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Federal Register :: Debt Management [1]

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Date: 2020-06-17  

The general debt management regulations of the Department of Agriculture (USDA) provide that individual USDA agencies may issue regulations for their own specific debt collection activities principally in recognition that the agencies conducted debt collection activities prior to the enactment of the Debt Collection Improvement Act of 1996 (DCIA). Many of the provisions of individual agencies are redundant to part 3. This rule will eliminate the debt collection regulations of the following USDA agencies, and part 3 will be revised to include specific provisions used by these agencies: the Commodity Credit Corporation (CCC); the Federal Crop Insurance Corporation (FCIC), and the Farm Service Agency (FSA). In addition, as required by the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 (the 2015 Civil Penalties Act), this rule updates the size of civil monetary penalties to reflect inflationary adjustments for 2020.

SUPPLEMENTARY INFORMATION:

Background

The regulations in 7 CFR part 3 (part 3) specify the general regulations applicable to debt collection activities of USDA agencies and specify the amount of civil penalties that USDA agencies levy as authorized by law. Federal agencies are required by several laws to collect debts owed to the United States, principally DCIA. Several USDA agencies issued debt collection regulations prior to the enactment of DCIA and the provisions of 7 CFR 3.1(b) allow individual USDA agencies to issue regulations to supplement part 3.

The Office of the Chief Financial Officer (OCFO), USDA, is reviewing the individual agency regulations and procedures in order to ensure that all agencies' individual debt collection policies align with government-wide policies, as well as the specific policies of the Secretary. For purposes of this review, a “debt” is a delinquent amount owed to the United States and does not include the entire outstanding amount of a loan made by an agency when the borrower is making scheduled loan payments as required by the loan agreement. If a USDA agency determines that a borrower is delinquent on a loan payment, the delinquent amount will be considered to be a “debt” for purposes of part 3 and the agency will be required to give all due process notices prior to proceeding with debt collection actions, including administrative offset or salary offset and referral to the Department of Treasury for centralized offset. The intent of this review is to consolidate the debt collection and settlement regulations of USDA in one location to ensure consistency and uniformity in operations of USDA agencies. This action is not intended to make any substantive changes in USDA policy or procedure or to impose any additional burden on a person who is indebted to the United States.

The amendments made by this final rule incorporate the results of this review by CCC, FSA, the Foreign Agricultural Service (FAS), FCIC, the Natural Resources Conservation Service (NRCS), and the Risk Management Agency (RMA).

FSA's principal debt settlement regulations that supplement part 3 have been in 7 CFR part 792. In addition, regulations in 7 CFR parts 1951 and 1956 have been used by FSA in the settlement and adjustments of FSA farm loans made under the Consolidated Farm and Rural Development Act (ConAct) and debts related to those loans. This rule removes 7 CFR part 792 and 7 CFR part 1951, subpart C. Since 7 CFR part 1956 is also used by the Rural Development of USDA (RD), those regulations are not deleted but are amended to state affirmatively that they do not apply to loans made by FSA and debts relating to such loans. In those limited instances where provisions of 7 CFR parts 792, 1951, and 1956 will continue to be used because of their specific application to FSA debts, the provision has been included in part 3; for the provisions that will continue to only be used for Farm Loan Programs, the provisions have been included in 7 CFR part 761 as subpart F.

RD also has debt settlement authority under the ConAct and The Housing Act of 1949 (Housing Act). The following list of RD's implementing debt settlement regulations authorized by the ConAct and the Housing Act that are excepted from part 3 are:

Additionally, 7 CFR part 1951, subpart C, RD regulations that previously implemented the Debt Collection Improvement Act are being replaced by part 3 and therefore are being removed, as stated above.

Exceptions are included in the regulation for CCC and FCIC. CCC and FCIC are wholly-owned government corporations and each have independent settlement authority under their respective authorizing laws. Accordingly, while the debt collection regulations for these entities have been deleted, provisions have been included in part 3 to recognize the ability of these corporations to settle and adjust claims without referral to the Department of Justice. In addition, this rule revises part 3 to make clear that, in those instances where a debt has been incurred by a foreign obligor and is potentially susceptible to the bankruptcy or insolvency laws of a foreign jurisdiction, the provisions of part 3 are not applicable. Principally, these instances of foreign debt collection arise under CCC programs which authorize CCC to make payments to entities who have financed exports of US agricultural ( printed page 36671) products and the foreign obligor does not make full payment to the exporter or the exporter's assignee. In these programs, CCC retains the right to pursue collection from the obligor, and often these matters fall within the jurisdiction of a foreign court.

NRCS, FAS, and RMA do not have agency specific debt collection regulations and currently follow part 3. Accordingly, no action was necessary to delete existing regulations or revise part 3.

This rule also revises subpart I of part 3 to update the amount of civil monetary penalties that may be levied by USDA agencies to reflect inflationary adjustments for 2020 as required by the 2015 Civil Penalties Act. As required by the 2015 Civil Penalties Act, the annual adjustment was made for inflation based on the Consumer Price Index for the month of October 2019 and rounded to the nearest dollar after an initial adjustment. The civil monetary penalties are listed according to the applicable administering agency.

Effective Date and Notice and Comment

The action taken by this rule: Consolidates at 7 CFR part 3 existing debt collection regulations used by certain USDA agencies; eliminates obsolete debt collection regulations; and adjusts USDA civil monetary penalties as required by the 2015 Civil Penalties Act.

Because the action to update existing regulations is ministerial and the adjustment to civil monetary penalties is required by the 2015 Civil Penalties Act, USDA finds that there is good cause under 5 U.S.C. 553(b)(3)(B) that opportunity for prior comment is unnecessary and contrary to the public interest and USDA is issuing this revised regulation as a final rule.

The Office of Management and Budget (OMB) designated this rule as not major under the Congressional Review Act, as defined by 5 U.S.C. 804(2). Therefore, FSA is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review.

Accordingly, this rule is effective upon publication in the Federal Register .

Executive Orders 12866, 13563, 13771, and 13777

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The requirements in Executive Orders 12866 and 13573 for the analysis of costs and benefits apply to rules that are determined to be significant. Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” established a federal policy to alleviate unnecessary regulatory burdens on the American people.

The Office of Management and Budget (OMB) designated this rule as not significant under Executive Order 12866, and therefore, OMB has not reviewed this rule and an analysis of costs and benefits is not required under either Executives Orders 12866 or 13563.

Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” requires that, in order to manage the private costs required to comply with Federal regulations, for every new significant or economically significant regulation issued, the new costs must be offset by the elimination of at least two prior regulations. As this rule is designated not significant, it is not subject to Executive Order 13771. In a general response to the requirements of Executive Order 13777, USDA created a Regulatory Reform Task Force, and USDA agencies were directed to remove barriers, reduce burdens, and provide better customer service both as part of the regulatory reform of existing regulations and as an ongoing approach. USDA reviewed this regulation and made changes to improve any provision that was determined to be outdated, unnecessary, or ineffective.

Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule whenever the Administrative Procedure Act or any other law requires an agency to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because USDA is not required by Administrative Procedure Act or any law to publish a proposed rule for this rulemaking.

Environmental Review

The action taken by this rule is ministerial in nature in that the purpose of the rule is to eliminate obsolete regulations and to consolidate current debt collection regulations of three UDSA agencies at one USDA-wide regulation. Accordingly, this action does not require an analysis under the National Environmental Policy Act (NEPA).

Executive Order 12372, “Intergovernmental Review of Federal Programs,” requires consultation with State and local officials that would be directly affected by proposed Federal financial assistance. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal financial assistance and direct Federal development. For reasons specified in the final rule related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs and activities within this rule are excluded from the scope of Executive Order 12372.

This rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This rule will not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. The rule will not have retroactive effect. Before any judicial action may be brought regarding the provisions of this rule, the administrative appeal provisions identified in 7 CFR part 3 must be exhausted.

This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government, except as required by law. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on ( printed page 36672) policies that have Tribal implications, including regulations, legislative comments, proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

The USDA has assessed the impact of this rule on Indian Tribes and determined that this rule does not have Tribal implications that require Tribal consultation under Executive Order 13175. If a Tribe requests consultation, OCFO will work with USDA's Office of Tribal Relations to ensure meaningful consultation is provided when changes, additions, and modifications identified in this rule are not expressly mandated by legislation.

The Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments or the private sector. 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 of $100 million or more in any 1 year for State, local, or Tribal governments, in the aggregate, or to the private sector. The UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of the UMRA, for State, local, and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

E-Government Act Compliance

USDA is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Federal Assistance Programs

This rule does not provide any new Federal Domestic Assistance Program nor change any of the USDA programs that are in the Catalog of Federal Domestic Assistance. This rule prescribes standards and procedures for use by USDA agencies in the collection, compromise, suspension, or termination of debts owed to the United States.

Paperwork Reduction Act

This rule does not create any new information collection requirements as the agencies affected by this rule will continue to conduct debt collection activities in the same manner as before this rule. Due to the nature of this rule, the information collection is exempted from the Paperwork Reduction Act as specified in 5 CFR 1320.4(a)(2) because the nature of the information collection activities is that the USDA agency is conducting administrative action against the individuals or debtors.

Under the authority of 5 U.S.C. 301, 7 U.S.C. 1506, and 15 U.S.C. 714b and as discussed in the preamble, USDA amends Title 7 of the Code of Federal Regulations as follows:

1. Revise part 3 to read as follows:

PART 400—GENERAL ADMINISTRATIVE REGULATIONS

2. The authority citation for part 400 continues to read as follows:

Authority: 7 U.S.C.1506(l), 1506(o).

Subpart K [Removed and Reserved]

3. Remove and reserve subpart K, consisting of §§ 400.115 through 400.142.

( printed page 36691) PART 761—FARM LOAN PROGRAMS; GENERAL PROGRAM ADMINISTRATION

4. The authority citation for part 761 continues to read as follows:

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

Subpart A—General Provisions

5. Amend § 761.1 by adding paragraphs (e), (f), and (g) to read as follows:

§ 761.1 Introduction. * * * * * (e) Part 3 of this title and 31 CFR part 285 describe the policies and procedures the Agency will follow for non-centralized offset (including administrative offset) and referral to Treasury for centralized offset (TOP), Federal salary offset, Administrative Wage Garnishment, and collection through Treasury's private collection agencies (cross-servicing). Supplemental provisions for FLP purposes are described in part 761, subpart F of this title. (f) Part 3 of this title and 31 CFR parts 900-904 describe the policies and procedures the Agency will follow for debt settlement authorities pursuant to the Federal Claims Collection Standards. Supplemental provisions for FLP purposes are described in part 761, subpart F of this title. (g) Part 761, subpart F of this title describes the debt settlement policies and procedures for FLP debt pursuant to the Act.

6. Amend § 761.2 as follows:

a. In paragraph (a), add in alphabetical order abbreviations for “ARA”, “FCCS”, and “OIG”; and

b. In paragraph (b):

i. Revise the definition for “Adjustment”;

ii. Add in alphabetical order a definition for “Alternative repayment agreement”;

iii. Revise the definitions of “Cancellation” and “Debt forgiveness”; and

iv. Add in alphabetical order a definition for “Hearing official”.

The additions and revisions read as follows:

§ 761.2 Abbreviations and definitions. * * * * * (a) * * * ARA Alternative Repayment Agreement. * * * * * FCCS Federal Claims Collection Standards. * * * * * OIG Office of the Inspector General, USDA. * * * * * (b) * * * Adjustment means the settlement of an FLP debt for less than the total amount owed. The adjusted amount is collected through a series of payments that are scheduled over time. An adjustment is not a final settlement until all scheduled payments have been made. After applying all payments pursuant to the adjustment agreement, any remaining balance is canceled. The amount canceled is reported to the IRS pursuant to § 3.90 of this title and applicable IRS requirements. * * * * * Alternative repayment agreement is a written repayment agreement accepted by both the borrower and the Agency as specified in §§ 3.42(b) and 3.80 of this title. The agreement may allow for payments to be made from the borrower to the Agency as an alternative to collecting the payment amounts through administrative offset, or Federal salary offset. * * * * * Cancellation means the final resolution of an FLP debt without receiving payment in full. Any amounts still owed, after applying payments in accordance with approved adjustment and compromise agreements, is canceled. The amount canceled is reported to the IRS pursuant to § 3.90 of this title and applicable IRS requirements. * * * * * Debt forgiveness means the reduction or termination of a debt under the Act in a manner that results in a loss to the Agency, through: (i)(A) Writing down or writing off a debt pursuant to 7 U.S.C. 2001; (B) Cancellation of remaining amounts owed after compromising, adjusting, reducing, or charging off a debt or claim pursuant to 7 U.S.C. 1981; (C) Paying a loss pursuant to 7 U.S.C. 2005 on a FLP loan guaranteed by the Agency; (D) Discharging a debt as a result of bankruptcy; or (E) Releases of liability which result in a loss to the Agency. (ii) Debt forgiveness does not include: (A) Debt reduction through a conservation contract; (B) Any writedown provided as part of the resolution of a discrimination complaint against the Agency; (C) Prior debt forgiveness that has been repaid in its entirety; (D) Consolidation, rescheduling, reamortization, or deferral of a loan; and (E) Forgiveness of a YL debt due to circumstances beyond the borrower's control. * * * * * Hearing official. For the purposes of salary offset, the hearing official is an Administrative Law Judge of the USDA or another individual not under the supervision or control of the USDA. For the purposes of administrative wage garnishment, the hearing official is selected pursuant to part 3, subpart E of this title. * * * * *

7. Add Subpart F to read as follows:

Subpart F—Farm Loan Programs Debt Settlement 761.401 Purpose. 761.402 Abbreviations and definitions. 761.403 General. 761.404 Eligibility. 761.405 Application. 761.406 Types of debt settlement. 761.407 Failure to pay. 761.408 Administrator authority.

§ 761.402 Abbreviations and definitions. (a) Abbreviations and definitions for terms used in this subpart are provided in 7 CFR part 3 and § 761.2. (b) Definitions used only in this subpart include: (1) Third party converter means an individual or entity who: (i) Is in possession of agency security property, or money from the sale of security, in relation to a loan or other debt that the individual or entity was not liable for; or (ii) Assists, or participates knowingly or unknowingly, in the transportation or sale of agency security, in relation to a loan or other debt that the individual or entity was not liable for; or (iii) Assists, or participates knowingly or unknowingly, in temporarily or permanently relocating or concealing the location of agency security property, or money from the sale of agency security, in relation to a loan or other debt that the individual or entity was not liable for. ( printed page 36692) (2) [Reserved]

§ 761.403 General. (a) The Agency will settle debts that result from, except as otherwise specified in this section: (1)(i) Farm Ownership loans (part 764, subpart D of this chapter), including down payment loans (764, subpart E of this chapter); (ii) Operating loans (part 764, subpart G of this chapter), including microloans part 764 of this chapter), and youth loans (part 764, subpart H of this chapter); (iii) Emergency loans (part 764, subpart I of this chapter); (iv) Conservation loans (part 764, subpart F of this chapter); (v) Economic Emergency loans (serviced under parts 761 through 767 of this chapter); softwood timber loans; Soil and Water loans; Individual Recreation Loans; Irrigation and Drainage loans; and Shift-in-land-use (Grazing Association) loans; (2) Costs associated with servicing a borrower's account including, but not limited to, Uniform Commercial Code filing fees, surveys, appraisals, protective advances, and liquidation expenses; (3) Debts reduced to judgment; (4) Non-Program Loans; (5) Amounts the Agency is authorized to recapture through agreements such as the Shared Appreciation Agreement (part 766, subpart E of this chapter); (6) Loss claims paid on guaranteed loans (part 762 of this chapter); (7) Unauthorized assistance; (8) Amounts the Agency may collect from third party converters, or other individuals or entities having possession of security for FLP loans or monies obtained through the sale of FLP loan security; and (9) Debt returned to the Agency from the Treasury cross-servicing program. (b) The debtor's signature is not required to process some debt settlement actions. These cases include, but are not limited to, debts discharged in bankruptcy and debts returned from Treasury's cross-servicing program with amounts still owing when no further collection can be taken. (c) FSA will not engage in settlement of a debt if: (1) Foreclosure of security has been initiated and is pending with Justice, unless Justice has advised FSA that it does not object to the settlement; or (2) Debts that have been referred to Justice for a judgment, or a judgement has been obtained by the United States Attorney or Justice, unless Justice closes its file and releases the judgement back to FSA for continued servicing; or (3) The debtor's account is involved in a fiscal irregularity investigation in which final action has not been taken or the account shows evidence that a shortage may exist and an investigation will be requested; or (d) The Agency will consider settlement of a debt only when: (1) All security has been liquidated and the proceeds, less any prior lien amounts, have been applied to the debt; or the Agency received a lump sum payment equal to the security's current market value, less any prior lien amounts, and (2) Payment is received based on the Agency's determination of the amount the borrower can pay to resolve the remaining balance owed on the unsecured debt. (3) The lump sum payment made under paragraph (d)(1) of this section for the security's market value may be submitted by the borrower, an individual authorized to act for the borrower pursuant to a power of attorney document or court order, or an individual who is not an obligor on the debt but who has an ownership interest in the security. (e) If an FLP loan has been accelerated and all security has been liquidated, and the agency has approved an adjustment debt settlement offer in accordance with this subpart, voluntary payments and involuntary payments (such as offsets) will be applied in the following order, as applicable: (1) Recoverable costs and protective advances plus interest; (2) Loan principal; (3) Deferred non-capitalized interest; (4) Accrued deferred interest; and (5) Interest accrual to date of payment. (f) Settlement of FLP debt referred to Treasury's cross-servicing program and returned to the Agency as uncollectible will not be processed for the borrower until all FLP debts referred to the cross-servicing program for that borrower have been returned, with or without payment agreements.

§ 761.404 Eligibility. (a) A borrower is eligible for debt settlement if the borrower: (1) Meets the requirements for the particular type of debt settlement under this part; and (2) Submits a complete application for debt settlement as specified in § 761.405. (b) All parties liable for the debt must submit a complete application with the following exceptions: (1) The applicable information required in § 761.405 can be provided by the administrator or executor of the Estate, heir, or other authorized person who can sign the debt settlement application; or compiled by FSA staff when a signature cannot be obtained. (2) The debt may be settled when the borrower has no known assets or income from which collection can be made, has disappeared and cannot be located without undue expense, and there is no security remaining for the debt. (3) In cases where the full amount of the unsecured debt cannot be collected in a reasonable time by legal action or through enforced collection proceedings, the Agency may consider a debt settlement offer submitted by a borrower without requiring a complete application. When evaluating these offers, the Agency will consider the likelihood of the debtor obtaining a larger income or additional assets, including inheritance prospects within 5 years, from which legal or enforced collection could be made. (c) A borrower is not eligible for debt settlement if: (1) The borrower is indebted on another active FLP loan that the borrower cannot or will not debt settle; or (2) The debt has been referred to the OIG, OGC, or Justice because of suspected civil or criminal violation, unless investigation was declined or advice was provided that the debt can be canceled, compromised, or adjusted.

§ 761.405 Application. (a) A borrower requesting debt settlement must submit complete and accurate information from which the Agency can make a full determination of the borrower's financial circumstances and repayment ability. Except for the situations listed in § 761.404(b), each liable party, must submit the following: (1) One completed original debt settlement application on the applicable Agency form signed by all parties liable for the debt; (2) A current financial statement; (3) A cash flow projection for the next production or earnings period; (4) Verification of employment or other earned income, including verification of a nondebtor spouse's income which will be included as available to pay family living expenses; (5) Verification of assets including, but not limited to, cash, checking accounts, savings accounts, certificates of deposit, individual retirement accounts, retirement and pension funds, mutual funds, stocks, bonds, and accounts receivable; (6) Verification of debts greater than $1,000; (7) Copies of complete Federal income tax returns for the previous 3 years; and ( printed page 36693) (8) Any other items requested by the Agency to evaluate the debtor's financial condition. (b) [Reserved]

§ 761.406 Types of debt settlement. (a) Compromise. The Agency may compromise a debt owed to the Agency if the requirements of this subpart are met and: (1) The borrower pays a lump sum as a compromise for the remaining unsecured debt; and (2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt. (b) Adjustment. The Agency may settle a debt owed to the Agency through an adjustment agreement if the requirements of this subpart are met and: (1) The borrower agrees to pay the adjustment amount for a period of time not to exceed 5 years; and (2) The amount is reasonable based on the Agency's determination of what the borrower can pay to settle the debt; and (3) The borrower provides documentation that funds are, or will be, available to pay the adjustment offer through its term. (c) Cancellation. The Agency may cancel a debt owed to the Agency if the requirements of this subpart are met and the application and supporting documents indicate that the borrower is unable to pay a compromise or adjustment offer.

§ 761.407 Failure to pay. (a) Failure to pay any compromise amount approved by FSA by the date agreed will result in cancellation of the compromise agreement. (b) Failure to pay debt adjustment amounts approved by FSA by the dates agreed will result in cancellation of the adjustment agreement. (c) A debtor who has entered into an agreement under this subpart may request that FSA extend a repayment date for 90 days. The debtor must provide information that supports the basis for the request at the time the request is made. (d) If a debtor is delinquent under the terms of an adjustment agreement and FSA determines the debtor is likely to be financially unable to meet the terms of the agreement, the existing agreement may be cancelled and the debtor may be allowed to apply for a different type of settlement more consistent with the debtor's repayment ability. (e) If an agreement is cancelled, any payments received will be retained as payments on the debt owed.

§ 761.408 Administrator authority. On an individual case basis, the Agency may consider granting an exception to any requirement of this part if: (a) The exception is not inconsistent with the authorizing statute or other applicable law; and (b) The Agency's financial interest would be adversely affected by acting in accordance with this part and granting an exception would resolve or eliminate the adverse effect upon its financial interest.

PART 765—FARM LOAN PROGRAMS, DIRECT LOAN SERVICING—REGULAR

8. The authority citation for part 765 continues to read as follows:

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

9. Amend § 765.155 in paragraph (d) by removing the words “attempt to settle the debt in accordance with subpart B of 7 CFR part 1956” and adding the words “service the debt in accordance with part 761, subpart F of this chapter” in their place.

Subpart I—Transfer of Security and Assumption of Debt

10. Amend § 765.406 by revising paragraph (b)(3) to read as follows:

§ 765.406 Release of transferor from liability. * * * * * (b) * * * (3) If an outstanding balance will remain and all of the transferor's security has been transferred, the transferor may pay the remaining balance or request debt settlement in accordance with part 761 subpart F of this chapter. If the transferor does not resolve the debt by paying the remaining balance or submitting a debt settlement offer that is acceptable to the Agency, the Agency will service the debt in accordance with part 3 of this title using all applicable collection tools including, but not limited to, administrative offset, AWG, cross-servicing, Federal salary offset, and TOP. * * * * *

PART 766—FARM LOAN PROGRAMS, DIRECT LOAN SERVICING—SPECIAL

11. The authority citation for part 766 continues to read as follows:

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

Subpart C—Loan Servicing Programs § 766.101 [Amended]

12. Amend § 766.101 as follows:

a. In paragraph (b)(1), remove the words “(Appendix A to this subpart)”;

b. In paragraph (b)(2), remove the phrase “FSA-2510” and add the phrase “FSA-2510 (Appendix A to this subpart) or FSA-2510-IA” in its place;

c. In paragraph (b)(3), remove the words “(Appendix C to this subpart)”; and

d. In paragraph (d)(2), remove the phrase “FSA-2510” and add the phrase “FSA-2510 or FSA-2510-IA” in its place.

13. Amend § 766.102 in paragraph (c) by removing the words “subpart B of 7 CFR part 1956” and adding the words “part 761, subpart F of this chapter” in their place.

14. Revise § 766.103 in paragraph (b) introductory text by removing the phrase “FSA-2510” and adding the phrase “FSA-2510 or FSA-2510-IA” in its place.

15. Revise appendix A to subpart C to read as follows:

Appendix A to Subpart C of Part 766—FSA-2510, Notice of Availability of Loan Servicing to Borrowers Who Are 90 Days Past Due

This appendix contains the notification (form letter) that the Farm Service Agency will send to borrowers who are at least 90 days past due on their loan payments. It provides information about the loan servicing that is available to the borrower. As stated below on the notification, the borrower is to respond within 60 days from receiving the notification (see § 766.101(b)(2) and (d)(2) for the requirements). The notification is provided here as required by 7 U.S.C. 1981d.

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16. Revise appendix B to subpart C to read as follows:

Appendix B to Subpart C of Part 766—FSA-2510-IA, Notice of Availability of Loan Servicing to Borrowers Who Are 90 Days Past Due (For Use in Iowa Only)

This appendix contains the notification (form letter) that the Farm Service Agency will send to borrowers with loans in Iowa who are at least 90 days past due on their loan payments. It provides information about the loan servicing that is available to the borrower. As stated below on the notification, the borrower is to respond within 60 days from receiving the notification (see § 766.101(b)(2) and (d)(2) for the requirements). The notification is provided here as required by 7 U.S.C. 1981d.

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Appendix C to Subpart C of Part 766 [Removed]

17. Remove appendix C to subpart C.

18. Amend § 766.352 in paragraph (a)(5) by removing the words “subpart B of 7 CFR part 1956” and adding the words “part 761, subpart F of this chapter and part 3 of this title” in their place.

19. Amend § 766.353 in paragraph (a)(8) by removing the words “subpart B of 7 CFR part 1956 before or in conjunction with the” and adding the words “part 761, subpart F of this chapter before, or in conjunction with, the” in their place.

20. Amend § 766.354 by revising paragraph (a)(6) to read as follows:

§ 766.354 Voluntary conveyance of chattel. (a) * * * (6) Complete debt settlement application in accordance with part 761, subpart F of this chapter before, or in conjunction with, the voluntary conveyance offer if the value of the property to be conveyed is less than the FLP debt. * * * * *

21. Amend § 766.357 by revising paragraphs (b)(5) and (c)(3) to read as follows:

§ 766.357 Involuntary liquidation of real property and chattel. * * * * * (b) * * * (5) If an unpaid balance on the FLP loan remains after the foreclosure sale of the property, the Agency will service the account in accordance with part 761, subpart F of this chapter and part 3 of this title. (c) * * * (3) If an unpaid balance on the FLP loan remains after the sale of the repossessed property, the Agency will service the account in accordance with part 761, subpart F of this chapter and part 3 of this title.

PART 772—FARM LOAN PROGRAMS, SERVICING MINOR PROGRAM LOANS

22. The authority citation for part 772 continues to read as follows:

Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 25 U.S.C. 490.

23. Amend § 772.9 by revising paragraph (c) to read as follows:

§ 772.9 Releases. * * * * * (c) Servicing of debt not satisfied through liquidation. Balances remaining after the sale or liquidation of the security will be serviced in accordance with part 761, subpart F of this chapter and part 3 of this title.

24. Revise § 772.13 to read as follows:

§ 772.13 Delinquent account servicing. (a) AMP loans. If the borrower does not make arrangements to cure the default after notice by the Agency and is not eligible for reamortization in accordance with § 772.14, the Agency will liquidate the account in accordance with § 772.16. Delinquent AMP loans will be serviced in accordance with part 761, subpart F of this chapter and part 3 of this title. (b) IMP loans. Delinquent IMP loans will be serviced in accordance with part 761, subpart F of this chapter and part 3 of this title.

( printed page 36714) PART 792—[REMOVED]

25. Under the authority of 31 U.S.C. 3717, remove part 792.

PART 1403—[REMOVED]

26. Under the authority of 15 U.S.C. 714b, remove part 1403.

PART 1951—SERVICING AND COLLECTIONS

27. The authority citation for part 1951 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C 1932 note; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 U.S.C. 1480.

Subpart C [Removed and Reserved]

28. Remove and reserve subpart C, consisting of §§ 1951.101 through 1951.150.

PART 1956—DEBT SETTLEMENT

29. The authority citation for part 1956 continues to read as follows:

Authority: 5 U.S.C. 301; and 7 U.S.C. 1989.

Subpart B—Debt Settlement—Farm Loan Programs and Multi-Family Housing

30. Amend § 1956.51 in the first sentence by removing the words “the Farm Credit loan programs of the Farm Service Agency (FSA) and” and adding a sentence at the end of the section.

The addition reads as follows.

§ 1956.51 Purpose. * * * The provisions of this subpart do not apply to any program administered by the Farm Service Agency as of June 17, 2020.

Subpart C—Debt Settlement—Community and Business Programs

31. Amend § 1956.101 by adding a sentence at the end of the section to read as follows.

§ 1956.101 Purpose. * * * The provisions of this subpart do not apply to any program administered by the Farm Service Agency as of June 17, 2020.

[END]
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[1] Url: https://www.federalregister.gov/documents/2020/06/17/2020-09447/debt-management#:~:text=If%20a%20USDA%20agency%20determines,in%20operations%20of%20USDA%20agencies

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