FR 2021-00005

The Federal Register recently published a correction to an earlier notice regarding loan guarantee rates and fees applicable for the fiscal year 2021, issued by the Rural Business-Cooperative Service, the Rural Housing Service, and the Rural Utilities Service of the U.S. Department of Agriculture. This correction addresses the omission of key details in the original document concerning specific financial rates and procedures, particularly for the state of Alaska and regarding periodic fee collection.

General Summary

The original notice, issued on September 1, 2020, outlined the Guarantee Fee rates, Guarantee percentage, and other financial details essential for those applying for loans under USDA's various loan guarantee programs. However, the document was published without including the specific guarantee percentage for Alaska and lacked comprehensive information about the periodic guarantee retention fee. The correction seeks to fill these gaps by introducing necessary additions and clarifications.

Significant Issues and Concerns

Although the correction attempts to remedy previous omissions, it leaves several significant issues unaddressed. Notably, it fails to provide clarity on how the guarantee percentage for Alaska will be established or calculated. Moreover, the correction does not give detailed insight into how the periodic guarantee retention fee will be collected or calculated, creating potential confusion for borrowers and lenders.

Further, the document's brief explanation of fee payment schedules uses language that might confuse stakeholders unfamiliar with the detailed procedural timeline, stating that the first fee payment is due on January 31 of the second year following a certain range of issuance dates. Such phrasing lacks practical guidance on calculating these timelines.

A fundamental drawback is the absence of a reason for the initial oversight concerning Alaska and the retention fee. Furthermore, there is no specific guidance on who to contact for inquiries, particularly about Alaska’s guarantee percentage. These omissions may perplex potential borrowers and stakeholders who seek clarity.

Impact on the Public

For the general public, especially those considering participating in USDA's loan programs, these vague and incomplete notices could pose significant barriers. Clarity and complete guidance are essential in ensuring stakeholders fully understand the expense and obligations involved in these loan guarantees.

Impact on Specific Stakeholders

Potential borrowers in Alaska may face uncertainty, as the document does not clarify how they can determine the guarantee percentage applicable to their loans. This could affect financing decisions or applications under the USDA programs. Additionally, lenders and financial professionals must navigate these unaddressed gaps, potentially causing delays or miscalculations in loan setups.

On a positive note, addressing the issue through this correction might encourage a reevaluation of communication and documentation standards, prompting government agencies to ensure greater transparency and completeness in future notices.

In summary, while the notice aims to correct previous omissions, its lack of clarity and comprehensive details may impede an effective understanding and execution of the updated terms among stakeholders. It underscores the importance of precise and complete documentation in federal communications, especially when it affects financial commitments and operations.