[Federal Register: December 27, 2002 (Volume 67, Number 249)]
[Notices]
[Page 79038-79042]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de02-52]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice for Requests for Proposals for Guaranteed Loans Under the
Section 538 Guaranteed Rural Rental Housing Program (GRRHP) for Fiscal
Year 2003
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: This is a request for proposals for guaranteed loans under the
section 538 Guaranteed Rural Rental Housing Program (GRRHP) pursuant to
7 CFR 3565.4 for Fiscal Year (FY) 2003 subject to the availability of
funding. FY 2002 funding for the section 538 was $99.7 million. This
notice is being issued prior to passage of a final appropriations bill
to allow applicants sufficient time to leverage financing and submit
proposals in the form of ``RESPONSES'', and give the Agency maximum
time to process applications within the current fiscal year. A Notice
of Funding Availability will be published announcing the funding level
for GRRHP for FY 2003 once an appropriation act has been enacted. The
commitment of program dollars will be made to applicants of selected
responses that have fulfilled the necessary requirements for
obligation, to the extent an appropriation act provides funding for
GRRHP for FY 2003. Expenses incurred in developing applications will be
at the applicant's risk. The following paragraphs outline the
timeframes, eligibility requirements, lender responsibilities, and the
overall response 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
general public with guidance on program administration. HB-1-3565,
which contains a copy of Appendix 1, can be found at the Rural
Development regulation web site address http://rdinit.usda.gov/regs.
Eligible lenders are invited to submit 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 this notice, eligible lenders may submit a complete
application concurrently with the response. The submission of a
complete application will not affect the scoring process.
DATES: Program dollars will be allocated through a continuous selection
process to the extent and when an appropriation act provides funding
for GRRHP for FY 2003. The RHS will review all responses through May
16, 2003. Reviews will take place on an on-going basis. Those responses
that are selected that subsequently fulfill the necessary requirements
for obligation and meet all federal environmental requirements will
receive commitments to the extent an appropriation act provides funding
for GRRHP for FY 2003 until all funds are expended. If any fiscal year
2003 funds have not been exhausted by May 16, 2003, the Agency will
continue receiving and reviewing responses until all funds are
expended. A notice will be placed in the Federal Register when all
funds are committed for FY 2003.
Eligible lenders intending to mail a response or application must
provide sufficient time to permit delivery to the NOTICE submission
address on or
[[Page 79039]]
before the closing deadline date and time. Acceptance by a U.S. Post
Office or private mailer does not constitute delivery. Postage due
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, but not funded, in prior years are eligible for FY 2003
program dollars subject to the availability of funds. Prior year NOFA
RESPONSES selected by RHS for submission of a complete application may
submit an application for competition for FY 2003 funding without
completing a FY 2003 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 meet the
requirements for obligation, which include all federal environmental
documents required by 7 CFR 1940, subpart G, Form RD 3565-1, and the
$2,500 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.
Required Responses From: Eligible Lenders for Multi-Family Lending.
Program Offers: Loan Guarantees and Interest Credits for Rural
Housing.
Qualifying Properties: Qualifying properties include new
construction for multi-family housing units or acquisition of existing
structures with rehabilitation of at least $15,000 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. 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, 2003, 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 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. 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 response
reflecting financial and market feasibility under both funding options.
Responses requesting consideration under both options will not affect
interest credit selection. However, once the interest credit funds are
exhausted, only those 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, responses
requesting interest credit must score a minimum of 55 points under the
criteria established in this notice. 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 2003.
Program Fees for FY 2003: 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.
(3) There is no fee for site assessment and market analysis or
preliminary feasibility in FY 2003.
(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
2003.
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 (HFA) in good standing in the
state or states where it conducts business. Lender eligibility
requirements are contained in 7 CFR 3565.102. Below is a list of some
of the eligible lender criteria under 7 CFR 3565.102:
(1) 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 on
the HUD web site at http://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 http://
[[Page 79040]]
www.freddiemac.com. Fannie Mae approved lenders are found at http://www.fanniemae.com
.
(3) A state or local 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 a prudent manner. 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 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 a prudent manner.
In this case, the eligible lender must submit the response and
application. All contractual and legal documentation will be signed
between RHS and the lender that submitted the response and application.
RHS Lender Approval Application: Lenders whose 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 to the Director of Multi-Family
Housing Processing Division and the address as provided in the NOTICE
SUBMISSION ADDRESS section of this notice. 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) 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, (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; and
(10) Documentation on bonding and insurance.
RHS Lender Approval Requirements: Lenders who request RHS lender
approval must meet the standards stipulated in the 7 CFR 3565.103.
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 Notice Responses: All responses require lender
information and project specific data. Incomplete responses will not be
considered for funding. Lenders will be notified of incomplete
responses. Complete responses are to include a signed cover letter from
the lender on the lender's letterhead and the following information:
(1) 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--The lender must submit the project
specific data below on the lender's letterhead, signed by both the
lender and the prospective borrower.
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Lender Name............................ Insert the lender's name.
Lender Tax ID ................ Insert lender's tax ID .
Lender Contact Name.................... Name of the lender contact for
Loan.
Mailing Address........................ Lender's complete mailing
address.
Phone ........................ Phone for lender
contact.
Fax .......................... Insert lender's fax .
E-mail Address......................... Insert lender contact e-mail
address.
Borrower Name and Organization Type.... State whether borrower is a
Limited Partnership,
Corporation, Indian Tribe,
etc.
Tax Classification Type................ State whether borrower is for
profit, not for profit, etc.
Borrower Tax ID .............. Insert borrower's tax ID .
Borrower Address, including County..... Insert borrower's address and
county.
Borrower Phone ............... Insert borrower's phone .
Principal or Key Member for the Insert name and title.
Borrower.
Borrower Information and Statement of Attach relevant information.
Housing Development Experience.
New Construction or Acquisition or State whether the project is
Repair or Rehabilitation of at Least new construction or
$15,000 Per Unit. acquisition or repair or
rehabilitation.
Project Location Town or City.......... Town or city in which the
project is located.
[[Page 79041]]
Project County......................... County in which the project is
located.
Project State.......................... State in which state the
project is located.
Project Zip Code....................... Insert zip code.
Project Congressional District......... Congressional District for
project location.
Project Name........................... Insert project name.
Project Type........................... Family, senior (all residents
over 55), or mixed
Property Description and Proposed Provide as an attachment.
Development Schedule.
Total Project Development Cost......... Enter amount for total project.
of Units..................... Insert the of units
in the project.
Cost Per Unit.......................... Total development cost divided
by of units.
Bedroom Mix............................ of units by
of bedrooms.
Rent................................... Proposed rent structure.
Median Income for Community............ Provide median income for the
community.
Evidence of Site Control............... Attach relevant information.
Description of Any Environmental Issues Attach relevant information.
Loan Amount............................ Insert the loan amount.
Interest Credit (IC)................... Is interest credit requested
for this loan? (Yes or No).
If Above Is Yes, Should Proposal Be If Yes, proposal must show
Considered Under Non-IC Selection, If financial feasibility for NON-
IC Funds Are Exhausted?. IC consideration.
Borrower's Proposed Equity............. Insert amount.
Tax Credits............................ Will the project be allocated
tax credits? How much? What is
the estimated value of the tax
credits awarded?
Other Sources of Funds................. List all funding sources.
Loan to Value.......................... Guaranteed loan divided by
value of project.
Debt Coverage Ratio.................... Net Operating Income divided by
debt service payments.
Percentage of Guarantee................ Percentage guarantee requested.
Collateral............................. Attach relevant information.
Empowerment Zone (EZ) or Enterprise Yes or No. Is the project in a
Community (EC). recognized EZ or EC?
Colonia or Tribal Lands................ Is the project in a Colonia or
on an Indian Reservation? (Yes
or No)
Population............................. Must be within the 20,000
population limit set for the
program.
Is a Guarantee for Construction Being State yes or no. The Agency
Requested? Are Advances Being will guarantee construction
Requested?. for construction advances,
only as part of a combination
construction and permanent
loan.
Loan Term.............................. Up to a 40-year amortized loan
Balloon mortgages 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 six priority criteria for projects with requests for interest
credit are listed below.
Priority 1--Projects located in eligible rural communities with the
lowest populations will receive the highest points.
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Population size Points
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0-5,000 people............................ 15
5,001-10,000 people....................... 10
10,001-15,000 people...................... 5
15,001-20,000 people...................... 0
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Priority 2--The RHS will award points for projects with 3-5 bedroom
as follows:
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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. 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 $35,000......................... 20
$35,001-$45,000........................... 15
$45,001-$55,000........................... 10
$55,001-$65,000........................... 5
More than $65,000......................... 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. Points will
be awarded 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--The development of projects on Tribal Lands, or in an
Empowerment Zone or Enterprise Community will receive points. The RHS
will attribute 20 points to projects that are developed in any of the
locations described in this priority.
Priority 6--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.
The RHS will attribute 20 points to projects that are developed in any
of the locations described in this priority.
Notice Submission Address: Eligible lenders will send 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.
[[Page 79042]]
Notifications: Responses will be reviewed for completeness and
eligibility. The RHS will notify those lenders whose 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 notice. Requests for RHS lender approval
should be sent to the person and address listed in the NOTICE
SUBMISSION ADDRESS section in this notice.
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, http://www.rurdev.usda.gov, under the Rural
Development program area.
Rural Development State Office staff will work with lenders in the
development of an application package. Required documentation for a
complete application package is stated in section 3 of HB-1-3565.
The deadline for the submission of a complete application and
application fee is 90 days from the date of notification of response
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 response that is ready to
proceed with processing to be selected.
Obligation of Program Funds: The RHS will only obligate funds to
projects that meet the requirements for obligation, including
undergoing a satisfactory environmental review in accordance with the
National Environmental Protection Act (NEPA) and lenders who have
submitted the $2,500 application fee and completed Form RD 3565-1 for
the selected project.
Conditional Commitment: Once required documents for obligation and
the 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 fulfilled
before the issuance of a guarantee, in accordance with 7 CFR 3565.303.
Issuance of Guarantee: The RHS will issue a guarantee to the lender
for a project in accordance with 7 CFR 3565.303. 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: December 20, 2002.
James E. Selmon, III,
Associate Administrator, Rural Housing Service.
[FR Doc. 02-32758 Filed 12-26-02; 8:45 am]