Notices. Notice; request for information

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 4910-13-M DEPARTMENT OF TRANSPORTATION Federal Motor Carrier Safety Administration [Docket No. FMCSA-2006-26602] Notice of Request for Information (RFI): Renew Approval of an Information Collection; OMB Control No. 2126-0011 (Commercial Driver Licensing and Test Standards) AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT. ACTION: Notice; request for information. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request

(ICR)described below to the Office of Management and Budget

(OMB)for review and approval and invites public comment. The FMCSA requests approval to revise an ICR entitled, *“Commercial Driver Licensing and Test Standards.”* This information collection is needed to ensure that drivers, motor carriers and the States are complying with notification and recordkeeping requirements for information related to testing, licensing, violations, convictions and disqualifications and that the information is accurate, complete and transmitted and recorded within certain time periods as required by the Commercial Motor Vehicle Safety Act of 1986 (CMVSA), as amended. DATES: We must receive your comments on or before September 10, 2007. ADDRESSES: You may submit comments by any of the following methods. Please identify your comments by the FMCSA Docket Number FMCSA-2006-26602. • *Web site: http://dms.dot.gov.* Follow instructions for submitting comments to the Docket. • *Fax:* 202-493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington DC 20590 between 9 a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays. • *Docket:* For access to the Docket Management System

(DMS)to read background documents or comments received, go to *http://dms.dot.gov* at any time or to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington DC 20590 between 9 a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays. The DMS is available electronically 24 hours each day, 365 days each year. If you want notification of receipt of your comments, please include a self-addressed, stamped envelope, or postcard or print the acknowledgement page that appears after submitting comments on-line. • *Privacy Act:* Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** on April 11, 2000 (65 FR 19477), or you may visit *http://dms.dot.gov.* FOR FURTHER INFORMATION CONTACT: Mr. Robert Redmond, Office of Safety Programs, Commercial Driver's License Division (MC-ESL), Department of Transportation, Federal Motor Carrier Safety Administration, West Building 6th Floor, 1200 New Jersey Avenue, SE., Washington, DC 20590-0001. Telephone: 202-366-5014; e-mail: *robert.redmond@dot.gov.* Office hours are from 9 a.m. to 5:30 p.m., e.t., Monday through Friday, except Federal Holidays. SUPPLEMENTARY INFORMATION: Background The licensed drivers in the United States deserve reasonable assurance that their fellow motorists are properly qualified to drive the vehicles they operate. Before the Commercial Motor Vehicle Safety Act of 1986 (CMVSA or the Act at Attachment A) Public Law 99-570, Title XII, 100 Stat. 3207-170) was signed by the President on October 27, 1986, 18 States and the District of Columbia authorized any person licensed to drive an automobile to also legally drive a large truck or bus. No special training or special license was required to drive these vehicles, even though it was widely recognized that operation of certain types of vehicles called for special skills, knowledge and training. Even in the 32 States that had a classified driver licensing system in place, only 12 of these States required an applicant to take a skills test in a representative vehicle. Equally serious was the problem of drivers possessing multiple driver licenses that enabled these commercial motor vehicle

(CMV)drivers to avoid license suspension for traffic law convictions. By spreading their convictions among several States, CMV drivers could avoid punishment for their infringements, and stay behind the wheel. The CMVSA addressed these problems. Section 12002 of the Act makes it illegal for a CMV operator to have more than one driver's license. Section 12003 requires the CMV driver conducting operations in commerce to notify both the designated State of licensure official and the driver's employer of any convictions of State or local laws relating to traffic control (except parking tickets). This section also requires each person who applies for employment as a CMV operator to notify prospective employers of all previous employment as a CMV operator for at least the previous ten years. In section 12005 of the Act, the Secretary of Transportation (Secretary) is required to develop minimum Federal standards for testing and licensing of operators of CMVs. Section 12007 of the Act also directs the Secretary, in cooperation with the States, to develop a clearinghouse to aid the States in implementing the one driver, one license, and one driving record requirement. This clearinghouse is known as the commercial driver's license information system (CDLIS). The CMVSA further requires each person who has a CDL suspended, revoked or canceled by a State, or who is disqualified from operating a CMV for any period, to notify his or her employer of such actions. Drivers of CMVs must notify their employers within 1 business day of being notified of the license suspension, revocation, and cancellation, or of the lost right to operate or disqualification. These requirements are reflected in 49 CFR part 383, titled *“Commercial Driver's License Standards; Requirements and Penalties.”* Specifically, section 383.21 prohibits a person from having more than one license; section 383.31 requires notification of convictions for driver violations; section 383.33 requires notification of driver's license suspensions; section 383.35 requires notification of previous employment; and section 383.37 outlines employer responsibilities. Section 383.111 requires the passing of a knowledge test by the driver and section 383.113 requires the passing of a skills test by the driver; section 383.115 contains the requirement for the double/triple trailer endorsement, section 383.117 contains the requirement for the passenger endorsement, section 383.119 contains the requirement for the tank vehicle endorsement and section 383.121 contains the requirement for the hazardous materials endorsement. Section 12011 of the CMVSA states that the Secretary shall withhold a portion of the Federal-aid highway funds apportioned to a State if the State does not substantially comply with the requirements in section 12009(a) of the Act. The information gathered during State compliance reviews is used to determine whether States are complying with these requirements. A final rule was published on July 31, 2002 (67 FR 49742) implementing 15 of the 16 CDL related provisions of the Motor Carrier Safety Improvement Act of 1999 (MCSIA) (Public Law 106-159, 113 Stat. 1748 (Dec. 9, 1999)) (Attachment B) that were designed to enhance the safety of drivers on our nation's highways by ensuring that only safe drivers operate CMVs. These new requirements are contained in 49 CFR part 383 and include: five new major and serious disqualifying offenses (section 383.51): Non-CMV disqualifying offenses by a CDL holder (section 383.51); disqualification of drivers determined to be an imminent hazard (section 383.52); a new school bus endorsement (section 383.123); a prohibition on issuing a hardship license to operate a CMV while under suspension (section 384.210); a prohibition on masking convictions (section 384.226); and various requirements for transmitting, posting and retaining driver convictions and disqualification records. An interim final rule

(IFR)was published on May 5, 2003 (68 FR 23844)as a companion rule to the Transportation Security Administration's (TSA's) May 5, 2003 IFR implementing section 1012 of the USA PATRIOT Act (Public Law 107-56) (Attachment C) on security threat assessments for drivers applying for or renewing a CDL with a hazardous materials endorsement. While TSA set the requirements in their rule; FMCSA has the responsibility as part of the CDL testing and issuance process to ensure that States are in compliance with the TSA requirements. This information collection supports the DOT Strategic Goal of Safety by requiring that drivers of CMVs are properly licensed according to all applicable Federal requirements. The 10-year employment history information supplied by the CDL holder to the employer upon application for employment (49 CFR 383.35) is used to assist the employer in meeting his/her responsibilities to ensure that the applicant does not have a history of high safety risk behavior. State officials use the information collected on the license application form (49 CFR 383.71), the medical certificate information that is posted to the driving record (proposed) and the conviction and disqualification data posted to the driving record (49 CFR 383.73) to prevent unqualified and/or disqualified CDL holders from operating CMVs on the nation's highways. State officials are also required to administer knowledge and skills tests to CDL driver applicants (49 CFR 384.202). The driver applicant is required to correctly answer at least 80 percent of the questions on each knowledge test in order to achieve a passing score on that test. To achieve a passing score on the skills test, the driver applicant must demonstrate that he/she can successfully perform all of the skills listed in the regulations. During State CDL compliance reviews, FMCSA officials review this information to ensure that the provisions of the regulations are being carried out. Without the aforementioned requirements, there would be no uniform control over driver licensing practices to prevent unqualified and/or disqualified drivers from being issued a CDL and to prevent unsafe drivers from spreading their convictions among several licenses in several States and remaining behind the wheel of a CMV. Failure to collect this information would render the regulations unenforceable. Information submitted by the States will be used by the FMCSA to determine if individual States are in “substantial compliance” with section 12009(a) of the CMVSA. The FMCSA reviews information submitted by the States and conducts such reviews, audits, and investigations of each State once every three years or as it deems necessary to make compliance determinations for all States and the District of Columbia. If this information were not available, the FMCSA would have no means of independently verifying State compliance. This request for renewed approval includes three additional information collection items:

(1)“State completing documents for a State-CDL compliance review [49 CFR 384],”

(2)“CDL Knowledge and Skills Tests Recordkeeping [49 CFR 384.202]” and

(3)driver renewals under “Driver Completion of the CDL Application [49 CFR 383.71].” *Title:* Commercial Driver Licensing and Test Standards. *OMB Number:* 2126-0011. *Type of Request:* Revision of a currently-approved information collection. *Respondents:* Drivers with a commercial driver's license

(CDL)and State driver licensing agencies. *Estimated Number of Respondents:* 8,332,800 driver respondents and 7,870,400 State respondents. *Estimated Time per Response:* 5.15 minutes per response. *Expiration Date:* April 30, 2007. *Frequency of Response:* Variable. *Estimated Total Annual Burden:* 1,391,456 hours. The Information Collection is Comprised of Seven Components

(1)*Notification of Convictions/Disqualifications:* There are approximately 11.52 million active commercial driver's license

(CDL)driver records. Each driver averages 1 conviction every 3 years. The estimated number of annual responses = 3,840,000 (11.52 million CDL drivers/3 = 3,840,000). It takes approximately 10 minutes to notify a motor carrier concerning convictions. The notification requirement has an estimated annual burden of 640,000 burden hours (3,840,000 convictions × 10/60 hours = 640,000 hours);

(2)*Providing Previous Employment History:* The estimated annual turnover rate of drivers is approximately 14 percent (%.) There are an estimated 1,612,800 annual responses to this requirement (11.52 million CDL drivers × .14 annual turnover rate = 1,612,800). It takes approximately 15 minutes to complete this requirement. The employment history requirement has an estimated annual burden of 403,200 hours (1,612,800 annual responses × 15/60 hours = 403,200 hours);

(3)*State Certification of Compliance:* There are 51 responses (50 States and the District of Columbia) to this requirement and it takes approximately 32 hours to complete each response. The compliance certification requirement has an estimated annual burden of 1,632 hours (51 responses × 32 hours = 1,632 hours);

(4)*State Compliance Review Documentation:* A State CDL compliance review is conducted approximately every 3.4 years. There are 15 responses (51 States/3.4 years = 15 States/year). It takes approximately 160 hours to complete each response. The State compliance review documentation requirement has an estimated annual burden of 2,400 hours (15 States × 160 hours = 2,400 hours).

(5)C *DLIS Recordkeeping:* Fifty

(50)States and the District of Columbia are required to enter data into the commercial driver's license information system (CDLIS) about operators of CMVs and to perform record checks before issuing, renewing, upgrading or transferring a CDL. There are approximately 576,000 new drivers a year (11.52 million drivers × .05 = 576,000 new drivers). We estimate that the average amount of time for each CDLIS inquiry performed by a State to add a new driver is 2 minutes. The new driver requirement has an estimated annual burden of 19,200 hours (576,000 transactions × 2/60 = 19,200 hours). There are 230,400 drivers a year who change their State of domicile (11.52 million drivers × .02 = 230,400 drivers). We estimate that the average amount of time for each CDLIS inquiry performed by a State to change a driver's State of domicile is 2 minutes. The change State of domicile requirement has an estimated annual burden of 7,680 hours (230,400 transactions × 2/60 hours = 7,680 hours). Approximately 25 percent of convictions result in a disqualification. There are 4,800,000 driver convictions and disqualifications (3,840,000 convictions × 1.25 = 4,800,000). We estimate that the average amount of time for each transaction performed by a State is 2 minutes. The driver conviction/disqualification transaction requirement has an estimated annual burden of 160,000 hours (4,800,000 transactions × 2/60 hours = 160,000 hours). Approximately 33 percent of active CDL drivers have a hazardous materials endorsement. The average renewal period is approximately 5 years. There are 760,320 drivers a year applying for or renewing a hazardous materials endorsement to their CDL (11.52 million active CDL drivers × .33/5 years = 760,320 drivers). We estimate that the average amount of time for each citizenship/resident alien status check performed by a State is 2 minutes. The citizenship/resident alien status check transaction requirement has an estimated annual burden of 25,344 hours (760,320 transactions × 2/60 hours = 25,344 hours). The total burden hours for these combined collection of information activities is 212,224 hours (19,200 hours + 7,680 hours + 160,000 hours + 25,344 hours = 212,224 hours).

(6)*CDL Application Form:* There are approximately 576,000 new CDL applicants a year. It takes approximately 1 minute to complete the CDL application. The new applicant CDL application requirement has an estimated annual burden of 9,600 hours (576,000 applications × 1/60 hours = 9,600 hours). The average CDL renewal period is approximately 5 years. Therefore, 2,304,000 drivers renew their CDL a year (11.52 million active CDL drivers/5 years = 2,304,000 drivers). It takes approximately 1 minute for renewal drivers to complete the CDL application. The renewal driver CDL application requirement has an estimated annual burden of 38,400 hours (2,304,000 × 1/60 hours = 38,400 hours). The total burden hours for these combined collection of information activities is 48,000 hours (9,600 hours + 38,400 hours = 48,000 hours).

(7)*Knowledge and Skills Test Recordkeeping:* There are approximately 576,000 new CDL applicants a year. It takes approximately 2 minute to record the results of knowledge tests and 5 minutes for the skills tests. Approximately 25 percent of the applicants fail the knowledge and skills tests. The knowledge test recordkeeping requirement has an estimated annual burden of 24,000 hours (576,000 applicants × 2 /60 hours × 1.25 = 24,000 hours). The skills test recordkeeping requirement has an estimated annual burden of 60,000 hours (576,000 applicants × 5/60 hours × 1.25 = 60,000). The total burden hours are 84,000 hours for these combined activities (24,000 + 60,000 = 84,000). *Definitions:* Under 49 CFR 383.5, a CMV is defined as a motor vehicle or combination of motor vehicles which:

(a)Has a gross combination weight rating of 11,794 or more kilograms

(kg)(26,001 or more pounds

(lbs)inclusive of a towed unit with a gross vehicle weight rating

(GVWR)of more than 4,536 kg (10,000 lbs));

(b)has a GVWR of 11,794 or more kg (26,001 or more lbs);

(c)is designed to transport 16 or more passengers, including the driver; or

(d)is of any size and is used to transport hazardous materials as hazardous materials are defined in 49 CFR 383.5. *Public Comments Invited:* You are asked to comment on any aspect of this information collection, including:

(1)Whether the proposed collection is necessary for the FMCSA's performance;

(2)the accuracy of the estimated burden;

(3)ways for the FMCSA to enhance the quality, usefulness, and clarity of the collected information; and

(4)ways that the burden could be minimized without reducing the quality of the collected information. The agency will summarize or include your comments in the request for OMB's clearance of this information collection. Issued on: June 29, 2007. D. Marlene Thomas, Associate Administrator for Administration. [FR Doc. E7-13376 Filed 7-9-07; 8:45 am] BILLING CODE 4910-EX-P DEPARTMENT OF TRANSPORTATION Maritime Administration Reports, Forms and Recordkeeping Requirements; Agency Information Collection Activity Under OMB Review AGENCY: Maritime Administration, DOT. ACTION: Notice and request for comments. SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), this notice announces that the Information Collection abstracted below has been forwarded to the Office of Management and Budget

(OMB)for review and approval. The nature of the information collection is described as well as its expected burden. The **Federal Register** Notice with a 60-day comment period soliciting comments on the following collection of information was published on April 23, 2007. No comments were received. DATES: Comments must be submitted on or before August 9, 2007. FOR FURTHER INFORMATION CONTACT: Rodney McFadden, Maritime Administration, 1200 New Jersey Ave., SE., Washington, DC 20590. Telephone: 202-366-2647, FAX: 202-366-7403 or e-mail: *rodney.mcfadden @dot.gov.* Copies of this collection also can be obtained from that office. SUPPLEMENTARY INFORMATION: Maritime Administration (MARAD). *Title:* Elements of Request for Course Approval. *OMB Control Number:* 2133-0535. *Type of Request:* Extension of currently approved collection. *Affected Public:* Respondents are public and private maritime security course training providers. *Forms:* None. *Abstract:* Under this voluntary collection, public and private maritime security training course providers may choose to provide the Maritime Administration (MARAD) with information concerning the content and operation of their courses. MARAD will use this information to evaluate whether the course meets the training standards and curriculum promulgated under Section 109 of the Maritime Transportation Security Act of 2002

(MTSA)(Pub. L. 107-295). Courses found to meet these standards will receive a course approval. *Annual Estimated Burden Hours:* 3,000 hours. ADDRESSES: Send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503, Attention MARAD Desk Officer. *Comments Are Invited On:* Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; the accuracy of the agency's estimate of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. (Authority: 49 CFR 1.66) Issued in Washington, DC on July 3, 2007. Daron T. Threet Secretary, Maritime Administration. [FR Doc. E7-13349 Filed 7-9-07; 8:45 am] BILLING CODE 4910-81-P DEPARTMENT OF TRANSPORTATION Maritime Administration [Docket No. MARAD-2007-28659] Requested Administrative Waiver of the Coastwise Trade Laws AGENCY: Maritime Administration, Department of Transportation. ACTION: Invitation for public comments on a requested administrative waiver of the Coastwise Trade Laws for the vessel ADELAIDE. SUMMARY: As authorized by Pub. L. 105-383 and Pub. L. 107-295, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below. The complete application is given in DOT docket MARAD-2007-28659 at *http://dms.dot.gov.* Interested parties may comment on the effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. If MARAD determines, in accordance with Pub. L. 105-383 and MARAD's regulations at 46 CFR Part 388 (68 FR 23084; April 30, 2003), that the issuance of the waiver will have an unduly adverse effect on a U.S.-vessel builder or a business that uses U.S.-flag vessels in that business, a waiver will not be granted. Comments should refer to the docket number of this notice and the vessel name in order for MARAD to properly consider the comments. Comments should also state the commenter's interest in the waiver application, and address the waiver criteria given in § 388.4 of MARAD's regulations at 46 CFR Part 388. DATES: Submit comments on or before August 9, 2007. ADDRESSES: Comments should refer to docket number MARAD-2007-28659. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. You may also send comments electronically via the Internet at *http://dmses.dot.gov/submit/.* All comments will become part of this docket and will be available for inspection and copying at the above address between 10 a.m. and 5 p.m., E.T., Monday through Friday, except federal holidays. An electronic version of this document and all documents entered into this docket is available on the World Wide Web at *http://dms.dot.gov.* FOR FURTHER INFORMATION CONTACT: Joann Spittle, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue, SE., Room W21-203, Washington, DC 20590. Telephone 202-366-5979. SUPPLEMENTARY INFORMATION: As described by the applicant the intended service of the vessel ADELAIDE is: Intended Use: “Day sails, sailing classes.” Geographic Region: “Maine, Massachusetts, New York, Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida.” Privacy Act Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit *http://dms.dot.gov.* Dated: July 2, 2007. By order of the Maritime Administrator. Daron T. Threet, Secretary, Maritime Administration. [FR Doc. E7-13350 Filed 7-9-07; 8:45 am] BILLING CODE 4910-81-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration [Docket No. PHMSA-2007-28505] Pipeline Safety: Requests for Waivers of Compliance (Special Permits) AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA); DOT. ACTION: Notice. SUMMARY: The Federal pipeline safety laws allow a pipeline operator to request PHMSA to waive compliance with any part of the Federal pipeline safety regulations. We are publishing this notice to provide a list of requests we have received from pipeline operators seeking relief from compliance with certain pipeline safety regulations. This notice seeks public comment on these requests, including comments on any environmental impacts. In addition, this notice reminds the public that we have changed what we call a decision granting such a request to a special permit. At the conclusion of the comment period, PHMSA will evaluate each request individually to determine whether to grant a special permit or deny the request. DATES: Submit any comments regarding any of these requests for special permit by August 9, 2007. ADDRESSES: Comments should reference the docket number for the request and may be submitted in the following ways: • *DOT Web Site:* *http://dms.dot.gov* . To submit comments on the DOT electronic docket site, click “Comment/Submissions,” click “Continue,” fill in the requested information, click “Continue,” enter your comment, then click “Submit.” • *Fax:* 1-202-493-2251. • *Mail:* Docket Management System: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* DOT Docket Management System; U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *E-Gov Web Site:* *http://www.Regulations.gov* . This site allows the public to enter comments on any **Federal Register** notice issued by any agency. *Instructions:* You should identify the docket number for the request you are commenting on at the beginning of your comments. If you submit your comments by mail, you should submit two copies. If you wish to receive confirmation that PHMSA received your comments, you should include a self-addressed stamped postcard. Internet users may submit comments at *http://www.regulations.gov* , and may access all comments received by DOT at *http://dms.dot.gov* by performing a simple search for the docket number. Note: All comments will be posted without changes or edits to *http://dms.dot.gov* including any personal information provided. *Privacy Act Statement:* Anyone may search the electronic form of all comments received for any of our dockets. You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477) or you may visit *http://dms.dot.gov* . FOR FURTHER INFORMATION CONTACT: Wayne Lemoi by telephone at

(404)832-1160; or, e-mail at *wayne.lemoi@dot.gov.* SUPPLEMENTARY INFORMATION: Change in Nomenclature The PHMSA changed the name of a decision we make granting a request for waiver of compliance from “decision granting waiver” to “special permit” to reflect that granting the request will not reduce safety. We commonly add safety conditions to decisions granting waivers to ensure that waiving compliance with an existing pipeline safety standard is consistent with pipeline safety. The change was simply a name change for a decision granting waiver under 49 U.S.C. 60118(c)(1). Comments Invited on Requests for Waiver The PHMSA has filed in DOT's Docket Management System

(DMS)requests for waiver we have received from pipeline operators seeking relief from compliance with certain pipeline safety regulations. Each request has been assigned a separate docket number in the DMS. We invite interested persons to participate by reviewing these requests and by submitting written comments, data or other views. Please include any comments on environmental impacts granting the requests may have. Before acting on any request, PHMSA will evaluate all comments received on or before the comment closing date. We will consider comments received after this date if it is possible to do so without incurring additional expense or delay. We may grant or deny these requests based on the comments we receive. The PHMSA has received the following requests for waivers of compliance with pipeline safety regulations. Docket No. Requester Regulation(s) Nature of waiver PHMSA-2007-28019 TPM, Inc 49 CFR 195.410 To authorize the operator to mark the pipeline using the words “Chemical Pipeline” in lieu of “Anhydrous Ammonia Pipeline.” PHMSA-2007-28276 Golden Pass LNG Terminal, L.L.C 49 CFR 193.2301 To authorize the use of automatic ultrasonic testing to inspect liquefied natural gas tank welds. PHMSA-2007-28458 Dominion Transmission, Inc 49 CFR 192.611 To authorize operation of 6,354 ft of a gas transmission pipeline located one mile east of the Groveport Compressor Station in Fairfield County, Ohio without reducing operating pressure as a result of a change from a Class 2 to a Class 3 location. Authority: 49 U.S.C. 60118(c)(1) and 49 CFR 1.53. Issued in Washington, DC on July 3, 2007. Jeffrey D. Wiese, Acting Associate Administrator for Pipeline Safety. [FR Doc. E7-13379 Filed 7-9-07; 8:45 am] BILLING CODE 4910-60-P DEPARTMENT OF THE TREASURY Community Development Financial Institutions Fund Proposed Collection; Comment Request ACTION: Notice and request for comments. SUMMARY: The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the Community Development Financial Institutions Fund (the “Fund”), within the Department of the Treasury, is soliciting comments concerning the Native American CDFI Assistance

(NACA)Program Application. DATES: Written comments should be received on or before September 10, 2007 to be assured of consideration. ADDRESSES: Direct all written comments to Linda G. Davenport, Deputy Director for Policy and Programs, Community Development Financial Institutions Fund, U.S. Department of the Treasury, 601 13th Street, NW., Suite 200 South, Washington, DC 20005, Facsimile Number

(202)622-7754. FOR FURTHER INFORMATION CONTACT: A copy of the draft NACA Program Application or requests for additional information may be obtained by contacting: Ruth Jaure, Program Manager, Community Development Financial Institutions Fund, U.S. Department of the Treasury, 601 13th Street, NW., Suite 200 South, Washington, DC 20005; or by phone to

(202)622-8662. SUPPLEMENTARY INFORMATION: *Title:* Native American CDFI Assistance

(NACA)Program Application. *OMB Number:* 1559-0025. *Abstract:* The Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 *et seq.* ) (the “Act”) authorizes the Community Development Financial Institutions Fund (the “Fund”) of the U.S. Department of the Treasury to promote economic revitalization and community development through investment in and assistance to Fund-certified community development financial institutions (“CDFIs”) through the CDFI Program. The Revised Continuing Appropriations Resolution, 2007 (Pub. L. 110-5) authorizes the Fund to provide financial assistance and technical assistance to benefit Native American Communities, with such benefit being provided primarily through qualified community development lender organizations with experience and expertise in community development banking and lending in Indian country, Native American organizations, Tribes and tribal organizations and other suitable providers. Through the NACA Program, the Fund provides

(i)FA and/or TA awards to Native CDFIs and entities that can be certified as Native CDFIs at time of award; and

(ii)TA awards to entities that propose to become Native CDFIs within two years and “Sponsoring Entities” (e.g., Native American organizations, Tribes, Tribal organizations) that propose to create separate legal entities that will become Native CDFIs within three years. *Type of Review:* Revision. *Affected Public:* Not-for-profit institutions; state, local or tribal government and tribal entities; and businesses or other for-profit institutions. *Estimated Number of Respondents:* 40. *Estimated Annual Time per Respondent:* 65 hours. *Estimated Total Annual Burden Hours:* 2,600 hours. *Request for Comments:* Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. 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 Fund, including whether the information shall have practical utility;

(b)the accuracy of the Fund's estimate of the burden of the collection of information;

(c)ways to enhance the quality, utility, and clarity of the information to be collected;

(d)ways to minimize the burden of the collection of information 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. Authority: Pub. L. No. 107-73; Pub. L. No. 110-5. Dated: June 29, 2007. Kimberly A. Reed, Director, Community Development Financial Institutions Fund. [FR Doc. E7-13331 Filed 7-9-07; 8:45 am] BILLING CODE 4810-70-P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency Agency Information Collection Activities: Submission for OMB Review; Comment Request AGENCY: Office of the Comptroller of the Currency (OCC), Treasury. ACTION: Notice and request for comment. SUMMARY: The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on a proposed information collection, as required by the Paperwork Reduction Act of 1995. An agency may not conduct or sponsor, and a 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 comment concerning a proposed information collection titled, “Survey of Minority Owned National Banks.” The OCC is also giving notice that it has submitted the proposed information collection to OMB for review. DATES: Comments must be submitted on or before August 9, 2007. ADDRESSES: Communications Division, Office of the Comptroller of the Currency, Public Information Room, Mailstop 1-5, Attention: 1557-NEW, 250 E Street, SW., Washington, DC 20219. In addition, comments may be sent by fax to

(202)874-4448, or by electronic mail to *regs.comments@occ.treas.gov.* You can inspect and photocopy the comments at the OCC's Public Information Room, 250 E Street, SW., Washington, DC 20219. You can make an appointment to inspect the comments by calling

(202)874-5043. Additionally, you should send a copy of your comments to OCC Desk Officer, 1557-NEW, by mail to U.S. Office of Management and Budget, 725 17th Street, NW., #10235, Washington, DC 20503, or by fax to

(202)395-6974. FOR FURTHER INFORMATION CONTACT: You may request additional information or a copy of the collection and supporting documentation submitted to OMB by contacting: Mary Gottlieb,

(202)874-5090, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219. SUPPLEMENTARY INFORMATION: Title: Survey of Minority Owned National Banks. *OMB Control No.:* New collection. *Type of Review:* Regular review. *Description:* The OCC is committed to assessing its efforts to provide supervisory support, technical assistance, education, and outreach to the Minority Owned National Banks (MONBs) under its supervision. To perform this assessment, it is necessary to obtain, from the individual MONBs, feedback on the effectiveness of OCC's current efforts and suggestions for enhancing its supervisory efforts and assistance going forward. The OCC will use the information it gathers to assess the needs of MONBs, and OCC's current efforts to meet those needs. The OCC will also use the information to focus and enhance its supervisory, technical assistance, education and outreach activities with respect to MONBs. *Affected Public:* Businesses or other for-profit. *Burden Estimates:* *Estimated Number of Respondents:* 40. *Estimated Number of Responses:* 40. *Estimated Annual Burden:* 80 hours. *Frequency of Response:* On occasion. *Comments:* The OCC issued a 60-day Federal Register Notice on April 19, 2007 (72 FR 19761). No comments were received. Comments continue to be invited on:

(a)Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;

(b)The accuracy of the agency's estimate of the burden of the collection of information;

(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 startup costs and costs of operation, maintenance, and purchase of services to provide information. Dated: July 2, 2007. Karen Solomon, Director, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency. [FR Doc. E7-13283 Filed 7-9-07; 8:45 am] BILLING CODE 4810-33-P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency [Docket No. OCC-2007-0005] FEDERAL RESERVE SYSTEM [Docket No. OP-1278] FEDERAL DEPOSIT INSURANCE CORPORATION DEPARTMENT OF THE TREASURY Office of Thrift Supervision [No. 2007-31] NATIONAL CREDIT UNION ADMINISTRATION Statement on Subprime Mortgage Lending AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); and National Credit Union Administration

(NCUA)(collectively, the Agencies). ACTION: Final guidance—Statement on Subprime Mortgage Lending. SUMMARY: The Agencies are issuing a final interagency Statement on Subprime Mortgage Lending. This guidance has been developed to clarify how institutions can offer certain adjustable rate mortgage

(ARM)products in a safe and sound manner, and in a way that clearly discloses the risks that borrowers may assume. EFFECTIVE DATE: July 10, 2007. FOR FURTHER INFORMATION CONTACT: *OCC:* Michael Bylsma, Director, Community and Consumer Law Division,

(202)874-5750 or Stephen Jackson, Director, Retail Credit Risk,

(202)874-5170. *Board:* Division of Banking Supervision and Regulation: Brian P. Valenti, Supervisory Financial Analyst,

(202)452-3575, Virginia M. Gibbs, Senior Supervisory Financial Analyst,

(202)452-2521, or Sabeth I. Siddique, Assistant Director,

(202)452-3861; Division of Consumer and Community Affairs: Kathleen C. Ryan, Counsel,

(202)452-3667, or Jamie Z. Goodson, Attorney,

(202)452-3667; or Legal Division: Kara L. Handzlik, Attorney

(202)452-3852. Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. Users of Telecommunication Device for Deaf only, call

(202)263-4869. *FDIC:* Beverlea S. Gardner, Examination Specialist,

(202)898-3640, Division of Supervision and Consumer Protection; Richard B. Foley, Counsel

(202)898-3784; Mira N. Marshall, Acting Chief Community Reinvestment Act and Fair Lending,

(202)898-3912; April A. Breslaw, Acting Associate Director, Compliance Policy & Exam Support Branch, Division of Supervision and Consumer Protection,

(202)898-6609. *OTS:* Tammy L. Stacy, Director of Consumer Regulation, Compliance and Consumer Protection Division,

(202)906-6437; Glenn Gimble, Senior Project Manager, Compliance and Consumer Protection Division,

(202)906-7158; William J. Magrini, Senior Project Manager, Credit Risk,

(202)906-5744; or Teresa Luther, Economist, Credit Risk,

(202)906-6798. *NCUA:* Cory W. Phariss, Program Officer, Examination and Insurance,

(703)518-6618. SUPPLEMENTARY INFORMATION: I. Background The Agencies developed this Statement on Subprime Mortgage Lending to address emerging risks associated with certain subprime mortgage products and lending practices. In particular, the Agencies are concerned about the growing use of ARM products 1 that provide low initial payments based on a fixed introductory rate that expires after a short period, and then adjusts to a variable rate plus a margin for the remaining term of the loan. These products could result in payment shock to the borrower. The Agencies are concerned that these products, typically offered to subprime borrowers, present heightened risks to lenders and borrowers. Often, these products have additional characteristics that increase risk. These include qualifying borrowers based on limited or no documentation of income or imposing substantial prepayment penalties or prepayment penalty periods that extend beyond the initial fixed interest rate period. In addition, borrowers may not be adequately informed of product features and risks, including their responsibility to pay taxes and insurance, which might be separate from their mortgage payments. 1 For example, ARMs known as “2/28” loans feature a fixed rate for two years and then adjust to a variable rate for the remaining 28 years. The spread between the initial fixed interest rate and the fully indexed interest rate in effect at loan origination typically ranges from 300 to 600 basis points. These products originally were extended to customers primarily as a temporary credit accommodation in anticipation of early sale of the property or in expectation of future earnings growth. However, these loans have more recently been offered to subprime borrowers as “credit repair” or “affordability” products. The Agencies are concerned that many subprime borrowers may not have sufficient financial capacity to service a higher debt load, especially if they were qualified based on a low introductory payment. The Agencies are also concerned that subprime borrowers may not fully understand the risks and consequences of obtaining this type of ARM loan. Borrowers who obtain these loans may face unaffordable monthly payments after the initial rate adjustment, difficulty in paying real estate taxes and insurance that were not escrowed, or expensive refinancing fees, any of which could cause borrowers to default and potentially lose their homes. In response to these concerns, the Agencies published for comment the Proposed Statement on Subprime Mortgage Lending (proposed statement), 72 FR 10533 (March 8, 2007). The proposed statement provided guidance on the criteria and factors, including payment shock, that an institution should assess in determining a borrower's ability to repay the loan. The proposed statement also provided guidance intended to protect consumers from unfair, deceptive, and other predatory practices, and to ensure that consumers are provided with clear and balanced information about the risks and features of these loans. Finally, the proposed statement addressed the need for strong controls to adequately manage the risks associated with these products. The Agencies requested comment on all aspects of the proposed statement, and specifically requested comment about whether:

(1)These products always present inappropriate risks to institutions and consumers, or the extent to which they may be appropriate under some circumstances;

(2)the proposed statement would unduly restrict the ability of existing subprime borrowers to refinance their loans, and whether other forms of credit are available that would not present the risk of payment shock;

(3)the principles of the proposed statement should be applied beyond the subprime ARM market; and

(4)limitations on the use of prepayment penalties would help meet borrower needs. The Agencies collectively received 137 unique comments on the proposed statement. Comments were received from financial institutions, industry-related trade associations (industry groups), consumer and community groups, government officials, and members of the public. II. Overview of Public Comments The commenters were generally supportive of the Agencies' efforts to provide guidance in this area. However, many financial institution commenters expressed concern that certain aspects of the proposed statement were too prescriptive or could unduly restrict subprime borrowers' access to credit. Many consumer and community group commenters stated that the proposed statement did not go far enough in addressing their concerns about these products. Financial institutions and industry groups stated that they supported prudent underwriting, but opposed a strict requirement that ARM loans subject to the proposed statement be underwritten at a fully indexed rate with a fully amortizing repayment schedule. They also stated that these loan products are not always inappropriate, particularly because they can be a useful credit repair vehicle or a means to establish a favorable credit history. Many of these commenters expressed concern that the proposed statement would unduly restrict credit to subprime borrowers. They also requested that the proposed statement be modified to allow lenders flexibility in helping existing subprime borrowers refinance out of ARM loans that will reset to a monthly payment that they cannot afford. The majority of financial institutions and industry group commenters opposed the application of the proposed statement outside the subprime market. A number of these commenters requested clarification of the scope of the proposed statement and the definition of “subprime.” Some industry group commenters also expressed concern that consumer disclosure requirements would put federally-regulated institutions at a disadvantage and cause consumer information overload. They also requested that any changes to consumer disclosure requirements be part of a comprehensive reform of existing disclosure regulations. Consumer and community group commenters generally supported the proposed statement. Many of these commenters expressed their concern that the products covered by the proposed statement present inappropriate risks for subprime borrowers. Many of these commenters supported extending the scope of the proposed statement to other mortgage products. These commenters supported the proposed underwriting criteria, though a number of them suggested stricter underwriting criteria. They also supported further limiting or prohibiting the use of reduced documentation and stated income loans, suggesting that such a reduction would be in the best interests of consumers. Both industry group and consumer and community group commenters expressed concern that the proposed statement will not apply to all lenders. Industry group commenters indicated this would put federally-regulated financial institutions at a competitive disadvantage. Consumer and community group commenters encouraged the Agencies to continue to work with state regulators to extend the principles of the proposed statement to non-federally supervised institutions. Since the time that the Agencies announced the proposed statement, the Conference of State Bank Supervisors

(CSBS)and the American Association of Residential Mortgage Regulators (AARMR) issued a press release confirming their intent to “develop a parallel statement for state supervisors to use with state-supervised entities.” 2 2 Media Release, CSBS & AARMR, “CSBS and AARMR Support Interagency Statement on Subprime Lending” (March 2, 2007), available at *http://www.csbs.org/AM/Template.cfm?Section=Search&template=/CM/HTMLDisplay.cfm&ContentID=10295.* III. Agencies' Action on Final Joint Guidance The Agencies are issuing the Statement on Subprime Mortgage Lending (Statement) with some changes to respond to the comments received and to provide additional clarity. The Statement applies to all banks and their subsidiaries, bank holding companies and their nonbank subsidiaries, savings associations and their subsidiaries, savings and loan holding companies and their subsidiaries, and credit unions. Significant comments on specific provisions of the proposed statement, the Agencies' responses, and changes to the proposed statement are discussed below. Scope of Guidance A number of financial institution and industry group commenters and two credit reporting companies requested that the definition of “subprime” be clarified. A financial institution and an industry group commenter requested a bright-line test to determine if a borrower falls into the subprime category. The Agencies considered commenters' requests that a definition of “subprime” be included in the Statement. The Agencies determined, however, that the reference to the subprime borrower characteristics from the 2001 Expanded Guidance for Subprime Lending Programs (Expanded Guidance) provides appropriate information for purposes of this Statement. The Expanded Guidance provides a range of credit risk characteristics that are associated with subprime borrowers, noting that the characteristics are illustrative and are not meant to define specific parameters for all subprime borrowers. 3 Because the term “subprime” is not consistently defined in the marketplace or among individual institutions, the Agencies believe that incorporating the subprime borrower credit risk characteristics from the Expanded Guidance provides sufficient clarity. 3 Federally insured credit unions should refer to LCU 04-CU-13—Specialized Lending Activities. A number of commenters also requested clarification as to whether the proposed statement applies to all products with the features described. In addition, the Agencies specifically requested comment regarding whether the proposed statement's principles should be applied beyond the subprime ARM market. All consumer and community groups and some of the financial institutions who addressed this question supported application of the proposed statement beyond the subprime market. However, most financial institution and industry group commenters opposed application of the proposed statement beyond the subprime market. These commenters stated that the issues the proposed statement was designed to address are confined to the subprime market and expansion of the proposed statement to other markets would unnecessarily limit the options available to other borrowers. As with the proposed statement, the Statement retains a focus on subprime borrowers, due to concern that these consumers may not fully understand the risks and consequences of these loans and may not have the financial capacity to deal with increased obligations. The Agencies did revise the language to indicate that the proposed statement applies to certain ARM products that have one or more characteristics that can cause payment shock, as defined in the proposed statement. While the Statement has retained its focus on subprime borrowers, the Agencies note that institutions generally should look to the principles of this Statement when such ARM products are offered to non-subprime borrowers. Risk Management Practices Predatory Lending Considerations Some financial institution and industry group commenters raised concerns that the proposed statement implied that subprime lending is “per se” predatory. The Statement clarifies that subprime lending is not synonymous with predatory lending, and that there is no presumption that the loans to which the Statement applies are predatory. Qualifying Standards The proposed statement provided that subprime ARMs should be underwritten at the fully indexed rate with a fully amortizing repayment schedule. Many consumer and community groups supported the proposed statement's underwriting standards. Other consumer and community groups thought that the proposed qualifying standards did not go far enough, and suggested that these loans should be underwritten on the basis of the maximum possible monthly payment. The majority of industry group commenters who addressed this issue opposed the proposed underwriting standard as overly prescriptive. Some commenters also requested that the Statement define “fully indexed rate with a fully amortizing repayment schedule.” All of the commenters that addressed the issue favored including a reasonable estimate of property taxes and insurance in an assessment of borrowers' debt-to-income ratios. The Agencies continue to believe that institutions should maintain qualification standards that include a credible analysis of a borrower's capacity to repay the loan according to its terms. This analysis should consider both principal and interest obligations at the fully indexed rate with a fully amortizing repayment schedule, plus a reasonable estimate for real estate taxes and insurance, whether or not escrowed. Qualifying consumers based on a low introductory payment does not provide a realistic assessment of a borrower's ability to repay the loan according to its terms. Therefore, the proposed general guideline of qualifying borrowers at the fully indexed rate, assuming a fully amortizing payment, remains unchanged in the final Statement. The Agencies did, however, provide additional information regarding the terms “fully indexed rate” and “fully amortizing payment schedule” to clarify expectations regarding how institutions should assess borrowers' repayment capacity. Reduced Documentation or Stated Income Loans Several commenters raised concerns about reduced documentation or stated income loans. The majority of commenters who addressed this issue supported the proposed statement's position that institutions should be able to readily document income for many borrowers and that reduced documentation should be accepted only if mitigating factors are present. A few financial institution and industry group commenters urged the Agencies to allow lenders some flexibility in deciding when these loans are appropriate for borrowers whose income is derived from sources that are difficult to verify. On the other hand, some consumer and community group commenters stated that borrowers are not always given the option to document income and thereby pay a lower interest rate. They also indicated that stated income loans may be a vehicle for fraud in that borrower income may be inflated to qualify for a loan. The Agencies believe that verifying income is critical to conducting a credible analysis of borrowers' repayment capacity, particularly in connection with loans to subprime borrowers. Therefore, the final Statement provides that stated income and reduced documentation should be accepted only if there are mitigating factors that clearly minimize the need for verification of repayment capacity. The Statement provides some examples of mitigating factors, and sets forth an expectation that reliance on mitigating factors should be documented. The Agencies note that for many borrowers, institutions should be able to readily document income using recent W-2 statements, pay stubs, and/or tax returns. Workout Arrangements The Agencies specifically requested comment on whether the proposed statement would unduly restrict the ability of existing subprime borrowers to refinance out of certain ARMs to avoid payment shock. The Agencies also asked about the availability to these borrowers of other mortgage products that do not present the risk of payment shock. The majority of financial institution and industry group commenters who responded to this specific question believed that the proposed statement would unduly restrict existing subprime borrowers' ability to refinance. However, most consumer and community groups who addressed the issue expressed the view that allowing existing borrowers to refinance into another unaffordable ARM was not an acceptable solution to the problem and, therefore, that eliminating this option would not be an undue restriction on credit. Some commenters mentioned that certain government-sponsored entities and lenders have already committed to revise their lending program criteria and/or create new programs that potentially may provide alternative mortgage products for refinancing existing subprime loans. To address these issues, the Agencies incorporated a section on workout arrangements in the final text that references the principles of the April 2007 interagency Statement on Working with Borrowers. The Agencies believe prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower. Consumer Protection Principles Prepayment Penalties The Agencies specifically requested comment regarding whether prepayment penalties should be limited to the initial fixed-rate period; how this practice, if adopted, would assist consumers and affect institutions; and whether an institution's providing a window of 90 days prior to the reset date to refinance without a prepayment penalty would help meet borrower needs. The overwhelming majority of commenters who addressed this question agreed that prepayment penalties should be limited to the initial fixed-rate period, and several commenters proposed a complete prohibition of prepayment penalties. Commenters suggested different time frames for expiration of the prepayment penalty period, ranging from 30 to 90 days prior to the reset date. Several industry group commenters, however, opposed such a limitation. They stated that prepayment fees are a legitimate means for lenders and investors to be compensated for origination costs when borrowers prepay prior to the interest rate reset. Further, these commenters noted that most lenders do not offer mortgage products that have prepayment penalty periods that extend beyond the fixed interest rate period and that borrowers should be allowed time to exit the loan prior to the reset date. In light of the comments received, the Agencies revised the Statement to state that the period during which prepayment penalties apply should not exceed the initial reset period, and that institutions generally should provide borrowers with a reasonable period of time (typically, at least 60 days prior to the reset date) to refinance their loans without penalty. There is no supervisory expectation for institutions to waive contractual terms with regard to prepayment penalties on existing loans. 4 4 Federal credit unions are prohibited from charging prepayment penalties. 12 CFR 701.21. Consumer Disclosure Issues Many financial institution and industry group commenters suggested that the Agencies' consumer protection goals would be better accomplished through amendments to generally applicable regulations, such as Regulation Z (Truth in Lending) 5 or Regulation X (Real Estate Settlement Procedures). 6 Some financial institution and consumer and community group commenters questioned the value of additional disclosures and expressed concern that the proposed statement would contribute to consumer information overload. A few commenters stated that the proposed statement would add burdensome new disclosure requirements and would result in the provision of confusing information to consumers. 5 12 CFR part 226 (2006). 6 24 CFR part 3500 (2005). Some industry group commenters asked the Agencies to provide uniform disclosures for these products, or to publish illustrations of the consumer information contemplated by the proposed statement similar to those previously proposed by the Agencies in connection with nontraditional mortgage products. 7 Several commenters also requested that any disclosures include the maximum possible monthly payment under the terms of the loan. 7 71 FR 58673 (October 4, 2006). The Agencies have determined that, given the growth in the market for the products covered by the Statement and the heightened legal, compliance, and reputation risks associated with these products, guidelines are needed now to ensure that consumers will receive the information they need about the material features of these loans. In addition, while the Agencies are sensitive to commenters' concerns regarding disclosure burden, we do not anticipate that the information outlined in the Statement will result in additional lengthy disclosures. Rather, the Agencies contemplate that the information can be provided in a brief narrative format and through the use of examples based on hypothetical loan transactions. In response to requests by commenters, the Agencies are working on and expect to publish for comment proposed illustrations of the type of consumer information contemplated in the Statement. The Agencies disagree with the commenters who expressed concern that the proposed statement appears to establish a suitability standard under which lenders would be required to assist borrowers in choosing products that are appropriate to their needs and circumstances. These commenters argued that lenders are not in a position to determine which products are most suitable for borrowers, and that this decision should be left to borrowers themselves. It is not the Agencies' intent to impose such a standard, nor is there any language in the Statement that does so. Control Systems While some commenters who addressed the control systems portion of the proposed statement supported the Agencies' proposal, some industry group commenters expressed concern that these provisions were neither realistic nor practical. A few industry group commenters requested clarification of the scope of a financial institution's responsibilities with regard to third parties. Some consumer and community group commenters requested uniform regulation of and increased enforcement against third parties. The Agencies have carefully considered these comments, but have not revised this portion of the proposed statement. The Agencies do not expect institutions to assume an unwarranted level of responsibility for the actions of third parties. Moreover, the control systems discussed in the Statement are consistent with the Agencies' current supervisory authority and policies. Supervisory Review The Agencies received no comments on the supervisory review portion of the proposed statement. However, minor changes have been made to clarify the circumstances under which the Agencies will take action against institutions in connection with the products addressed in the Statement. IV. Text of Final Joint Guidance The final interagency Statement on Subprime Mortgage Lending appears below. Statement on Subprime Mortgage Lending The Agencies 8 developed this Statement on Subprime Mortgage Lending (Subprime Statement) to address emerging issues and questions relating to certain subprime 9 mortgage lending practices. The Agencies are concerned borrowers may not fully understand the risks and consequences of obtaining products that can cause payment shock. 10 In particular, the Agencies are concerned with certain adjustable-rate mortgage

(ARM)products typically offered to subprime borrowers that have one or more of the following characteristics: 8 The Agencies consist of the Board of Governors of the Federal Reserve System (the Board), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). 9 The term “subprime” is described in the 2001 Expanded Guidance for Subprime Lending Programs. Federally insured credit unions should refer to LCU 04-CU-13—Specialized Lending Activities. 10 Payment shock refers to a significant increase in the amount of the monthly payment that generally occurs as the interest rate adjusts to a fully indexed basis. Products with a wide spread between the initial interest rate and the fully indexed rate that do not have payment caps or periodic interest rate caps, or that contain very high caps, can produce significant payment shock. • Low initial payments based on a fixed introductory rate that expires after a short period and then adjusts to a variable index rate plus a margin for the remaining term of the loan; 11 11 For example, ARMs known as “2/28” loans feature a fixed rate for two years and then adjust to a variable rate for the remaining 28 years. The spread between the initial fixed interest rate and the fully indexed interest rate in effect at loan origination typically ranges from 300 to 600 basis points. • Very high or no limits on how much the payment amount or the interest rate may increase (“payment or rate caps”) on reset dates; • Limited or no documentation of borrowers' income; • Product features likely to result in frequent refinancing to maintain an affordable monthly payment; and/or • Substantial prepayment penalties and/or prepayment penalties that extend beyond the initial fixed interest rate period. Products with one or more of these features present substantial risks to both consumers and lenders. These risks are increased if borrowers are not adequately informed of the product features and risks, including their responsibility for paying real estate taxes and insurance, which may be separate from their monthly mortgage payments. The consequences to borrowers could include: being unable to afford the monthly payments after the initial rate adjustment because of payment shock; experiencing difficulty in paying real estate taxes and insurance that were not escrowed; incurring expensive refinancing fees, frequently due to closing costs and prepayment penalties, especially if the prepayment penalty period extends beyond the rate adjustment date; and losing their homes. Consequences to lenders may include unwarranted levels of credit, legal, compliance, reputation, and liquidity risks due to the elevated risks inherent in these products. The Agencies note that many of these concerns are addressed in existing interagency guidance. The most prominent are the 1993 Interagency Guidelines for Real Estate Lending (Real Estate Guidelines), the 1999 Interagency Guidance on Subprime Lending, and the 2001 Expanded Guidance for Subprime Lending Programs (Expanded Subprime Guidance). 12 12 Federally insured credit unions should refer to LCU 04-CU-13—Specialized Lending Activities. National banks also should refer to 12 CFR 34.3(b) and (c), as well as 12 CFR part 30, Appendix C. While the 2006 Interagency Guidance on Nontraditional Mortgage Product Risks (NTM Guidance) may not explicitly pertain to products with the characteristics addressed in this Statement, it outlines prudent underwriting and consumer protection principles that institutions also should consider with regard to subprime mortgage lending. This Statement reiterates many of the principles addressed in existing guidance relating to prudent risk management practices and consumer protection laws. 13 13 As with the Interagency Guidance on Nontraditional Mortgage Product Risks, 71 FR 58609 (October 4, 2006), this Statement applies to all banks and their subsidiaries, bank holding companies and their nonbank subsidiaries, savings associations and their subsidiaries, savings and loan holding companies and their subsidiaries, and credit unions. Risk Management Practices Predatory Lending Considerations Subprime lending is not synonymous with predatory lending, and loans with the features described above are not necessarily predatory in nature. However, institutions should ensure that they do not engage in the types of predatory lending practices discussed in the Expanded Subprime Guidance. 14 Typically, predatory lending involves at least one of the following elements: 14 Federal credit unions should refer to 12 CFR 740.2 and 12 CFR 706 for information on prohibited practices. • Making loans based predominantly on the foreclosure or liquidation value of a borrower's collateral rather than on the borrower's ability to repay the mortgage according to its terms; • Inducing a borrower to repeatedly refinance a loan in order to charge high points and fees each time the loan is refinanced (“loan flipping”); or • Engaging in fraud or deception to conceal the true nature of the mortgage loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower. Institutions offering mortgage loans such as these face an elevated risk that their conduct will violate Section 5 of the Federal Trade Commission Act (FTC Act), which prohibits unfair or deceptive acts or practices. 15 15 The OCC, the Board, the OTS, and the FDIC enforce this provision under section 8 of the Federal Deposit Insurance Act. The OCC, Board, and FDIC also have issued supervisory guidance to the institutions under their respective jurisdictions concerning unfair or deceptive acts or practices. See OCC Advisory Letter 2002-3—Guidance on Unfair or Deceptive Acts or Practices, March 22, 2002, and 12 CFR part 30, Appendix C; Joint Board and FDIC Guidance on Unfair or Deceptive Acts or Practices by State-Chartered Banks, March 11, 2004. The OTS also has issued a regulation that prohibits savings associations from using advertisements or other representations that are inaccurate or misrepresent the services or contracts offered (12 CFR 563.27). The NCUA prohibits federally insured credit unions from using any advertising or promotional material that is inaccurate, misleading, or deceptive in any way concerning its products, services, or financial condition (12 CFR 740.2). Underwriting Standards Institutions should refer to the Real Estate Guidelines, which provide underwriting standards for all real estate loans. 16 The Real Estate Guidelines state that prudently underwritten real estate loans should reflect all relevant credit factors, including the capacity of the borrower to adequately service the debt. 17 The 2006 NTM Guidance details similar criteria for qualifying borrowers for products that may result in payment shock. 16 Refer to 12 CFR part 34, subpart D (OCC); 12 CFR part 208, subpart C (Board); 12 CFR part 365 (FDIC); 12 CFR 560.100 and 12 CFR 560.101 (OTS); and 12 CFR 701.21 (NCUA). 17 OTS Examination Handbook Section 212, 1-4 Family Residential Mortgage Lending, also discusses borrower qualification standards. Federally insured credit unions should refer to LCU 04-CU-13—Specialized Lending Activities. Prudent qualifying standards recognize the potential effect of payment shock in evaluating a borrower's ability to service debt. An institution's analysis of a borrower's repayment capacity should include an evaluation of the borrower's ability to repay the debt by its final maturity at the fully indexed rate, 18 assuming a fully amortizing repayment schedule. 19 18 The fully indexed rate equals the index rate prevailing at origination plus the margin to be added to it after the expiration of an introductory interest rate. For example, assume that a loan with an initial fixed rate of 7% will reset to the six-month London Interbank Offered Rate (LIBOR) plus a margin of 6%. If the six-month LIBOR rate equals 5.5%, lenders should qualify the borrower at 11.5% (5.5% + 6%), regardless of any interest rate caps that limit how quickly the fully indexed rate may be reached. 19 The fully amortizing payment schedule should be based on the term of the loan. For example, the amortizing payment for a “2/28” loan would be calculated based on a 30-year amortization schedule. For balloon mortgages that contain a borrower option for an extended amortization period, the fully amortizing payment schedule can be based on the full term the borrower may choose. One widely accepted approach in the mortgage industry is to quantify a borrower's repayment capacity by a debt-to-income

(DTI)ratio. An institution's DTI analysis should include, among other things, an assessment of a borrower's total monthly housing-related payments ( *e.g.* , principal, interest, taxes, and insurance, or what is commonly known as PITI) as a percentage of gross monthly income. This assessment is particularly important if the institution relies upon reduced documentation or allows other forms of risk layering. Risk-layering features in a subprime mortgage loan may significantly increase the risks to both the institution and the borrower. Therefore, an institution should have clear policies governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages. When risk-layering features are combined with a mortgage loan, an institution should demonstrate the existence of effective mitigating factors that support the underwriting decision and the borrower's repayment capacity. Recognizing that loans to subprime borrowers present elevated credit risk, institutions should verify and document the borrower's income (both source and amount), assets and liabilities. Stated income and reduced documentation loans to subprime borrowers should be accepted only if there are mitigating factors that clearly minimize the need for direct verification of repayment capacity. Reliance on such factors also should be documented. Typically, mitigating factors arise when a borrower with favorable payment performance seeks to refinance an existing mortgage with a new loan of a similar size and with similar terms, and the borrower's financial condition has not deteriorated. Other mitigating factors might include situations where a borrower has substantial liquid reserves or assets that demonstrate repayment capacity and can be verified and documented by the lender. However, a higher interest rate is not considered an acceptable mitigating factor. Workout Arrangements As discussed in the April 2007 interagency Statement on Working with Borrowers, the Agencies encourage financial institutions to work constructively with residential borrowers who are in default or whose default is reasonably foreseeable. Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower. Financial institutions should follow prudent underwriting practices in determining whether to consider a loan modification or a workout arrangement. 20 Such arrangements can vary widely based on the borrower's financial capacity. For example, an institution might consider modifying loan terms, including converting loans with variable rates into fixed-rate products to provide financially stressed borrowers with predictable payment requirements. 20 Institutions may need to account for workout arrangements as troubled debt restructurings and should follow generally accepted accounting principles in accounting for these transactions. The Agencies will not criticize financial institutions that pursue reasonable workout arrangements with borrowers. Further, existing supervisory guidance and applicable accounting standards do not require institutions to immediately foreclose on the collateral underlying a loan when the borrower exhibits repayment difficulties. Institutions should identify and report credit risk, maintain an adequate allowance for loan losses, and recognize credit losses in a timely manner. Consumer Protection Principles Fundamental consumer protection principles relevant to the underwriting and marketing of mortgage loans include: • Approving loans based on the borrower's ability to repay the loan according to its terms; and • Providing information that enables consumers to understand material terms, costs, and risks of loan products at a time that will help the consumer select a product. Communications with consumers, including advertisements, oral statements, and promotional materials, should provide clear and balanced information about the relative benefits and risks of the products. This information should be provided in a timely manner to assist consumers in the product selection process, not just upon submission of an application or at consummation of the loan. Institutions should not use such communications to steer consumers to these products to the exclusion of other products offered by the institution for which the consumer may qualify. Information provided to consumers should clearly explain the risk of payment shock and the ramifications of prepayment penalties, balloon payments, and the lack of escrow for taxes and insurance, as necessary. The applicability of prepayment penalties should not exceed the initial reset period. In general, borrowers should be provided a reasonable period of time (typically at least 60 days prior to the reset date) to refinance without penalty. 21 21 Federal credit unions are prohibited from charging prepayment penalties. 12 CFR 701.21. Similarly, if borrowers do not understand that their monthly mortgage payments do not include taxes and insurance, and they have not budgeted for these essential homeownership expenses, they may be faced with the need for significant additional funds on short notice. 22 Therefore, mortgage product descriptions and advertisements should provide clear, detailed information about the costs, terms, features, and risks of the loan to the borrower. Consumers should be informed of: 22 Institutions generally can address these concerns most directly by requiring borrowers to escrow funds for real estate taxes and insurance. • *Payment Shock.* Potential payment increases, including how the new payment will be calculated when the introductory fixed rate expires. 23 23 To illustrate: a borrower earning $42,000 per year obtains a $200,000 “2/28” mortgage loan. The loan's two-year introductory fixed interest rate of 7% requires a principal and interest payment of $1,331. Escrowing $200 per month for taxes and insurance results in a total monthly payment of $1,531 ($1,331 + $200), representing a 44% DTI ratio. A fully indexed interest rate of 11.5% (based on a six-month LIBOR index rate of 5.5% plus a 6% margin) would cause the borrower's principal and interest payment to increase to $1,956. The adjusted total monthly payment of $2,156 ($1,956 + $200 for taxes and insurance) represents a 41% increase in the payment amount and results in a 62% DTI ratio. • *Prepayment Penalties.* The existence of any prepayment penalty, how it will be calculated, and when it may be imposed. 24 24 See footnote 21. • *Balloon Payments.* The existence of any balloon payment. • *Cost of Reduced Documentation Loans.* Whether there is a pricing premium attached to a reduced documentation or stated income loan program. • *Responsibility for Taxes and Insurance.* The requirement to make payments for real estate taxes and insurance in addition to their loan payments, if not escrowed, and the fact that taxes and insurance costs can be substantial. Control Systems Institutions should develop strong control systems to monitor whether actual practices are consistent with their policies and procedures. Systems should address compliance and consumer information concerns, as well as safety and soundness, and encompass both institution personnel and applicable third parties, such as mortgage brokers or correspondents. Important controls include establishing appropriate criteria for hiring and training loan personnel, entering into and maintaining relationships with third parties, and conducting initial and ongoing due diligence on third parties. Institutions also should design compensation programs that avoid providing incentives for originations inconsistent with sound underwriting and consumer protection principles, and that do not result in the steering of consumers to these products to the exclusion of other products for which the consumer may qualify. Institutions should have procedures and systems in place to monitor compliance with applicable laws and regulations, third-party agreements and internal policies. An institution's controls also should include appropriate corrective actions in the event of failure to comply with applicable laws, regulations, third-party agreements or internal policies. In addition, institutions should initiate procedures to review consumer complaints to identify potential compliance problems or other negative trends. Supervisory Review The Agencies will continue to carefully review risk management and consumer compliance processes, policies, and procedures. The Agencies will take action against institutions that exhibit predatory lending practices, violate consumer protection laws or fair lending laws, engage in unfair or deceptive acts or practices, or otherwise engage in unsafe or unsound lending practices. Dated: June 28, 2007. John C. Dugan, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, June 28, 2007. Jennifer J. Johnson, Secretary of the Board. Dated at Washington, DC, the 27th day of June, 2007. By order of the Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. Dated: June 28, 2007. By the Office of Thrift Supervision. John Reich, Director. Dated: June 28, 2007. By the National Credit Union Administration. JoAnn M. Johnson, Chairman. [FR Doc. 07-3316 Filed 7-9-07; 8:45 am]

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