[Federal Register: October 12, 2005 (Volume 70, Number 196)]
[Rules and Regulations]
[Page 59224-59229]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc05-3]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Part 1902
Disbursement of Funds
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: The Agencies are revising their disbursement of funds
regulations. This action is necessary since existing regulations do not
accurately reflect the current disbursement methodologies employed by
the Agencies. The intended effect is to simplify and update the
regulations; to eliminate reference to the obsolete Loan Disbursement
System; clarify Federal Deposit Insurance Corporation (FDIC) and
National Credit Union Administration (NCUA) insurance coverage; and
eliminate reference to the now defunct Federal Savings and Loan
Insurance Corporation (FSLIC). These amended regulations are to ensure
the Agencies' field offices have current guidance on the disbursement
methods available and supervised bank accounts.
EFFECTIVE DATE: October 12, 2005.
FOR FURTHER INFORMATION CONTACT: Ronald Gianella, Staff Accountant,
Office of the Deputy Chief Financial Officer, Policy and Internal
Review Division, U.S. Department of Agriculture, STOP 33, P.O. Box
200011, St. Louis, Missouri 63120, telephone: (314) 457-4298.
SUPPLEMENTARY INFORMATION:
Classification
This action is not subject to the provisions of Executive Order
12866 since it involves only internal Agency management. This action is
not published for prior notice and comment under the Administrative
Procedure Act since it involves only internal Agency management and
publication for comment is unnecessary and contrary to the public
interest.
Programs Affected
The Catalog of Federal Domestic Assistance programs impacted by
this action are as follows:
10.353--National Rural Development Partnership
10.405--Farm Labor Housing Loans and Grants
10.410--Very Low to Moderate Income Housing Loans
10.411--Rural Housing Site Loans and Self-Help Housing Land Development
Loans
10.415--Rural Rental Housing Loans
10.417--Very Low-Income Housing Repair Loans and Grants
10.420--Rural Self-Help Housing Technical Assistance
10.421--Indian Tribes and Tribal Corporation Loans
10.427--Rural Rental Assistance Payments
10.433--Rural Housing Preservation Grants
10.438--Section 538 Rural Rental Housing Guaranteed Loans
10.441--Technical and Supervisory Assistance Grants
10.442--Housing Application Packaging Grants
10.444--Direct Housing Natural Disaster Loans and Grants
10.445--Direct Housing Natural Disaster
10.446--Rural Community Development Initiative
10.760--Water and Waste Disposal Systems for Rural Communities
10.761--Technical Assistance and Training Grants
10.762--Solid Waste Management Grants
10.763--Emergency Community Water Assistance Grants
10.766--Community Facilities Loans and Grants
10.767--Intermediary Relending Program
10.768--Business and Industry Loans
10.769--Rural Business Enterprise Grants
10.770--Water and Waste Disposal Loans and Grants (Section 306C)
10.771--Rural Cooperative Development Grants
10.772--Empowerment Zones Program
10.773--Rural Business Opportunity Grants
10.775--Renewable Energy Systems and Energy Efficiency Improvements
Program
10.854--Rural Economic Development Loans and Grants
Intergovernmental Consultation
Programs with Catalog of Federal Domestic Assistance numbers
10.353, 10.405, 10.411, 10.415, 10.420, 10.421, 10.427, 10.433, 10.760,
10.763, 10.766, 10.767, 10.768, 10.769, 10.770, 10.771, 10.773, and
10.854 are subject to the provisions of Executive Order 12372 which
requires intergovernmental consultation with State and local officials.
Programs with Catalog of Federal Domestic Assistance numbers
10.410, 10.417, 10.438, 10.441, 10.442, 10.444, 10.445, 10.446, 10.761,
10.762, 10.772, 10.775 are excluded from the scope of Executive Order
12372.
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this rule: (1) Unless
otherwise specifically provided, all State and local laws and
regulations that are in conflict with this rule will be preempted; (2)
no retroactive effect will be given to this rule except as specifically
prescribed in the rule; and (3) administrative proceedings of the
National Appeals Division (7 CFR part 11) must be exhausted before
litigation against the Department is instituted.
Paperwork Reduction Act
The information collection requirements contained in this rule have
been approved by the Office of Management and Budget (OMB) under the
provisions of 44 U.S.C. Chapter 35 and were assigned OMB control number
0575-0184 in accordance with the Paperwork Reduction Act of 1995. No
person is required to respond to a collection of information unless it
displays a valid OMB control number. This rule does not impose any new
[[Page 59225]]
information collection requirements from those approved by OMB.
GPEA Statement
The Agencies are committed to compliance with GPEA, which requires
Government agencies, in general, to provide the public the option of
submitting information or transacting business electronically to the
maximum extent possible.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under Section 202 of the UMRA, the
Agencies generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any 1 year. When such a statement is needed for a
rule, Section 205 of the UMRA generally requires the agencies to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, more cost-effective, or least burdensome
alternative that achieves the objectives of the rule. This rule
contains no Federal mandates (under the regulatory provisions of title
II of the UMRA) for State, local, and tribal governments or the private
sector. Thus, the rule is not subject to the requirements of Sections
202 and 205 of the UMRA.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
Subpart G, ``Environmental Program.'' The Agencies have determined that
this final action does not constitute a major Federal action
significantly affecting the quality of human environment, and in
accordance with the National Environmental Policy Act of 1969, 42
U.S.C. 4321 et seq., an Environmental Impact Statement is not required.
Executive Order 13132, Federalism
The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. In addition,
this rule does not impose substantial direct compliance costs on State
and local governments. Therefore, consultation with the States is not
required.
Discussion of Final Rule
7 CFR 1902, subpart A, is being revised to eliminate procedures
servicing officials should follow in ordering loan and grant
disbursements. These procedures are in 7 CFR 2018, subpart D. 7 CFR
1902, subpart A, is being revised to clarify FDIC and NCUA insurance
coverage and eliminate reference to the now defunct FSLIC. The
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
abolished the insolvent FSLIC. The FDIC insures deposits in banks and
savings associations and insures each person's share in all joint
accounts at an institution up to $100,000. The NCUA insures deposits in
Federal credit unions and insures each person's share in all joint
accounts at an institution up to $100,000.
The Farm Service Agency (FSA) disbursement policies are established
in internal agency handbooks. While disbursements under some FSA
programs were processed according to 7 CFR 1902, subpart A, prior to
the USDA Reorganization Act, FSA no longer utilizes this subpart.
List of Subjects in 7 CFR Part 1902
Accounting, banks, banking, grant programs--housing and community
development, loan programs--agriculture, loan programs--housing and
community development.
0
For reasons set forth in the preamble, Chapter XVIII, title 7, Code of
Federal Regulations is amended as follows:
PART 1902--SUPERVISED BANK ACCOUNTS
0
1. The authority citation for part 1902 is revised to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 U.S.C. 6991, et seq.;
42 U.S.C. 1480; Reorganization Plan No. 2 of 1953 (5 U.S.C. App.).
Subpart A--Supervised Bank Accounts of Loan, Grant, and Other Funds
0
2. The title of subpart A is revised to read as set forth above.
0
3. Section 1902.1 is revised to read as follows:
Sec. 1902.1 General.
This subpart prescribes the policies and procedures in establishing
and using supervised bank accounts, and in placing Multi-Family Housing
(MFH) reserve accounts in supervised bank accounts. 7 CFR part 2018,
subpart D, provides the procedures Servicing Officials should follow in
ordering loan and grant disbursements.
(a) Borrowers referred to in this subpart include both loan and
grant recipients. They are referred to as ``depositors'' in the deposit
agreements hereinafter described. References herein and in deposit
agreements to ``other lenders'' include lenders and grantors other than
Rural Development.
(b) Banks and savings associations referred to in this subpart are
those in which deposits are insured by the FDIC.
(c) Credit unions referred to in this subpart are those in which
deposits are insured by the NCUA.
(d) Financial institutions as referred to in this subpart include
banks, savings associations, and credit unions which are covered by the
proper insurance coverage cited in paragraphs (b) and (c) of this
section.
(e) Supervised bank accounts referred to in this subpart are bank,
savings association, or credit union accounts established through
deposit agreements entered into between the borrower, the United States
of America acting through Rural Development, and the Financial
Institution on Form RD 402-1, ``Deposit Agreement''.
(f) Form RD 402-1 provides for the deposit of funds in a supervised
bank account to ensure the performance of the borrower's obligation to
Rural Development in connection with a loan and/or grant.
(g) ``Interest-Bearing Deposit Agreement'' (Exhibit B of this
subpart), provides for the deposit of loan or grant funds that are not
required for immediate disbursement in specified interest-bearing
deposits, and it is executed in conjunction with Form RD 402-1.
(h) Servicing officials referred to in this instruction include
county supervisors, district directors, local supervisors, area
supervisors, and National Office grant program managers.
(i) Automated systems referred to in this instruction refers to the
loan accounting systems; e.g., Program Loan Accounting System,
Automated Multi-Housing Accounting System, and Dedicated Loan
Origination System, from which loan and grant disbursements are
ordered.
(j) This subpart includes the National Office directly servicing a
grant recipient or recipient of cooperative agreement funds.
0
4. Section 1902.2 is revised to read as follows:
Sec. 1902.2 Policies concerning disbursement of funds.
(a) Generally, loan and grant disbursements may be requested on an
as needed basis, thereby reducing the need for supervised bank
accounts. For
[[Page 59226]]
all construction loans and those loans using multiple advances, only
the actual amount to be disbursed at loan closing will be requested
through the automated systems. Subsequent disbursements will be ordered
as needed. However, supervised bank accounts may be used in certain
circumstances. For example:
(1) When a construction loan is made and the construction is
substantially completed, but a small amount is being withheld pending
completion of landscaping or some similar item. In this case, funds not
disbursed may be placed in a supervised bank account for future
disbursement as appropriate.
(2) When a large number of checks will be issued in the
construction of a dwelling or other development. In such cases, loan
and grant disbursements will be requested in accordance with 7 CFR part
2018, subpart D as necessary, deposited in a supervised bank account,
and disbursed as necessary to suppliers, sub-contractors, etc.
(3) Association loan and grant funds made on a multiple advance
basis may be deposited in a supervised bank account when required by
State statutes or when determined necessary by the loan approval
official.
(4) Supervised bank accounts may be used when needed as defined in
paragraph (a)(5) of this section to ensure the correct expenditures of
all or a part of loan and grant funds, borrower contributions, and
borrower income. Such accounts will be limited in amount and duration
to the extent feasible through the prudent disbursement of funds and
the prompt termination of the interests of Rural Development and other
lenders when the accounts are no longer required.
(5) When it is determined by the Servicing Official that special
supervision is needed in the management of the borrower's finances,
funds may be deposited in a supervised bank account. This supervisory
technique will be used for a temporary period to help the borrower
learn to properly manage his/her finances. Such a period will not
exceed 1 year unless extended by the Servicing Official.
(b) Program instructions provide information as to the type of note
to be utilized and the method of handling advances and the interest
accrued.
(c) The debt instruments executed at the time of loan closing
constitute an obligation on the part of the Government to disburse all
funds at one time or in multiple advances, provided the funds are for
purposes authorized by the Government at the time of loan closing. This
obligatory commitment takes priority over any intervening liens or
advances by other creditors, regardless of the provisions of the State
laws involved.
0
5. Section 1902.3, is amended by revising paragraphs (a), (b)
introductory text, and (c) to read as follows:
Sec. 1902.3 Procedures to follow in fund disbursement.
(a) The Servicing Official will determine during loan approval the
amount(s) of loan or grant disbursement(s)--full or partial--and will
process the request to the appropriate automated system in accordance
with 7 CFR part 2018, subpart D.
(b) When Treasury check(s) are delivered to the Servicing Official,
the Servicing Official will make sure that the name of the borrower and
the amount(s) of check(s) coincide with the request on file. The
Servicing Official should be sure that the check is properly endorsed
to ensure payment to the intended recipient. Examples of such
restrictive endorsements are:
* * * * *
(c) When necessary, and only under the circumstances listed in
Sec. 1902.2, the Servicing Official will establish, or cause to be
established, a supervised bank account. Funds deposited in a supervised
bank account are to be recorded and accounted for on Form RD 402-2,
``Statement of Deposits and Withdrawals''.
0
6. Section 1902.4 is amended by revising paragraphs (a)(3), (a)(5), and
(b)(1) to read as follows:
Sec. 1902.4 Establishing MFH reserve accounts in a supervised bank
account.
(a) * * *
(3) Interest bearing. The reserve account funds are encouraged to
be maintained in an interest-bearing account. The ``Interest-Bearing
Deposit Agreement'' set out in Exhibit B of this subpart is not
required to be used for reserve accounts.
* * * * *
(5) Financial institutions. The reserve account must be maintained
in authorized financial institutions set out in subpart C of part 1930
of this chapter; e.g., banks, savings associations, credit unions,
brokerage firms, mutual funds. Generally, any financial institution may
be used provided invested or deposited funds are insured to protect
against theft and dishonesty. The reserve account funds need not be
Federally insured, but must be otherwise covered by non-Federal
insurance against theft and dishonesty.
* * * * *
(b) * * *
(1) Deposits. Generally, Rural Development will not require the
review or approval of deposits or the use of Form RD 402-1 or 402-2.
* * * * *
7. Section 1902.6, is amended by revising paragraphs (a), (b)(3),
(c), (d), (e), and (f) to read as follows:
Sec. 1902.6 Establishing supervised bank accounts.
(a) Each borrower will be given an opportunity to choose the
financial institution in which the supervised bank account will be
established, provided the financial institution is a member of the FDIC
or NCUA, as applicable.
(b) * * *
(3) An agreement is reached with the financial institution
regarding the place where the counter-signature will be on the checks.
(c) When possible, Servicing Officials will make arrangements with
financial institutions to waive service charges in connection with
supervised bank accounts. However, there is no objection to the payment
by the borrower of a reasonable charge for such service.
(d) For each borrower, if the amount of any loan and grant funds,
plus any borrower contributions and funds from other sources to be
deposited in the supervised bank account will exceed $100,000, the
financial institution will be required to pledge collateral for the
excess over $100,000 before the deposit is made (see Sec. 1902.7 of
this subpart). If the supervised bank account is a joint account, any
amount over the FDIC- or NCUA-insured limit must be collateralized.
(e) Only one supervised bank account will be established for any
borrower regardless of the amount or source of funds, except for Rural
Rental Housing loans where separate accounts will be established for
each project.
(f) When a supervised bank account is established, an original and
two copies of the applicable Deposit Agreement and the Interest-Bearing
Deposit Agreement (Exhibit B of this subpart), when applicable, will be
executed by the borrower, the financial institution, and a Servicing
Office employee. The original will be retained in the borrower's case
file, one executed copy will be delivered to the financial institution
and one executed copy to the borrower. An extra copy of the Interest-
Bearing Deposit Agreement, when applicable, will be prepared and
attached to the certificate, passbook, or other evidence of deposit
representing the interest-bearing deposit.
* * * * *
0
8. Section 1902.7, is amended by revising paragraphs (a), (b)
introductory
[[Page 59227]]
text, (b)(1), (b)(2), (c), (d), (e), and (f) to read as follows:
Sec. 1902.7 Pledging collateral for deposit of funds in supervised
bank accounts.
(a) Funds in excess of $100,000 per financial institution,
deposited for borrowers in supervised bank accounts, must be secured by
pledging acceptable collateral with the Federal Reserve Bank (FRB) in
an amount not less than the excess. If the supervised bank account is a
joint account, any amount over the FDIC- or NCUA-insured limit must be
collateralized.
(b) As soon as it is determined that the loan will be approved and
the applicant has selected or tentatively selected a financial
institution for the supervised bank account, the Servicing Official
will contact the financial institution to determine:
(1) That the financial institution selected is insured by the FDIC
(banks and savings associations) or NCUA (credit unions).
(2) Whether the financial institution is willing to pledge
collateral with the FRB under 31 CFR part 202 (Treasury Circular 176)
to the extent necessary to secure the amount of funds being deposited
in excess of the FDIC or NCUA insurance limit.
* * * * *
(c) If the financial institution agrees to pledge collateral, the
Servicing Official should complete RD Form Letter 1902-A-2,
``Designated Financial Institution--Collateral Pledge'', in an original
and two copies: The original for the National Office, Policy and
Analysis Division; the first copy for the State Office; and the second
copy for the Servicing Official. The Rural Development Form Letter
1902-A-2 should be forwarded to the National Office, Policy and
Analysis Division, at least 30 days before the date of loan closing.
(d) The National Office, Policy and Analysis Division, will arrange
for the financial institution under its designation as a depository and
financial agent of the U.S. Government to pledge the requested
collateral.
(e) If, two days before loan closing, the local Rural Development
office which requested the collateral has not received notification
from the National Office, Policy and Analysis Division, that collateral
has been pledged, contact should be made with the financial institution
to ascertain whether they have pledged collateral with their local FRB
under 31 CFR part 202 (Treasury Circular 176). If the financial
institution has pledged collateral, the local Rural Development office
should contact the National Office, Policy and Analysis Division, who
will follow-up with the local FRB concerning the collateral.
(f) When the amount of deposit in the supervised bank account has
been reduced to a point where the financial institution desires part or
all of the collateral released, it should contact the National Office,
Policy and Analysis Division. The local Rural Development office will
be contacted for release authorization. The authorization release will
be made through the local FRB, with notification to the financial
institution. The local Rural Development office may also request
release through the National Office, Policy and Analysis Division.
0
9. Section 1902.8, is added to read as follows:
Sec. 1902.8 Authority to establish and administer supervised bank
accounts.
Servicing Officials are authorized to establish supervised bank
accounts, deposit loan checks and other funds, countersign checks,
close accounts, and execute all forms in connection with supervised
bank account transactions and redelegate this authority to a person
under their supervision who is considered capable of exercising such
authority. State Directors will make written demand upon the bank for
withdrawals outlined in Sec. 1902.16.
0
10. Section 1902.9, is amended by revising paragraphs (a)(1), (a)(2),
(a)(3), (a)(5), (b) introductory text, and (b)(2) to read as follows:
Sec. 1902.9 Deposits.
(a) * * *
(1) Checks made payable solely to the Federal Government or any
Agency thereof, and a joint check when the Treasurer of the United
States is a joint payee, may not be deposited in a supervised bank
account.
(2) Rural Development personnel will accept funds for deposit in a
borrower's supervised bank account ONLY in the form of: A check or
money order endorsed by the borrower ``For Deposit Only;'' a check
drawn to the order of the financial institution in which the funds are
to be deposited; a loan check drawn on the U.S. Treasury; or a Rural
Development electronic funds transfer disbursement.
(i) A joint check that is payable to the borrower and Rural
Development will be endorsed by the Servicing Official as provided in 7
CFR part 1951, subpart B, Exhibit B, section 4.
(ii) Ordinarily, when deposits are made from funds which are
received as the result of consent or subordination agreements or
assignments of income, the check should be drawn to the order of the
financial institution in which the supervised bank account is
established or jointly to the order of the borrower and Rural
Development. All such checks should be delivered or mailed to the
Servicing Office.
(3) If direct or insured loan funds or borrower contributions are
to be deposited in a supervised bank account, such funds will be
deposited on the date of loan closing after it has been determined that
the loan can be closed. However, if it is impossible to deposit the
funds on the day the loan is closed due to reasons such as distance
from the financial institution or banking hours, the funds will be
deposited on the first banking day following the date of loan closing.
* * * * *
(5) When funds from any source in the form of cash, check, or money
order are deposited by Rural Development personnel in a supervised bank
account, a deposit slip will be prepared in an original and two copies
with distribution as follows: Original to the financial institution,
one copy to the borrower, and one copy for the borrower's case folder.
The name of the borrower, the sources of funds, ``Subject to Rural
Development Countersignature'' and, if applicable, the account number,
will be entered on each deposit slip.
* * * * *
(b) Deposits by borrowers. Funds in the form of cash, check, or
money order may be deposited in the supervised bank account by the
borrower if authorized by Rural Development, provided the financial
institution has agreed that when a deposit is made to the account by
other than Rural Development personnel, the financial institution will
promptly deliver or mail a copy of the deposit slip to the Rural
Development Servicing Office.
* * * * *
(2) Funds other than loan or grant funds may be deposited by the
borrower in those exceptional instances where an agreement is reached
between the Servicing Official and the borrower, whereby the borrower
will make deposits of income from any source directly into the
supervised bank account. In such instances the borrower will be
instructed to prepare the deposit slip in the manner described in Sec.
1902.9 (a)(5) of this subpart.
0
11. Section 1902.10, is amended by revising paragraph (a), revising
paragraphs (d)(2) through (d)(5), and removing paragraph (d)(6) to read
as follows:
[[Page 59228]]
Sec. 1902.10 Withdrawals.
(a) The Servicing Official will not countersign checks on the
supervised bank account for the use of funds unless the funds deposited
by the borrower from other sources were cash deposits, checks which the
Servicing Official knows to be good, or deposited checks which have
cleared.
* * * * *
(d) * * *
(2) Ordinarily, a check will be countersigned before it is
delivered to the payee. However, in justifiable circumstances, such as
when excessive travel on the part of the borrower or Servicing Official
would be involved, or purchase would be prevented, and the borrower can
be relied upon to select goods and services in accordance with the
plans, a check may be delivered to the payee by the borrower before
being countersigned.
(i) When a check is to be delivered to the payee before being
countersigned, the Servicing Official must make it clear to the
borrower and to the payee, if possible, that the check will be
countersigned only if the quantity and quality of items purchased are
in accordance with approved plans.
(ii) Checks delivered to the payee before counter-signature will
bear the following legend in addition to the legend for
countersignature: Valid only upon countersignature of Rural
Development.''
(iii) The check must be presented by the payee or a representative
to the Rural Development Servicing Office for the required
countersignature.
(iv) Such check must be accompanied by a bill of sale, invoice, or
receipt signed by the borrower identifying the nature and cost of goods
or services purchased, or similar information must be indicated on the
check.
(3) For real estate loans or grants, whether the check is delivered
to the payee before or after countersignature, the number and date of
the check will be inserted on all bills of sale, invoices, receipts,
and itemized statements for materials, equipment, and services.
(4) Bills of sale, invoices, receipts, or itemized statements may
be returned to the borrower with the canceled check for the payment of
the bill.
(5) Checks to be drawn on a supervised bank account will bear the
legend:
``Countersigned,'' not as co-maker or endorser.
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(Title)
Rural Development
0
12. Section 1902.11 is revised to read as follows:
Sec. 1902.11 Servicing Office records.
A record of funds deposited in a supervised bank account will be
maintained on Form RD 402-2 in accordance with the Forms Manual Insert.
The record of funds provided for operating purposes by another creditor
or grantor will be on a separate Form RD 402-2 so that they can be
clearly identified.
0
13. Section 1902.14 is revised to read as follows:
Sec. 1902.14 Reconciliation of accounts.
(a) A checking account statement will be obtained periodically in
accordance with established practices in the area. If the checking
statement does not include sufficient information to reconcile the
account (the name of the payee or the check number and the amount of
each check; i.e., a negotiable demand draft drawn on a financial
institution), the original cancelled check or either a copy or other
reasonable facsimile of the cancelled check must be provided to the
Servicing Office with the statement. Checking account statements will
be reconciled promptly with Servicing Office records. The person making
the reconciliation will initial the record and indicate the date of the
action.
(b) All checking account statements and, if necessary, original
cancelled checks or either a copy or other reasonable facsimile of the
cancelled checks will be forwarded immediately to the borrower when
bank statements and Servicing Office records are in agreement. If a
transmittal is used, Form RD 140-4, ``Transmittal of Documents'', is
prescribed for that purpose.
(c) If the financial institution did not return the original
cancelled check(s) to the Agency with the statements, and Rural
Development has a need for the original cancelled check(s), the
financial institution, upon request by the Agency, will furnish to the
Agency the requested original cancelled check(s) or a certified copy or
other reasonable certified facsimile of the cancelled check(s) and will
provide this service to Rural Development with no fees being assessed
the Agency or the Depositor's account for the service.
0
14. Section 1902.15 is amended by revising paragraph (b), removing
paragraph (c), redesignating paragraph (d) as paragraph (c) and
revising newly designated paragraphs (c)(1)(i) introductory text,
(c)(2) introductory text, (c)(2)(iii), and (c)(4) to read as follows:
Sec. 1902.15 Closing accounts.
* * * * *
(b) For all loan accounts, after completion of authorized loan
funds expenditures, and after promptly refunding any remaining
unexpended loan funds on the borrower's loan account with Rural
Development or another lender, as appropriate.
(c) * * *
(1) * * *
(i) Ordinarily, upon notice of the death of a borrower, the
Servicing Official will request the State Director to make demand upon
the bank for the balance on deposit and apply all the balance after
payment of any bank charges to the borrower's Rural Development
indebtedness. When the State Director approves continuation with a
survivor, the supervised bank account of a deceased borrower may be
continued with a remaining joint debtor who is liable for the loan and
agrees to use the unexpended funds as planned, provided:
* * * * *
(2) Borrowers in default. Whenever it is impossible or impractical
to obtain a signed check from a borrower whose supervised bank account
is to be closed, the Servicing Official will request the State Director
to make demand upon the financial institution for the balance on
deposit in the borrower's supervised bank account for application as
appropriate:
* * * * *
(iii) For the return of Rural Development grant funds in accordance
with 7 CFR part 1951, subpart B or
* * * * *
(4) Paid up borrowers. A paid-up borrower is one who has a balance
remaining in the supervised bank account and has repaid the entire
indebtedness to Rural Development and has properly expended all funds
advanced by other lenders. In such cases the Servicing Official will:
(i) Notify the borrower in writing that the interests in the
account of Rural Development have been terminated, and
(ii) Inform the borrower of the balance remaining in the supervised
bank account.
0
15. Section 1902.50 is revised to read as follows:
Sec. 1902.50 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the OMB and have been assigned OMB
Control Number 0575-0158.
0
16. Exhibit B of this subpart is amended by revising the prefix for the
[[Page 59229]]
date from ``19'' to be ``20'' every place it is mentioned.
Dated: September 16, 2005.
Russell T. Davis,
Administrator, Rural Housing Service.
[FR Doc. 05-20357 Filed 10-11-05; 8:45 am]
BILLING CODE 3410-XV-P