Loan Guaranty: Electronic Payment of Funding Fee

Federal RegisterNov 28, 1997

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 36

RIN 2900-AH73

Loan Guaranty: Electronic Payment of Funding Fee

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the VA loan guaranty regulations to

require that all funding fees (including late fees and interest) for

VA-guaranteed loans be paid electronically through the Automated

Clearing House (ACH) program. The adoption of the ACH program will

eliminate lost mail and eliminate data errors resulting from manual

recording. Further accounting reconciliation will be reduced. In

addition, banking costs will be reduced. This document also corrects a

typographical error in the ``Allowable fees and charges: manufactured

home unit'' section.

DATES: Effective date: January 1, 1998.

FOR FURTHER INFORMATION CONTACT: Ms. Judith Caden, Assistant Director

for Loan Policy (264), Loan Guaranty Service, Veterans Benefits

Administration, Department of Veterans Affairs, Washington, DC 20420,

(202) 273-7368.

SUPPLEMENTARY INFORMATION: On May 7, 1997, VA published in the Federal

lenders to pay all funding fees (including late fees and interest) for

VA-guaranteed loans electronically through the ACH program effective

January 1, 1998. The regulations provide three methods for making

payments through the ACH program and specify the standard information

the lender must provide the collection agent when submitting loan

guaranty funding fees. Please refer to the May 7, 1997, Federal

Public comments were requested on the proposal. The comment period

ended July 7, 1997. VA received one comment. The comment supported the

proposal. The commenter, the Financial Management Service of the

Department of the Treasury, stated ``that the proposed rule change will

bring significant cost savings to VA's internal operations and provide

cash management savings to the Department of the Treasury.''

Based on the rationale set forth in the proposal and this document,

the proposed rule is adopted as a final rule without change.

Paperwork Reduction Act

Information collection and recordkeeping requirements associated

with the final rule (38 CFR 36.4232, 36.4254, and 36.4312) have been

approved by OMB under the provisions of the Paperwork Reduction Act (44

U.S.C. 3501-3520) and have been assigned OMB control number 2900-0474.

The information collection subject to this rulemaking concerns the

requirement that lenders provide VA information necessary to get set up

on the ACH system to pay the funding fee electronically and the

existing requirement that lenders provide VA certain standard

information when submitting loan guaranty funding fees. Interested

parties were invited to submit comments on the collection of

information. However, no comments were received regarding the

collection of information.

VA is not authorized to impose a penalty on persons for failure to

comply with information collection requirements which do not display a

current OMB control number, if required.

Regulatory Flexibility Act

The Secretary hereby certifies that this final rule will not have a

significant economic impact on a substantial number of small entities

as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-

612. The rule implements a program that will enhance operations and be

cost beneficial for all participating lenders. Lenders will be able to

participate by having access to a personal computer, and personal

computing is pervasive within the industry. Lenders will also have the

option of paying funding fees by calling an operator who will enter the

information into the ACH system for them. Funding fees represent

actions that have insignificant impact on lenders. Therefore, pursuant

to 5 U.S.C. 605(b), this final rule is exempt from the initial and

final regulatory flexibility analysis requirements of sections 603 and

604.

The Catalog of Federal Domestic Assistance Program numbers are

64.114 and 64.119.

List of Subjects in 38 CFR Part 36

Condominiums, Housing, Individuals with disabilities, Loan

programs--housing and community development, Manufactured homes,

Reporting and recordkeeping requirements, Veterans.

[[Page 63278]]

Approved: September 3, 1997.

Hershel W. Gober,

Acting Secretary of Veterans Affairs.

For the reasons set out in the preamble, 38 CFR part 36 is amended

as set forth below.

PART 36--LOAN GUARANTY

1. The authority citation for part 36 continues to read as follows:

Authority: 38 U.S.C. 501, 3701-3704, 3707, 3710-3714, 3719,

3720, 3729, 3762, unless otherwise noted.

2. In Sec. 36.4232, paragraph (e)(1) is amended by removing

``(e)(4)'' and adding, in its place, ``(e)(5)''; paragraphs (e)(2) and

(e)(3) are amended by removing ``paragraphs (e)(4) and'' and adding, in

its place, ``paragraph''; and by redesignating paragraph (e)(4) as

paragraph (e)(5); by adding a new paragraph (e)(4); and by revising the

parenthetical at the end of the section to read as follows:

Sec. 36.4232 Allowable fees and charges; manufactured home unit.

* * * * *

(e) * * *

(4) The lender is required to pay to the Secretary electronically

through the Automated Clearing House (ACH) system the fees described in

paragraphs (e)(1) and (e)(2) of this section and any late fees and

interest due on them. This shall be paid to a collection agent by

operator-assisted telephone, terminal entry, or central processing

unit-to-central processing unit (CPU-to-CPU) transmission. The

collection agent will be identified by the Secretary. The lender shall

provide the collection agent with the following: authorization for

payment of the funding fee (including late fees and interest) along

with the following information: VA lender ID number; four-digit

personal identification number; dollar amount of debit; VA loan number;

OJ (office of jurisdiction) code; closing date; loan amount;

information about whether the payment includes a shortage, late charge,

or interest; veteran name; loan type; sale amount; downpayment; whether

the veteran is a reservist; and whether this is a subsequent use of

entitlement. For all transactions received prior to 8:15 p.m. on a

workday, VA will be credited with the amount paid to the collection

agent at the opening of business the next banking day.

(Authority: 38 U.S.C. 3729(a))

* * * * *

(The information collection requirements in this section have been

approved by the Office of Management and Budget under control

numbers 2900-0474 and 2900-0516.)

3. Section 36.4254 is amended by redesignating paragraphs (d)(4)

and (d)(5) as paragraphs (d)(5) and (d)(6), respectively; by adding a

new paragraph (d)(4); and by adding a parenthetical at the end of the

section to read as follows:

Sec. 36.4254 Fees and charges.

* * * * *

(d) * * *

(4) The lender is required to pay to the Secretary electronically

through the Automated Clearing House (ACH) system the fees described in

paragraphs (d)(1) and (d)(2) of this section and any late fees and

interest due on them. This shall be paid to a collection agent by

operator-assisted telephone, terminal entry, or CPU-to-CPU

transmission. The collection agent will be identified by the Secretary.

The lender shall provide the collection agent with the following:

authorization for payment of the funding fee (including late fees and

interest) along with the following information: VA lender ID number;

four-digit personal identification number; dollar amount of debit; VA

loan number; OJ (office of jurisdiction) code; closing date; loan

amount; information about whether the payment includes a shortage, late

charge, or interest; veteran name; loan type; sale amount; downpayment;

whether the veteran is a reservist; and whether this is a subsequent

use of entitlement. For all transactions received prior to 8:15 p.m. on

a workday, VA will be credited with the amount paid to the collection

agent at the opening of business the next banking day.

(Authority: 38 U.S.C. 3729(a))

* * * * *

(The information collection requirements in this section have been

approved by the Office of Management and Budget under control number

2900-0474.)

4. Section 36.4312 is amended by redesignating paragraph (e)(4) as

paragraph (e)(5); by adding a new paragraph (e)(4); and by revising the

parenthetical at the end of the section to read as follows:

Sec. 36.4312 Charges and fees.