Documentation

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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices

pipeline safety regulations. The request
includes a technical analysis provided
by the operator. The request has been
filed at www.Regulations.gov and
assigned docket number PHMSA–2015–
0210. We invite interested persons to
participate by reviewing this special
permit request and draft environmental
assessment docketed at http://

comments closing date. Comments will
be evaluated after this date if it is
possible to do so without incurring
additional expense or delay. PHMSA
will consider each relevant comment we
receive in making our decision to grant
or deny a request.
PHMSA has received the following
special permit request:

Docket No.

Requester

Regulation(s)

Nature of special permit

PHMSA–2015–0210 ....................

Hess Corporation ......................

49 CFR 195.100; 112; 200;
202; 204; 206; 248; 260; 300;
and 304.

To authorize Hess North Dakota Pipelines, LLC (‘‘Hess’’) to commission
and operate two sections totaling approximately 14.5 miles of 6-inch
crude oil intrastate gathering pipelines
made of material other than steel in
Mountrail County, North Dakota at a
maximum operating pressure (MOP)
of 1,050 pounds per square inch. The
pipelines
are
manufactured
by
FlexSteel Pipeline Technologies of
Houston, Texas. The two sections are
affiliated with projects Hess refers to
as EN Johnson Phase 2 and the EN
VP&R. The Special Permit request
seeks to waive compliance from certain Federal regulations found in 49
CFR 195.

Authority: 49 U.S.C. 60118(c)(1) and 49
CFR 1.97.
Issued in Washington, DC on December 21,
2015, under authority delegated in 49 CFR
1.97.
Alan K. Mayberry,
Deputy Associate Administrator for Policy
and Programs.
[FR Doc. 2015–32487 Filed 12–23–15; 8:45 am]
BILLING CODE 4910–60–P

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
Agency Information Collection
Activities; Proposed Information
Collection; Comment Request; Draft
Bulletin: Risk Management Guidance
for Higher Loan-to-Value Lending in
Communities Targeted for
Revitalization
Office of the Comptroller of the
Currency (OCC), Treasury.
ACTION: Notice and request for comment.
AGENCY:

The OCC, as part of its
continuing effort to reduce paperwork
and respondent burden, invites the
general public and Federal agencies to
take this opportunity to comment on a
new information collection, as required
by the Paperwork Reduction Act of 1995
(PRA).
In accordance with the requirements
of the PRA, the OCC may not conduct

SUMMARY:
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www.Regulations.gov, and by
submitting written comments, data or
other views. Please include any
comments on potential environmental
impacts that may result if this special
permit is granted.
Before acting on this special permit
request, PHMSA will evaluate all
comments received on or before the

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Jkt 238001

or sponsor, and the respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(OMB) control number. The OCC is
soliciting PRA-related comment
concerning a new information collection
titled, ‘‘Draft Bulletin: Risk Management
Guidance for Higher Loan-to-Value
Lending in Communities Targeted for
Revitalization’’ (draft guidance).
DATES: You should submit written
comments by February 22, 2016.
ADDRESSES: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments by
email, if possible. Comments may be
sent to: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, Attention:
1557–NEW, 400 7th Street SW., Suite
3E–218, Mail Stop 9W–11, Washington,
DC 20219. In addition, comments may
be sent by fax to (571) 465–4326 or by
electronic mail to prainfo@occ.treas.gov.
You may personally inspect and
photocopy comments at the OCC, 400
7th Street SW., Washington, DC 20219.
For security reasons, the OCC requires
that visitors make an appointment to
inspect comments. You may do so by
calling (202) 649–6700, or for persons
who are deaf or hard of hearing, TTY,
(202) 649–5597. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in

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order to inspect and photocopy
comments.
All comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
FOR FURTHER INFORMATION CONTACT:
Shaquita Merritt, Clearance Officer,
(202) 649–5490, or for persons who are
deaf or hard of hearing, TTY, (202) 649–
5597, Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW., Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
Title: Draft Bulletin: Risk Management
Guidance for Higher Loan-to-Value
Lending in Communities Targeted for
Revitalization.
OMB Control No.: 1557–NEW.
Type of Review: Regular.
Abstract: Under the draft guidance,
national banks and federal savings
associations wishing to establish a
program for originating owner-occupied
residential mortgage loans that exceed
supervisory loan-to-value (SLTV) limits
in communities targeted for
revitalization should have policies and
procedures approved by their Board of
Directors (Board) that address the loan
portfolio management, underwriting,
and other relevant considerations for
such loans. The draft guidance would

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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
advise that banks also should notify the
appropriate OCC supervisory office in
writing at least 30 days prior to
originating residential loans pursuant to
a Board-approved program or
implementing any substantive change to
a previously submitted program and
provide a copy of the Board-approved
policies and procedures to the OCC
supervisory office.
Affected Public: Businesses or other
for-profit.
Burden Estimates:
Estimated Number of Respondents:
20.
Estimated Burden per Respondent for
the First Year: Drafting Policies–200
hours; Documentation–10 hours per
quarter (i.e., 40 hours); Reporting–10
hours.
Total Estimated Annual Burden:
5,000 hours.
Frequency of Response: On occasion.
Comments submitted in response to
this notice will be summarized and
included in the request for OMB
approval of the information collection.
All comments will become a matter of
public record. Comments are invited on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
OCC, including whether the information
has practical utility;
(b) The accuracy of the OCC’s
estimate of the information collection
burden;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
the collection on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and
(e) Estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information.
Draft Guidance: The text of the draft
guidance 1 is as follows:
Draft Bulletin: Risk Management
Guidance for Higher Loan-to-Value
Lending in Communities Targeted for
Revitalization

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Summary
The Office of the Comptroller of the
Currency (OCC) supports efforts by
national banks and federal savings
associations (collectively, banks) to
assist in the revitalization, stabilization,
or redevelopment (referred to in this
bulletin individually and collectively as
revitalization) of distressed
1 The OCC plans to issue this guidance in the
form of a bulletin directed to national banks and
federal savings associations.

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communities through prudent
residential mortgage lending. The OCC
recognizes that banks and other parties
have expressed concern that depressed
housing values in certain distressed
communities in the United States
inhibit mortgage lending in these
communities. One way in which banks
can support revitalization efforts in
distressed communities is by offering
mortgage products for purchasing, or
purchasing and rehabilitating, one- to
four-unit residential properties where
the loan amount may exceed
supervisory loan-to-value (SLTV) limits.
This bulletin provides guidance for
managing risks associated with
originating certain residential mortgage
loans that exceed SLTV limits.
Note for Community Banks
This guidance applies to all OCCsupervised banks wishing to establish a
program for originating owner-occupied
residential mortgage loans that exceed
SLTV limits in communities targeted for
revitalization.
Highlights
This bulletin provides guidance
regarding the
• Circumstances under which banks
may establish programs to originate
certain owner-occupied residential
mortgage loans that exceed SLTV limits.
• OCC’s supervisory considerations
regarding such programs.
As described in this bulletin, the OCC
will actively monitor and evaluate the
programs established by banks,
including the performance of owneroccupied residential mortgage loans that
exceed the SLTV limits. At least
annually, the OCC will assess whether
the programs are contributing to the
revitalization of targeted communities
and whether the banks are adequately
controlling the risks associated with
such higher loan-to-value (LTV)
lending.
Background
Some U.S. communities continue to
confront lagging home values. Financing
difficulties caused by depressed housing
markets are particularly pronounced in
communities that were significantly
affected by the financial crisis and
housing market decline.
As these communities work to
stabilize home ownership and home
values, the rehabilitation of abandoned
or distressed housing stock is an
important component of broader efforts
to strengthen communities. Local
governments, government-affiliated
entities, community-based
organizations, financial institutions, and
others have developed creative

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80459

solutions for some of these challenges.
These solutions include strategies for
acquiring and rehabilitating properties
in communities targeted for
revitalization. Community groups,
financial institutions, non-profit
organizations, and state and local
entities, including land banks, are
working together to develop and
implement innovative residential
mortgage financing to bring needed
lending to economically distressed
areas. The efforts include providing
second-lien loans to finance
rehabilitation costs, interest-rate
discounts, and down payment and
closing cost assistance. The Federal
Housing Administration, Fannie Mae,
and Freddie Mac all currently offer
rehabilitation financing.2
In addition to participating in these
and other third-party efforts, banks have
expressed a desire to participate in
revitalization efforts of distressed
communities by offering their own loan
products. The value of the collateral in
a distressed community, however, can
present challenges to banks’ residential
lending in part because of current SLTV
limits. Distressed sales, including short
sales and foreclosures, often negatively
affect home values in these
communities. Further, in communities
with minimal sales activity, finding
comparable property sales becomes
challenging when appraisals or
evaluations are required. Buyers of
distressed properties can have particular
difficulty securing adequate financing to
cover the often substantial renovation
costs required to make the properties
habitable.
The OCC recognizes that supporting
long-term community revitalization may
necessitate responsible innovative
lending strategies. One way in which
banks can support revitalization efforts
is through prudent lending within
established exceptions to the SLTV
limits for residential loans. Existing
regulations and guidelines recognize
that it may be appropriate, in individual
cases, for banks to make loans in excess
of the SLTV limits, based on support
provided by other credit factors.3 The
regulations and guidelines also
2 Programs include the Federal Housing
Administration’s Limited 203(k) Rehabilitation
Mortgage Insurance Program, Fannie Mae
HomeStyle Renovation, and Freddie Mac
Construction Conversion and Renovation
Mortgages.
3 For national banks, refer to 12 CFR 34, ‘‘Real
Estate Lending and Appraisals,’’ appendix A to
subpart D, ‘‘Interagency Guidelines for Real Estate
Lending Policies.’’ For federal savings associations,
refer to 12 CFR 160.101, ‘‘Real estate lending
standards,’’ appendix to 12 CFR 160.101,
‘‘Interagency Guidelines for Real Estate Lending
Policies.’’

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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices

recognize that banks may make prudent
underwriting exceptions for
creditworthy borrowers whose needs do
not fit within the banks’ general lending
policies, including SLTV limits, on a
loan-by-loan basis under certain
conditions.4 These conditions include
that the aggregate amount of all loans in
excess of SLTV limits should not exceed
100 percent of total capital, that the
boards of directors establish standards
for reviewing and approving exception
loans, and that written justification
setting forth relevant credit factors
accompany all approvals of exception
loans.5 Credit factors for these purposes
may include the borrower’s capacity to
adequately service the debt, the
borrower’s overall creditworthiness, and
the level of funds invested in the
property.6
The OCC believes that banks can offer
residential mortgage loans in
communities targeted for revitalization
in a manner consistent with safe and
sound lending practices. As described
later in section I of this bulletin, such
loans may include eligible loans in
eligible communities originated in
accordance with a board-approved
program (referred to as a program in this
bulletin). Important elements of any
program are the bank’s policies and
procedures for complying with the
ability-to-repay standard of Regulation
Z 7 and the bank’s separate underwriting
standards and approval processes for
residential mortgage loans that exceed
SLTV limits.
Lending under such a program may be
in the best interest of the bank,
individual borrowers, and the
community. Additionally, the bank may
receive Community Reinvestment Act
consideration for SLTV exception loans
depending on the specifics of the
program. SLTV exception lending is not,
however, without risk. The OCC will
actively monitor and evaluate how a
bank’s program manages the risks,
particularly to the bank and its
borrowers, and the effect the program
has on the community targeted by the
bank’s program. At least annually, the
OCC also will evaluate the overall
impact of programs offered by all banks
4 Id.
5 Id.

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6 Id.
7 The Dodd-Frank Wall Street Reform and
Consumer Protection Act amended the Truth in
Lending Act to require creditors to make a
reasonable, good faith determination of a
consumer’s ability to repay a mortgage loan, absent
specified exceptions. Refer to 15 U.S.C. 1639c. The
Consumer Financial Protection Bureau issued a
final rule amending Regulation Z to implement
these ability to repay requirements, which became
effective January 1, 2014. Refer to 78 FR 6621,
January 30, 2013.

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in communities targeted for
revitalization.
I. Program Criteria
A. Eligible Loan
An eligible loan should be a
permanent mortgage for the purchase of,
or purchase and rehabilitation of, an
owner-occupied residential property
located in an eligible community. An
eligible loan also should have an
original loan balance of $200,000 or less
and be originated under a program
developed pursuant to this bulletin.
The OCC recognizes that eligible
loans will have an LTV ratio equal to or
exceeding 90 percent without mortgage
insurance or readily marketable, or
other acceptable, collateral.
This bulletin does not apply to home
equity loans, lines of credit, or
refinancing loans.
B. Eligible Community
An eligible community should be one
that has been officially targeted for
revitalization by a federal, state, or
municipal governmental entity or
agency, or by a government-designated
entity such as a land bank.
C. Board-Approved Policies and
Procedures
Existing regulations and guidelines
require that each bank adopt and
maintain a general lending policy that
establishes appropriate limits and
standards for extensions of credit that
are secured by liens or interests in real
estate or that finance building
construction or other improvements.8
Additionally, banks should have
specific policies and procedures that are
approved by the board of directors, or
appropriately designated board
committee, and that address loan
portfolio management, underwriting,
and other relevant considerations for
eligible loans. These board-approved
policies and procedures should include
provisions that address the:
• Defined geographies of an eligible
community where the bank will
consider making eligible loans under
the program 9 and describe how the
8 For national banks, refer to 12 CFR 34, ‘‘Real
Estate Lending and Appraisals,’’ appendix A to
subpart D, ‘‘Interagency Guidelines for Real Estate
Lending Policies.’’ For federal savings associations,
refer to 12 CFR 160.101, ‘‘Real estate lending
standards,’’ appendix to 12 CFR 160.101,
‘‘Interagency Guidelines for Real Estate Lending
Policies.’’
9 Banks should retain documentation indicating:
(1) The eligible community is one targeted for
revitalization by a government entity or agency; (2)
the specific revitalization criteria used by the
government entity or agency; and (3) the type of
financing and other support, if any, that the
governmental entity provides to the community.

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eligible loans are intended to support
revitalization efforts in the eligible
community (e.g., how the origination of
eligible loans is expected to contribute
to the normalization of a distressed
housing market).
• Amount, and the duration, of the
bank’s financial commitment to the
program.
• Limitation on the aggregate level of
committed eligible loans as a percentage
of tier 1 capital (as defined in 12 CFR
3.2), which should not exceed 10
percent.
• Characteristics of eligible loans,
including loan structure, credit terms,
interest rate and fees, and maximum
loan size, which should not exceed
$200,000.
• Underwriting standards and
approval processes for eligible loans,
including appropriate documentation of
relevant credit factors and document
retention standards.
• Real estate appraisal and evaluation
criteria applicable to eligible loans.10
• Credit administration requirements
for eligible loans, including detailed
guidelines regarding oversight of the
rehabilitation process, such as controls
over contracts, disbursements,
inspections, and project management.
• Compliance with all applicable
laws and regulations, including the
ability-to-repay and other requirements
of 12 CFR 1026, anti-discrimination
laws, and section 5 of the Federal Trade
Commission Act.
• Content, form, and timing of
notice(s) the bank will provide in
connection with eligible loans to clearly
inform the borrower that:
—The market value of a rehabilitated
property likely will be less than the
original loan amount upon
completion of the rehabilitation.
—The market value may continue to be
less than the original loan amount
thereafter and for the duration of the
loan.
—There may be financial implications if
the borrower seeks to sell the property
after rehabilitation and the sale price
of such rehabilitated property is less
than the outstanding loan balance at
the time of such sale, and explain the
implications.
• Incentives that may be available to
qualifying borrowers (e.g., assistance or
10 For all mortgage loan transactions based on an
appraisal, banks should select and engage
appraisers with local market competency in valuing
the property securing an eligible loan. Similarly,
any evaluation, if applicable, should be credible
and consistent with safe and sound banking
practices. Given the unique underwriting
considerations, banks should not use automated
valuation models in connection with these
programs.

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Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
grants for down payments, fees, and
closing costs; at or below market interest
rates; or rewards for long-term
occupancy).
• Monitoring and internal reporting
requirements sufficient to: (1) Assess the
performance, impact, trends, and
success of the program; and (2) inform
the board on at least a quarterly basis of
the aggregate dollar amount, and
percentage of tier 1 capital, of
committed eligible loans in relation to
the board-approved limitation.
D. Notice to the OCC
The bank should notify the
appropriate OCC supervisory office in
writing at least 30 days before the bank’s
first origination of an eligible loan
pursuant to the program or the bank’s
making of any substantive change to a
previously submitted program.
Substantive changes may include the
addition of a new eligible community,
an increase in the financial commitment
or duration of a program, or material
changes to eligible loan characteristics
or underwriting standards. Such notice
should include:
• The date the bank’s board (or
appropriately designated board
committee) approved the program’s
policies and procedures.
• A copy of the board-approved
policies and procedures.
II. OCC Supervisory Considerations

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A. Supervision of Individual Banks
After receiving the bank’s notice to
the OCC, examiners will evaluate the
bank’s program to assess whether it
complies with the requirements of
applicable laws and regulations and is
consistent with safe and sound lending
practices, this bulletin, and other
relevant guidance. Examiners’
assessment will include review of the:
• Financial commitment (as a dollar
amount and a percentage of Tier 1
capital) and defined geographies for
originating eligible loans.
• Characteristics of eligible loans and
incentives, if available, to qualifying
borrowers.
• Standards for the underwriting,
collateral review, credit administration,
and approval of eligible loans.
• Borrower notice(s).
• Monitoring and reporting
procedures for eligible loans.
• Process for ensuring compliance
with all applicable laws and regulations.
In connection with the evaluation of
the bank’s program, examiners may
request clarification or changes to the
bank’s policies and procedures before
the bank’s first origination of an eligible
loan pursuant to the program or the

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bank’s making of any substantive
change to a previously submitted
program. Such requests may include
clarification or changes to ensure the
program is consistent with safe and
sound lending practices.
During the course of subsequent
supervisory activities, examiners also
will monitor and evaluate the program.
Examiners evaluations will include
consideration of the:
• Bank’s governance of the program
and whether the program adequately
manages the various risks.
• Performance of loans that exceed
the SLTV limits and whether delinquent
eligible loans are managed and
accurately classified consistent with the
OCC’s existing guidance on delinquent
loans and in compliance with
applicable laws pertaining to loans in
delinquency.11
• Bank’s internal reporting of
program performance, impact, trends,
and overall success.
• Process to establish and document
community development consideration,
if applicable, under the Community
Reinvestment Act.
For banks found to have shortfalls or
unsatisfactory governance or controls,
examiners will communicate these
findings to the bank and require
remediation to continue the lending
activity. In addition, examiners may
review individual eligible loans to
assess asset quality, credit risk, and
consumer compliance.
B. Overall Evaluation of Programs
At least annually, the OCC will
evaluate the overall impact of banks’
programs in communities targeted for
revitalization. The OCC’s evaluations
will consider, among other matters,
whether the programs adequately
control the various risks, the
performance of loans that exceed the
SLTV limits, and the effect such lending
has had on the housing market and
other economic indicators in
communities targeted for revitalization.
Based on these evaluations, the OCC
may amend or rescind this bulletin. Any
decision by the OCC to materially
amend or rescind this bulletin will
apply only to the origination of new
loans that exceed the SLTV limits. Any
loans originated that are consistent with
this bulletin, or any subsequent
revisions thereof, when made will not
11 Applicable laws may include (1) Regulation X,
12 CFR 1024, which provides mortgage servicing
standards, including early intervention
requirements and loss mitigation procedures and (2)
Regulation Z, 12 CFR 1026, which establishes
requirements for including delinquency-related
information on the periodic statements required for
residential mortgage loans.

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80461

be deemed to be unsafe and unsound
solely because of any material
amendment or rescission of this
bulletin.
Dated: December 18, 2015.
Stuart E. Feldstein,
Director, Legislative and Regulatory Activities
Division.
[FR Doc. 2015–32376 Filed 12–23–15; 8:45 am]
BILLING CODE 4810–33–P

DEPARTMENT OF THE TREASURY
Fiscal Service
Surety Companies Acceptable on
Federal Bonds: National Fire & Marine
Insurance Company Berkshire
Hathaway Homestate Insurance
Company
Bureau of the Fiscal Service,
Fiscal Service, Department of the
Treasury.
ACTION: Notice.
AGENCY:

This is Supplement No. 5 to
the Treasury Department Circular 570,
2015 Revision, published July 1, 2015,
at 80 FR 37735.
FOR FURTHER INFORMATION CONTACT:
Surety Bond Section at (202) 874–6850.
SUPPLEMENTARY INFORMATION: A
Certificate of Authority as an acceptable
surety on Federal bonds is hereby
issued under 31 U.S.C. 9305 to the
following companies:
National Fire & Marine Insurance
Company (NAIC# 20079), BUSINESS
ADDRESS: 3024 Harney Street,
Omaha, NE 68131–3580. PHONE:
(402)393–7255. UNDERWRITING
LIMITATION b/: $560,473,000.
SURETY LICENSES c/: NE.
INCORPORATED IN: Nebraska
Berkshire Hathaway Homestate
Insurance Company (NAIC# 20044),
BUSINESS ADDRESS: 1314 Douglas
Street, Omaha, NE 68102. PHONE:
(402)393–7255. UNDERWRITING
LIMITATION b/: $115,951,000.
SURETY LICENSES c/: AL, AK, AZ,
AR, CA, CO, CT, DE, DC, FL, GA, HI,
ID, IL, IN, IA, KS, KY, LA, ME, MD,
MA, MI, MN, MS, MO, MT, NE., NV,
NH, NJ, NM, NY, NC, ND, OH, OK,
OR, PA, RI, SC, SD, TN, TX, UT, VT,
VA, WA, WV, WI, WY.
INCORPORATED IN: Nebraska
Federal bond-approving officers should
annotate their reference copies of the
Treasury Circular 570 (‘‘Circular’’), 2015
Revision, to reflect these additions.
Certificates of Authority expire on
June 30th each year, unless revoked
prior to that date. The Certificates are
subject to subsequent annual renewal as
long as the companies remain qualified
SUMMARY:

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