SUPPORTING STATEMENT
Analyzing Credit Needs and Graduation Review
Explain the circumstances that make the collection of information necessary.
RHS provides supervised credit in the form of Multi-Family Housing (MFH) loans and Community Facility (CF) loans. The MFH loan program provides eligible persons with rental or cooperative housing pursuant to the Housing Act of 1949.
Section 333 of the CONACT, as amended, requires the Agencies to graduate their direct loan borrowers to other credit when they are able to do so. Graduation is an integral part of the Agency lending, as Government loans are not meant to be extended beyond a borrower’s need for subsidized rates or non-market terms. The notes, security instruments, or loan agreements of most borrowers require borrowers to refinance their Agency loans. When other credit becomes available to reasonable rates and terms, the Agency will continue to review the borrowers for possible graduation at periodic intervals. The information to be collected to carry out these mandates will primarily be financial data such as amount of income, expenses, asset values and liabilities.
2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the Agency has made of the information received from the current collection.
RHS submits this information collection to evaluate the borrower’s financial condition for graduation purpose. The information will be used in the Agency’s efforts to graduate direct loan borrowers to private credit, with or without the Agency loan guarantees. Specifically, the burden to be cleared with this regulation is as follows:
7 CFR 1951.263 Graduation of non-Farm Loan Programs Borrowers:
The Agency will conduct a thorough review of the borrower’s financial information, as it deems necessary to determine whether they are able to graduate to other credit. At minimum, the financial information must include a balance sheet and an income statement. RHS servicing official will conduct a review of the borrower’s financial strength and repayment ability. This review will eliminate those borrowers who are unable to meet the lending criteria and policies of the area lenders. An estimated 256 CF loan borrowers will require thorough review by the CF staff. Each borrower will need 2 hours to prepare the information.
7 CFR 1951.264 and 1951.265 Appeals:
If a borrower fails to provide information following receipt of graduation notice or letters, he/she is in default of the terms of their security instruments. The approval official may accelerate the account based on the borrower’s failure to perform as required by the loan and security instruments. If the borrower account is accelerated, the borrower may appeal the decision. A borrower that meets the local lending standards, taking into consideration the Agency’s loan guarantee program, will not be considered for a subsequent loan, subordination, or consent to additional indebtedness until the borrower’s ability or inability to graduate has been confirmed. If the borrower has been requested to graduate and has also been denied a request for a subsequent loan, subordination, or consent to additional indebtedness, the borrower may appeal both issues. For the purposes of burden, we only estimated about 10 people on an annual average.
3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection.
The Agency is committed to the E-Government Act that requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.
The Agency continues to utilize technology to reduce the burden of information collection on its customers. Most Rural Development forms are accessible electronically on the internet and many program participants (particularly Preferred and Certified Lenders) utilize this method to obtain loan documents - thus reducing annual reporting and record keeping burden hours. Still, in most cases approximately 96 percent of the Agency must meet with a direct loan borrower on at least an annual basis for other requirements. Also, no forms are being approved under this package. The Agency will accept financial documents transmitted via electronic media, when possible, and it is requesting OMB approval for that method of response collection.
4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.
Information obtained for other Agency purposes will be utilized when possible. Also, a borrower may substitute other forms for Agency forms when they are substantially similar. In the past, due to technology limitations, the Agency could not share data electronically with other agencies. However, the ongoing improvements of automation through the common computing environment will allow for the data sharing capabilities.
5. If the collection of information impacts small businesses or other small entities (item 5 of OMB Form 83-1), describe any methods used to minimize burden.
The information collection required by this regulation places no burden on small businesses or other small entities beyond that performed in the course of normal business or on small business inordinately as compared to large farms. Moreover, the information collection requirements imposed are not unreasonable in return for the benefit for which the respondent is receiving loans at attractive rates and terms to the Federal Government.
Financial service providers that must complete the information collection for the debtor are not considered small business.
Describe the consequences to Federal program or policy activities if the collection is not conducted or conducted less frequently, as well as any technical or legal obstacles to reducing burden.
This information collection is also required by the Agency’s authorizing legislation as a condition for program participation. The agricultural production and financial reporting cycle is typically annual. The Agency reviews and information collection have been designed to conform to that cycle in order to minimize burden. This also ensures that the Agency’s decisions are based on current financial data.
7. Explain any special circumstances that would cause an information collection to be conducted in a manner.
a. Requiring respondents to report information more than quarterly.
b. Requiring written responses in less than 30 days.
c. Requiring more than an original and two copies.
d. Requiring respondents to retain records for more than 3 years.
e. Not utilizing statistical sampling. There is no such requirement.
f. Requiring use of statistical sampling which has not been reviewed and approved by OMB.
g. Requiring a pledge of confidentiality.
Requiring submission of proprietary trade secrets.
There are no special circumstances. Data collection plans are consistent with 5 CFR 1320.6.
8. Describe efforts to consult with persons outside the Agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, reporting format (if any), and on data elements to be recorded, disclosed, or reported.
A 60-day notice was published on January 21, 2016, [Vol. 81, No. 13, pg. 3377]. No comments were received.
The information requested is standard throughout the credit industry and the Agency has the expertise to make the required determinations. The Agency regularly consults with interested persons inside and outside of the Government who are familiar with its programs and information collection requirements.
9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.
There is no payment or gift to respondents.
10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or Agency policy.
No assurance of confidentiality is provided. Request for information received by the Agency will be handled in accordance with the provisions of the Freedom of Information Act and the Privacy Act.
11. Provide additional justification for any question of a sensitive nature, such as sexual behavior or attitudes, religious beliefs, and other matters that are commonly considered private.
There is no information collection of a sensitive nature.
12. Provide estimates of the hour burden of the collection of information.
This submission is for 256 respondents with 266 responses for 522 burden hours. Regulations governing credit analysis and graduation reviews require the collection of this information. Estimated average response per respondent is 2 hours. See the attached spreadsheet. RHS had approximately the following numbers of borrowers covered by this subpart:
Community Facilities 256 512
Appeals 10 10
Respondents cost per hour $ 52
Total annual respondents cost $ 27,144
Respondents cost per hour was derived by using Agricultural Statistics 2016, United States Department of Agriculture, Table 9-44, Average household income of a farm operator, page IX-43.
13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information.
The regulation places no burden cost on respondents for capital, start up, total operation, maintenance, or the purchase of services.
14. Provide estimates of annualized cost to the Federal Government.
The estimated annual cost to the Federal Government is $21,402. This cost is salary, copying and administrative expense for Government employee time associated with information collection. There is no special equipment aside from that needed for day-to-day operations.
Summary of cost to the Government:
Graduation of non-FLP Borrowers
2 hours X $41 X 256 Respondents _ = $ 20,992
Appeals
1 hour X $41 X 10 Respondents___________________= $ 410
Total Cost __________________________________________ = $ 21,402
There is no cost to the Government for printing or overhead cost, as this burden consists of only non-form collection.
Hourly wage of $30.17 x 36.25% (for fringe benefits, etc.) = $41. The average was derived from, SALARY TABLE 2015-GS at http://www.opm.gov. The average base wage is based on USDA employees at GS-12, GS- 11 and GS- 7 step 5.
Explain the reasons for any program changes or adjustments reported in items
13 or 14 of the OMB Form 83-1.
Since the last submission there has been an increase in borrowers. In addition to 10 appeals, Reponses have increased from 220 to 266 and hours 430 to 522. The changes result in an overall increase of 46 responses and 92 hours.
16. For collection of information whose results will be published, outline plans for tabulation and publication.
There is no collection of information requirements in this regulation which will be published.
If seeking approval to not display the expiration date for OMB approval of the
information collection, explain the reasons that display would be inappropriate.
There are no forms associated with this docket.
Explain each exception to the certification statement identified in item 19 on
OMB 83-I.
There are no exceptions requested.
19. How is this information collection related to the Service Center Initiative (SCI)? Will the information collection be part of the one stop-shopping concept?
This information collection is collected through the USDA Service Center. The collection is required from the public for use by service center employees who assist the public in the gathering and completion of the required documentation and then analyze the information submitted to determine borrower graduation.
| File Type | application/msword |
| File Title | Date |
| Author | Authorized Gateway Customer |
| Last Modified By | Brown, Kimble - RD, Washington, DC |
| File Modified | 2016-04-18 |
| File Created | 2016-04-18 |