borrower to a 12-month time frame to refinance their current USDA mortgage debt may be detrimental when the economic environment may be favorable to refinance the debt now.  By lowering the mortgage payment for the borrower, it would put them in a better financial situation, allowing the borrower additional financial resources to save or spend on improvements to their home.
    • (3) Amend 7 CFR 3555.101(d)(3)(iii) to clarify the streamlined, non-streamlined, and streamlined-assist refinance loans must all maintain the current mortgage account for the 180 days prior to loan application. However, if the streamlined and non-streamlined mortgage accounts have not been opened for 180 days prior to loan application, no defaults must have occurred since the mortgage account was opened. The changes are intended to align the Agency with similar federal agencies’ refinance seasoning requirements.  It would also allow our current applicants to take advantage of favorable economic markets to refinance their homes.
  • Proposed Rule Scheduled for:  September 2024
• 7 CFR 3555--Single Family Housing Guaranteed Loan Program (SFHGLP)--Establishment of a Lender Review Board.
  • RIN: 0575-AD43
  • Summary:
    • “The Rural Housing Service (RHS) proposes to establish a  formal process to review and initiate administrative actions and civil monetary penalties against approved lenders in noncompliance with USDA, approval, servicing, and/or lending participation requirements called the Lender Review Board (Board) for USDA’s Single Family Housing Guaranteed Loan Program (SFHGLP) SFHGLP defines lender as the entity making, holding, or servicing a loan that is guaranteed under the provisions of 7 CFR 3555. SFH is proposing the Board to be comprised of voting members and non-voting advisors who will work with the Office of General Counsel to ensure cases that are referred are fact-based and meet legal sufficiency.  The Agency anticipates the following results of these changes: (1)  Provide transparency to all parties and creates an effective strategy to ensure lender accountability: (2) Provide procedures that will strengthen the management and oversight of the SFHGLP; (3)  Provide transparency to approved lenders of the enforcement actions that may be taken by USDA: (4)  Strengthen the oversight and management of the SFHGLP, ensuring lender accountability; and (5)  Align the Agency with other Federal housing programs.” 
  • Proposed Rule Scheduled for:  October 2024
• Single Family Housing Guaranteed Rural Housing Programs--Delegated Approval Authority and Strengthening Management Oversight - Final Rule
  • RIN: 
  • Summary:
    • The Rural Housing Service (RHS) published a proposed rule on August 4, 2022 [87 FR 47646] to amend the current regulations for the Single-Family Housing Guaranteed Loan Program (SFHGLP) regulation found in 7 CFR part 3555.  A 60-day comment period was provided for the proposed rule, which closed on October 3, 2022.  RHS received comments from 41 respondents, of which one of the comments was not applicable to the contents of the rule.  Of the comments received, 30 were from mortgage lenders, one was from a public assistance agency, and ten were from other members of the public. 
    • As a result of the comments received, Rural Development anticipates including in the Final Rule the opportunity for Delegated Lenders to submit files to the Agency for review and approval, in some circumstances.  In addition, Rural Development will consider the recommendations on oversight sample size and the roll-out timeframe in development of the final rule. The Agency will also add 7 CFR 3555.55 to grant Delegated Lenders the authority to approve and execute loan guarantees with limited to no involvement of Agency staff. The provisions include the following:
      • (1) The Agency may grant Delegated Lenders the authority to approve loans and obtain Loan Note Guarantees with limited to no involvement of Agency staff.
      • (2) The Agency would reserve the right to suspend or terminate any lender’s delegated status for reasons including, but not limited to, underwriting loans which do not meet Agency guidelines, providing data to the Agency’s automated underwriting system which is not supported by documentation retained by the lender, maintaining a portfolio that does not meet the established delinquency, loss claim, and default rate performance metrics, and other criteria described in Agency loan program requirements in 7 CFR 3555, and any other regulatory guidance issued.
      • (3) Delegated Lenders would be required to use the Agency’s automated underwriting system as described in 3555.107(b) Automated underwriting.”
      • (4) The Agency would monitor ongoing delegated authority (DA) eligibility using regular collection and analysis of loan level data and performance, as well as through lender oversight reviews/examinations.
    • The changes to 7 CFR 3555 are expected to improve the efficiency of the delivery of the SFHGLP, align Agency practices with industry standards, and provide the public, specifically low- and moderate-income households, with faster and better service by eliminating Agency intervention at loan origination through closing.”
      • Final Rule Scheduled for:  July 2024
• 7 CFR 3555.304--Section Changes to the Special Mortgage Recovery Advances (MRA) for the Single-Family Housing Guaranteed Loan Program:
  • RIN: 0575-AD28
  • Summary:
    • “The Rural Housing Service (RHS) published a proposed rule on January 27, 2023 (88 FR 5275) to amend the current regulation for the Single-Family Housing Guaranteed Loan Program (SFHGLP) regulations found in 7 CFR part 3555.  A 60-day comment period was provided for the proposed rule, which closed on March 28, 2023. RHS received comments from 12 respondents, of which four of the comments were misinterpretations of the rule or not applicable to the contents of the rule. Six of the responses were from individuals, one was a duplicate response, one identified as being a mortgage lender, and the remaining four comments were from organizations that represent various facets of the real estate finance industry.
    • The Agency intends to publish a final rule which will amend 7 CFR 3555.301 to adjust the Mortgage Recovery Advance (MRA) process to make it less cumbersome and eliminate documentation and eligibility challenges for borrowers who do not require payment reduction. Currently, the process to administer the MRA options require extensive processing, tracking, and oversight. The expected results of the changes are: (1) To offset the negative effects that delinquencies will have on our Single Family Guaranteed Loan Portfolio. This will allow more families to remain in their homes resulting in fewer loss claims for the Agency; (2) Gives lenders more flexibility in their servicing options; (3) Benefit borrowers and lenders by offering a less expensive and less cumbersome option, creating an environment that supports successful future home ownership. 
    • The Agency will publish a final rule to amend 7 CFR 3555 to implement changes related to the use of Special Servicing Options for Non-performing Loans. This final rule will benefit borrowers by offering a less cumbersome option to eliminate documentation and eligibility challenges for borrowers who do not require payment reduction and provide lenders more flexibility in their servicing options while reducing program risk of the guaranteed loan portfolio.”
  • Final Rule Scheduled for:  July 2024
• 7 CFR 3550--Streamlining and Improvement of Single-Family Housing Direct Programs:
  • RIN: 0575-AD33
  • Summary:
    • “7 CFR part 3550 sets forth the requirements of the direct SFH programs, authorized by sections 502 and 504 of the Housing Act of 1949, as amended (42 U.S.C. 1472 and 1474). The section 502 direct loan program provides 100 percent loan financing to assist low- and very low-income applicants obtain modest housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. The section 504 loan program provides one percent interest rate loans to very low-income homeowners in eligible rural areas to repair, improve, or modernize their home or to remove health and safety hazards. The section 504 grant program provides grants to elderly very low-income homeowners in eligible rural areas to remove health and safety hazards, or accessibility barriers from their home, often in conjunction with a section 504 loan.
    • The Agency published a proposed rule on 11/20/2023.  The public comment period ended on 1/19/2024. The proposed changes under consideration is part of the SFH Program’s effort to improve customer service for its borrowers by: creating a more efficient application process; promote consistency between the direct and guaranteed SFH loan programs where feasible; and review current housing market conditions and mortgage loan practices.  The agency intends to review SFH Program procedures and regulations to potentially identify and revise unnecessary and outdated regulations, as well as simplify other policies and procedures that may impose burdensome requirements on borrowers and applicants.”
  • Final Rule Scheduled for: December 2024

To read the Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions click here.

This post was prepared by Marissa M. Yaker, Esq.