[Federal Register: February 25, 2002 (Volume 67, Number 37)]
[Notices]
[Page 8679-8684]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe02-115]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Availability of Funding and Requests for Proposals for
Guaranteed Loans Under the Section 538 Guaranteed Rural Rental Housing
Program
AGENCY: Rural Housing Service, USDA.
ACTION: Notice of fund availability.
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Required Responses From: Eligible Lenders for Multi-Family Lending.
Program Offers: Loan Guarantees and Interest Credits for Rural
Housing.
SUMMARY: This Notice of Fund Availability (NOFA or Notice) announces
the timeframe, submission requirements and deadlines to submit
proposals in the form of ``NOFA responses'' for the section 538
Guaranteed Rural Rental Housing Program (GRRHP)for the Fiscal Year (FY)
2002 allocation of $99.77 million. This Notice describes the commitment
of program dollars, eligibility requirements, lender responsibilities,
and the overall NOFA and application processes.
The GRRHP operates under 7 CFR part 3565. The GRRHP Origination and
Servicing Handbook (HB-1-3565) is available to provide lenders and the
[[Page 8680]]
general public with guidance on program administration. HB-1-3565,
which contains a copy of 7 CFR part 3565 in Appendix 1, can be found at
the Rural Development regulation web site address http://
rdinit.usda.gov/regs.
Eligible lenders are invited to submit NOFA responses for the
development of affordable rental housing to serve rural America. The
Rural Housing Service (RHS) will review responses submitted by eligible
lenders, on the lender's letterhead, and signed by both the prospective
borrower and lender. Although a complete application is not required in
response to the NOFA, eligible lenders may submit a complete
application concurrently with the NOFA response. The submission of a
complete application will not affect the scoring process.
DATES: The FY 2002 program dollars will be allocated through a
continuous selection process. The RHS will review all NOFA responses
through May 16, 2002. Reviews will take place on an on-going basis.
Those responses that are selected that subsequently submit complete
applications and meet all federal environmental requirements will
receive commitments until all funds are expended. A notice will be
placed in the Federal Register when all funds are committed for FY
2002. NOFA responses received after May 16, 2002 will be held for
review subject to the availability of funds.
Eligible lenders intending to mail a NOFA response or application
must provide sufficient time to permit delivery to the NOFA submission
address on or before the closing deadline date and time. Acceptance by
a U.S. Post Office or private mailer does not constitute delivery.
Postage due NOFA responses and applications will not be accepted.
FOR FURTHER INFORMATION CONTACT: Arlene Nunes, Senior Loan Specialist,
Guaranteed Loans, Multi-Family Housing Processing Division, U.S.
Department of Agriculture, South Agriculture Building, Room 1271, STOP
0781, 1400 Independence Avenue, SW, Washington, DC 20250-0781. E-mail:
anunes@rdmail.rural.usda.gov. Telephone: (202) 401-2307. This number is
not toll-free. Hearing or speech-impaired persons may access that
number by calling the Federal Information Relay Service toll-free at
(800) 877-8339.
Eligiblity of Prior Year Selected NOFA Responses: NOFA responses
selected in FY 2001 are eligible for FY 2002 program dollars subject to
the availability of funds. FY 2001 NOFA responses selected by RHS for
submission of a complete application may submit an application for
competition for FY 2002 funding without completing a FY 2002 NOFA
response. All qualified applications will be funded on a first come
basis until all program funds are exhausted. RHS will commit and
obligate funds only to lenders that submit a complete application
including all federal environmental documents required by 7 CFR 1940
subpart G, Form RD 3565-1, ``Application for Loan and Guarantee'' and
the 2,500 dollar application fee.
General Program Information
Program Purpose: The section 538 Guaranteed Rural Rental Housing
Program is designed to increase the supply of affordable multi-family
housing through partnerships between the RHS and major lending sources,
as well as state and local housing finance agencies and bond issuers.
Qualifying Properties: Qualifying properties include new
construction for multi-family housing units or acquisition of existing
structures with rehabilitation of at least 15,000 dollars per unit.
Eligible Financing Sources: Any form of Federal, state, and
conventional sources of financing can be used in conjunction with the
loan guarantee, including Home Investment Partnership Program (HOME)
grant funds, tax exempt bonds, and low income housing tax credits.
Maximum Guarantee: The maximum guarantee for a permanent loan will
be 90 percent of the unpaid balance and interest on the loan. The
maximum guarantee on a construction loan will be 90 percent of the work
in place, which have credit enhancements, or up to 90 percent of the
amount actually advanced by the lender, whichever is less.
Reimbursement of Losses: Any losses will be split on a pro-rata
basis between the lender and the RHS from the first dollar lost.
Interest Rate: RHS will accept the best rate negotiated between the
lender and prospective borrower indexed to the 10-year Treasury Bond
Yield. However, priority points will be given for interest rates less
than 300 basis points over the 10-Year Treasury Bond Yield. Interest
rates must be fixed over the term of the loan.
Interest Credit: RHS will award interest credit to at least 20
percent of the loans made under the program. If 20 percent of the loans
have not received interest credit by May 16, 2002, then RHS will award
interest credit to those loans that initially requested interest credit
and have the highest interest credit priority score until at least 20%
of the loans have received interest credit. Requests for interest
credit must be made in the NOFA response. Lenders are not permitted to
make requests for interest credit after the selection process has taken
place.
Due to limited funding and in order to distribute Interest Credit
assistance as broadly as possible, the Agency has decided to limit the
interest credit to $1.5 million per loan. For example, if an eligible
request were made for interest credit on a loan of $2.5 million, up to
$1.5 million of the loan would receive interest credit and $1 million
would be originated at the note rate. Interest credit is not available
for construction loans. Interest credit is only available for permanent
loans. Lenders with projects that are viable with or without interest
credit are encouraged to submit a NOFA response reflecting financial
and market feasibility under both funding options. NOFA responses
requesting consideration under both options will not affect interest
credit selection. However, once the interest credit funds are
exhausted, only those NOFA responses requesting consideration under
both funding options or the Non-Interest Credit option will be further
considered.
Due to limited interest credit funds and the responsibility of RHS
to target and give priority to rural areas most in need, NOFA responses
requesting interest credit must score a minimum of 65 points under the
criteria established in this NOFA. In the event of ties, selection
between responses will be by lot.
Surcharges for Guarantee of Construction Advances: There is no
surcharge for the guarantee of construction advances for FY 2002.
Program Fees for FY 2002: The following information stipulates the
program fees.
(1) There is an initial guarantee fee of 1 percent of the total
guarantee amount, which will be due when the loan guarantee is issued.
In the case of a combination construction and permanent loan guarantee,
the 1 percent initial fee will be paid when the construction loan note
guarantee is issued. For purposes of calculating this fee, the
guarantee amount is the product of the percentage of the guarantee
times the initial principal amount of the guaranteed loan.
(2) There is an annual renewal fee of 0.5 percent of the
outstanding principal and interest of the loan. This fee will be
collected annually on January 1st of each calendar year.
[[Page 8681]]
(3) There is no fee for site assessment and market analysis or
preliminary feasibility in FY 2002.
(4) There is a non-refundable application fee of $2,500 when the
application is submitted.
(5) There is a flat fee of $500 when a lender requests RHS to
extend the term of a guarantee commitment.
(6) There is a flat fee of $500 when a lender requests RHS to
extend a guarantee commitment after the period of the commitment
lapses.
(7) There is a flat fee of $1,250 when a lender requests RHS to
approve the transfer of property and assumption of the loan to an
eligible prospective borrower.
(8) There is no lender application fee for lender approval in FY
2002.
Eligible Lenders: An eligible lender for the section 538 Guaranteed
Loan Housing Program as required by 7 CFR 3565.102 must be a licensed
business entity or Housing Finance Agency in good standing in the state
or states where it conducts business. Lender eligibility requirements
are contained in 7 CFR part 3565, subpart C, section 3565.102 ``Lender
Eligibility''. Below is a list of eligible lenders under 7 CFR
3565.102:
(1) A licensed business entity that meets the qualifications and
has the approval of the Secretary of Housing and Urban Development
(HUD) to make multi-family housing loans that are insured under the
National Housing Act. A complete list of HUD approved lenders can be
found in the HUD Web site at www.hud.gov.
(2) A licensed business entity that meets the qualifications and
has the approval of the Freddie Mac or Fannie Mae corporations to make
multi-family housing loans that are sold to the same corporations. A
complete list of Freddie Mac approved lenders can be found in Freddie
Mac's web site at www.freddiemac.com. Fannie Mae approved lenders are
found at www.fanniemae.com.
(3) A state or local Housing Finance Authority (HFA) with a top-
tier rating from Moody's or Standard & Poors, or member of the Federal
Home Loan Bank system, and the demonstrated ability to underwrite,
originate, process, close, service, manage, and dispose of multi-family
housing loans in a prudent manner.
(4) Be a GRRHP approved lender, defined as an entity with an
executed multi-family housing Lender's Agreement with RHS.
(5) Lenders that can demonstrate the capacity to underwrite,
originate, process, close, service, manage, and dispose of multi-family
housing loans. In order to be approved the lender will have to have an
acceptable level of financial soundness as determined by a lender
rating service. The submission of materials demonstrating capacity will
be required if the lender's NOFA response is selected.
Lenders who are otherwise ineligible may become eligible if they
maintain a correspondent relationship with an eligible lender that does
have the capacity to underwrite, originate, process, close, service,
manage, and dispose of multi-family housing loans. In this case, the
eligible lender must submit the NOFA response and application. All
contractual and legal documentation will be signed between RHS and the
lender that submitted the NOFA response and application.
RHS Lender Approval Application: Lenders whose NOFA responses are
selected will be notified by the RHS to submit a request for RHS lender
approval application within 30 days of notification. Lenders that have
received RHS lender approval in the past and are in good standing do
not need to reapply for RHS lender approval.
Submission of Documentation for RHS Lender Approval: All lenders
that have not yet received RHS lender approval must submit a complete
application for RHS lender approval. As RHS does not have a formal
application form, a complete application will consist of a cover letter
requesting RHS lender approval and the following documentation:
(1) a request for RHS lender approval on the lender's letterhead;
(2) Lenders who are HUD, Freddie Mac or Fannie Mae multi-family
approved lenders are required to show evidence of this status, such as
a copy of a letter designating the distinction.
(3) The lender's Loan Origination, Loan Servicing and Portfolio
Management Handbooks. These handbooks should detail the lender's
policies and procedures on loan origination through termination for
multi-family loans;
(4) Portfolio performance data;
(5) Copies of standard documents that will be used in processing
GRRHP loans;
(6) Resumes and qualifications of key personnel that will be
involved in the GRRHP;
(7) Identification of standards and processes that deviate from
those outlined in the GRRHP Origination and Servicing Handbook (HB-1-
3565) found at http://rdinit.usda.gov/regs;
(8) A copy of the most recent audited financial statements;
(9) Lender specific information including: (a) Legal name and
address, (b) list of principal officers and their responsibilities, (c)
certification that the officers and principals of the lender have not
been debarred or suspended from Federal programs, (d) Form AD 1047,
``Certification Regarding Debarment and Suspension,'' (e) certification
that the lender is not in default or delinquent on any Federal debt or
loan, or possess an outstanding finding of deficiency in a federal
housing program, and (f) certification of the lender's credit rating;
(10) Documentation on bonding and insurance; and
(11) Certification that computer systems comply with year 2000
technology.
RHS Lender Approval Requirements: Lenders who request RHS lender
approval must meet the standards stipulated in the 7 CFR part 3565,
subpart C, section 3565.103 ``Approval Requirements.''
Lender Responsibilities: Lenders will be responsible for the full
range of loan origination, underwriting, management, servicing,
compliance issues and property disposition activities associated with
their projects. The lender will be expected to provide guidance to the
prospective borrower on the RHS requirements during the application
phase. Once the guarantee is issued, the lender is expected to service
each loan it underwrites or contract these services to another capable
entity.
Discussion of Notice
Content of NOFA Responses: All NOFA responses require lender
information and project specific data. Incomplete responses will not be
considered for funding. Lenders will be notified of incomplete NOFA
responses. Complete NOFA responses are to include a signed cover letter
from the lender on the lender's letterhead and the following
information:
(1) Lender Information
A. Lender certification--The lender must certify that the lender
will make a loan to the prospective borrower for the proposed project,
under specified terms and conditions subject to the issuance of the RHS
guarantee. Lender certification must be on the lender's letterhead and
signed by both the lender and the prospective borrower.
(2) Project Specific Data
A. The lender must submit the project specific data below on the
lender's letterhead, signed by both the lender and the prospective
borrower.
[[Page 8682]]
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Lender Name Insert the lender's name
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Lender Tax ID # Insert lender's tax ID #
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Lender Contact Name Name of the lender contact for Loan
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Mailing Address Lender's complete mailing address
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Phone # Phone # for lender contact
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Fax # Insert lender's fax #
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E-mail Address Insert lender contact e-mail
address
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Borrower Name and Organization Type State whether borrower is a Limited
Partnership, Corporation, Indian
Tribe, etc.
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Tax Classification Type State whether borrower is for
profit, not for profit, etc.
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Borrower Tax ID # Insert borrower's tax ID #
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Borrower Address, including County Insert borrower's address and
county
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Borrower Phone # Insert borrower's phone #
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Principal or Key Member for the Insert name and title
Borrower
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Borrower Information and Statement Attach relevant information
of Housing Development Experience
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New Construction or Acquisition or State whether the project is new
Repair or Rehabilitation of at construction or acquisition or
Least $15,000 Per Unit repair or rehabilitation
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Project Location Town or City Town or city in which the project
is located
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Project County County in which the project is
located
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Project State State in which state the project is
located
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Project Zip Code Insert zip code
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Project Congressional District Congressional District for project
location
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Project Name Insert project name
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Project Type Family, senior (all residents over
55), or mixed
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Property Description and Proposed Provide as an attachment
Development Schedule
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Total Project Development Cost Enter amount for total project
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# of Units Insert the # of units in the
project
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Cost Per Unit Total development cost divided by #
of units
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Bedroom Mix # of units by # of bedrooms
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Rent Proposed rent structure
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Median Income for Community Provide median income for the
community
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Evidence of Site Control Attach relevant information
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Description of Any Environmental Attach relevant information
Issues
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Loan Amount Insert the loan amount
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Interest Credit (IC) Is interest credit requested for
this loan (Yes or No)?
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[[Page 8683]]
Interest Rate (for interest credit Lenders seeking interest credit
requests only) must provide the interest rate.
Priority points will be awarded to
projects requesting interest
credit for interest rates less
than 300 basis points over the 10-
year treasury bond yield
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If Above Is Yes, Should Proposal Be If Yes, proposal must show
Considered Under Non-IC Selection, financial feasibility for NON-IC
If IC Funds Are Exhausted? consideration.
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Borrower's Proposed Equity Insert amount.
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Tax Credits Will the project be allocated tax
credits? How much? What is the
estimated value of the tax credits
awarded?
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Other Sources of Funds List all funding sources.
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Loan to Value Guaranteed loan divided by value of
project.
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Debt Coverage Ratio Net Operating Income divided by
debt service payments.
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Percentage of Guarantee Percentage guarantee requested.
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Collateral Attach relevant information.
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Empowerment Zone (EZ) or Enterprise Yes or No? Is the project in a
Community (EC) recognized EZ or EC?
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Colonia or Tribal Lands Is the project in a Colonia or on
an Indian Reservation? Yes or No?
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Population Must be within the 20,000
population limit set for the
program.
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Is a Guarantee for Construction State yes or no. The Agency will
Being Requested? Are Advances guarantee construction advances,
Being Requested? only as part of a combination
construction and permanent loan.
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Loan Term Up to a 40-year amortized loan
Balloon mortgage with a minimum 25-
year term are eligible.
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Scoring of Priority Criteria for Selection of Projects with
Interest Credit Requests: RHS will allocate points to projects with
requests for interest credit. Projects with no interest credit request
will be reviewed for eligibility and viability on a continuous basis
and without any priority selection criteria.
The seven priority criteria for projects with requests for interest
credit are listed below.
Priority 1--Projects located in rural communities with the smallest
populations.
Score for Priority 1--Projects with the lowest populations will
receive the highest points.
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Population size Points
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0-1,000 people................................................ 20
1,001-2,000 people............................................ 19
2,001-3,000 people............................................ 18
3,001-4,000 people............................................ 17
4,001-5,000 people............................................ 16
5,001-6,000 people............................................ 15
6,001-7,000 people............................................ 14
7,001-8,000 people............................................ 13
8,001-9,000 people............................................ 12
9,001-10,000 people........................................... 11
10,001-11,000 people.......................................... 10
11,001-12,000 people.......................................... 9
12,001-13,000 people.......................................... 8
13,001-14,000 people.......................................... 7
14,001-15,000 people.......................................... 6
15,001-16,000 people.......................................... 5
16,001-17,000 people.......................................... 4
17,001-18,000 people.......................................... 3
18,001-19,000 people.......................................... 2
19,001-20,000 people.......................................... 1
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Priority 2--The RHS will award points for projects with 3-5 bedroom
units.
Score for Priority 2--The RHS will score the projects with the 3-5
bedroom units as follows:
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No. of 3-5 bedroom units Points
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More than 15.................................................. 20
10-15......................................................... 15
5-9........................................................... 10
1-4........................................................... 5
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Priority 3--The most needy communities as determined by the median
income from the most recent census data will receive points.
Score for Priority 3--The RHS will allocate points to projects
located in communities having the lowest median income. Points for
median income will be awarded as follows:
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Median income (dollars) Points
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Less than $25,000............................................. 20
$25,000-$29,999............................................... 15
$30,000-$34,999............................................... 10
$35,000-$40,000............................................... 5
More than $40,000............................................. 0
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Priority 4--Projects that demonstrate partnering and leveraging in
order to develop the maximum number of units and promote partnerships
with state and local communities will also receive points.
Score for Priority 4--The RHS will award points as follows:
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Loan to value ratio (percentage %) Points
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More than 75.................................................. 10
70-75......................................................... 15
Less than 70.................................................. 20
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Priority 5--RHS will award points for interest rates less above the
10-Year Treasury Bond Yield as follows:
Score for Priority 5
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Interest rate Points
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300 basis points or more, inclusive........................... -20
299 to 200 basis points, inclusive............................ 5
199 to 100 basis points, inclusive............................ 10
[[Page 8684]]
99 to 50 basis points, inclusive.............................. 15
Less than 50 basis points, inclusive.......................... 20
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Priority 6--The development of projects on Tribal Lands, or in an
Empowerment Zone or Enterprise Community will receive points.
Score for Priority 6--The RHS will attribute 20 points to projects
that are developed in any of the locations described in priority 6.
Priority 7--The development of projects in a Colonia or in a place
identified in the State's Consolidated Plan or State Needs Assessment
as a high need community for multi-family housing will receive points.
Score for Priority 7--The RHS will attribute 20 points to projects
that are developed in any of the locations described in priority 7.
NOFA Submission Address: Eligible lenders will send the NOFA
responses to: Director, Multi-Family Housing Processing Division, Rural
Housing Service, U.S. Department of Agriculture, Room 1263, STOP 0781,
1400 Independence Avenue, SW, Washington, DC 20250-0781. Responses for
participation in the program must be identified as ``Section 538
Guaranteed Rural Rental Housing Program'' on the envelope.
Notifications: NOFA responses will be reviewed for completeness and
eligibility. The RHS will notify those lenders whose NOFA responses are
selected via letter. The RHS will request lenders without RHS lender
approval to apply for RHS lender approval within 30 days upon receipt
of notification of selection. For information regarding RHS Lender
Approval, please refer to section SUBMISSION OF DOCUMENTATION FOR RHS
LENDER APPROVAL in this NOFA. Requests for RHS lender approval should
be sent to the person and address listed in the NOFA SUBMISSION ADDRESS
section in this NOFA.
Lenders will also be invited to submit a complete application and
the required application fee of $2,500 to the Rural Development State
Office where the project is located.
Submission of GRRHP Applications: Notification letters will
instruct lenders to contact the Rural Development State Office
immediately following notification of selection to schedule required
agency reviews. Rural Development State Office addresses can be found
in the USDA web site, www.usda.gov, under the Rural Development program
area.
Rural Development State Office staff will work with lenders in the
development of the complete application. Applications must include; (1)
The appropriate level of environmental review in accordance with 7 CFR
part 1940, subpart G, (2) the Civil Rights Impact Analysis
Certification, (3) intergovernmental review (7 CFR part 3015, subpart
V), and (4) appropriate flood insurance coverage as stipulated in 7 CFR
part 1806 subpart B.
The deadline for the submission of a complete application and fee
is 90 days from the date of notification of NOFA selection. If the
application and fee are not submitted within 90 days from the date of
notification, the selection is subject to cancellation, thereby
allowing another NOFA response that is ready to proceed with processing
to be selected.
Obligation of Program Funds: The RHS will only obligate funds to
projects that undergo a satisfactory environmental review in accordance
with the National Environmental Protection Act (NEPA).
Conditional Commitment: Once the complete application and
application fee are received and all NEPA requirements have been met,
the Rural Development State Office will issue a conditional commitment,
which stipulates the conditions that must be met for the issuance of a
guarantee, in accordance with 7 CFR part 3565, subpart G, section
3565.303. Once the conditional commitment is issued the funds are
obligated to the lender.
Issuance of Guarantee: The RHS will issue a guarantee to the lender
for a project in accordance with 7 CFR part 3565, subpart G, section
3565.303 ``Issuance of Loan Guarantee.'' No guarantee can be issued
without a complete application, review of appropriate certifications,
satisfactory assessment of the appropriate level of environmental
review, and the completion of any conditional requirements.
Dated: February 15, 2002.
James C. Alsop,
Acting Administrator, Rural Housing Service.
[FR Doc. 02-4332 Filed 2-22-02; 8:45 am]
BILLING CODE 3410-XV-P
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