[Federal Register Volume 62, Number 185 (Wednesday, September 24, 1997)]
[Rules and Regulations]
[Pages 49912-49915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25450]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 343
[Department of the Treasury Circular, Public Debt Series No. 3-68]
Regulations Governing the Offering of United States Mortgage
Guaranty Insurance Company Tax and Loss Bonds
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Department) or (Treasury) is
issuing in final form an amendment to its regulations governing United
States Mortgage Guaranty Insurance Company Tax and Loss Bonds, referred
to as tax and loss bonds. These securities are available for purchase
only by companies organized and engaged in the business of writing
mortgage guaranty insurance within the United States. Previously, these
securities were issued in definitive (paper) form. They were only
available in a ten year maturity. The Department has determined that
maintaining and servicing these securities in definitive form is not
cost-effective. The Department had also received many requests to offer
a twenty year maturity. This final rule will reduce administrative
overhead and costs by providing that on or after the effective date of
the regulation, the securities will only be offered in book-entry form
and that the securities may, at the option of the holder, be converted
to book-entry form. It will also provide for maturities of either ten
or twenty years. Minor changes to redemption notices have been added
and all addresses have been updated.
EFFECTIVE DATE: September 24, 1997.
ADDRESSES: Copies are available for downloading from the Bureau of the
Public Debt home page at: http://www.publicdebt.treas.gov/or may be
obtained from the Division of Special Investments, 200 3rd St., P.O.
Box 396, Parkersburg, WV 26106-0396.
FOR FURTHER INFORMATION CONTACT: Howard Stevens, Director, Division of
Special Investments, at 304-480-7752, or Edward C. Gronseth, Deputy
Chief Counsel, at 304-480-5192 or Jim Kramer-Wilt, Attorney/Adviser,
Office of the Chief Counsel, at 304-480-5190.
SUPPLEMENTARY INFORMATION:
I. Background
The Department of the Treasury, Bureau of the Public Debt, is
providing for the voluntary conversion of outstanding definitive tax
and loss securities to book-entry form and further providing for the
issuance of only book-entry securities. This conversion will improve
the cost-effectiveness of this program and the ease of administering
transactions involving these securities.
II. Section-by-Section Summary
Subpart A--General Information
Provisions included in the general information paragraph apply to
the offering of these securities. Part 343 has been substantially
rewritten. Changes from the 1968 regulations are as follows:
(1) Paragraph 343.1--This paragraph has been renumbered from 343.6.
(2) Paragraph 343.1(a)--This paragraph has been renumbered from
343.6(a). It is amended to state that copies of 31 CFR part 306 may be
obtained from the Division of Special Investments.
(3) Paragraph 343.1(b)--This is a new paragraph titled Issuance. It
states that on or after the effective date of this regulation, tax and
loss bonds will be issued only in book-entry form on the books of the
Treasury Department. The bonds will now be issued with ten or twenty
year maturities designated by the purchaser and are non-interest
bearing. Transfer by sale, exchange, assignment, pledge, or otherwise
is prohibited. The bonds may be reissued as provided in paragraph
343.4.
(4) Paragraph 343.1(c)--This paragraph has been renumbered from
343.6(b). It is amended to state that selected Federal Reserve Banks
and branches, as fiscal agents of the United States, may be designated
to perform such services requested of them by the Secretary of the
Treasury in connection with purchases, transactions and redemptions of
these bonds.
(5) Paragraph 343.1(d)--This is a new paragraph titled Debt limit
contingency. It states that the Department of the Treasury reserves the
right to change or suspend the terms and conditions of the offering of
tax and loss securities. This right includes provisions relating to the
purchase and redemption of these bonds and any related notices. This
may be done at any time the Secretary determines that the issuance of
obligations sufficient to conduct the orderly financing operations of
the United States cannot be made without exceeding the statutory debt
limit. Announcement of such changes shall be provided by such means as
the Secretary deems appropriate.
(6) 343.1(3)--This paragraph has been renumbered from 343.3. It is
amended to state that upon maturity of a bond, the Department will make
payment of the principal amount due to the owner. A bond scheduled for
maturity on a non-business day will be redeemed on the next business
day with the same force and effect as if made on the maturity date.
(7) Paragraph 343.1(f)--This paragraph is titled Reservations. It
includes language of the former paragraph 343.3. It is revised to state
that the Secretary of the Treasury may supplement or amend the terms of
this circular or any related amendments and supplements. Transaction
requests, including purchases or redemptions of bonds, are not
acceptable if unsigned, inappropriately completed, or not timely
submitted. The non-acceptance of inappropriate transaction requests is
final. The authority of the Secretary to waive regulations under 31 CFR
306.126 applies to part 343.
(8) Paragraph 343.1(g)--This is a new paragraph titled Forms and
additional information. It states that PD Form 3871 ``Application for
Issue of United States Mortgage Guaranty Insurance Company Tax and Loss
Bonds'', Fedwire instructions and other information will be furnished
by the Division of Special Investments upon request. Interested parties
may write to the Division of Special Investments or may telephone at
(304) 480-7752. Application forms may also be downloaded from the
Internet at Public Debt's home page at: http://
www.publicdebt.treas.gov/.
Subpart B--Tax and Loss Bonds
This is a new subpart which includes information on the issue date,
purchase, redemption, reissue and taxation of these bonds.
(9) Paragraph 343.2--This paragraph has been renumbered. It
combines the former paragraphs 343.1(c) and 343.2. This paragraph is
revised to state that the issue date must be a business day. The
securities will also be issued as of the date of receipt of Form PD F
3871, along with remittance of funds for the full amount of the
bond(s). Applications under this offering must be submitted to the
Division of Special Investments. An application may be submitted by fax
at (304) 380-7786 or (304) 480-6818, by mail or by other carrier.
Applications submitted by mail should be sent by certified or
registered mail.
(10) Paragraph 343.2(b)--This paragraph has been renumbered from
[[Page 49913]]
343.2. It is revised to state that tax and loss bonds may be purchased
only from the Division of Special Investments.
(11) Paragraph 343(a)--This sub-paragraph has been renumbered from
343.3. It has been revised to state that partial redemptions of bonds
may be requested in any whole dollar amount; however, an account
balance of less that $1,000 will be redeemed in total. The address to
which redemptions are sent is changed to the address now listed in
paragraph 343.3(d).
(12) Paragraph 343.3(b)--This sub-paragraph has been renumbered
from 343.3. This paragraph has been revised to state that payment will
be made by the Automated Clearing House (ACH) method to the owner's
account at a financial institution designated by the owner. To the
extent applicable, provisions of Paragraph 357.26 on ``Payments'', and
provisions of 31 CFR part 370, shall govern ACH payments made under
this offering. The Department of the Treasury may employ alternate
payment procedures, in lieu of ACH, in any case or class of cases where
operational considerations require such action.
(13) Paragraph 343.3(c)--This is a new paragraph titled Book-entry.
It states that bonds will be redeemed automatically upon maturity.
Payment will be made in accordance with the ACH payment instructions on
file. Redemptions prior to maturity will be made upon receipt of a
redemption request. Notice of redemption prior to maturity must be
submitted by letter, on company letterhead, to the Division of Special
Investments or faxed to (304) 480-7786 or (304) 480-6818.
The notice must be received by the Division of Special Investments
not less than three business days prior to the requested redemption
date. It must contain the owner's name and Tax Identification Number,
the requested redemption date, any changed payment routing
instructions, the case number(s) to be redeemed, including original
issue date(s) and the amount to be redeemed.
(14) Paragraph 343.3(d)--This is a new paragraph titled Registered
and provides for the redemption of a registered tax and loss bond. The
bond(s) with the assignment for redemption properly completed and
executed must be presented to the Division of Special Investments.
Payment routing instructions must also be included with the bond(s) at
redemption. Upon partial redemption of a registered bond, the remaining
balance will be reissued in book-entry form with the original issue and
maturity date.
(15) Paragraph 343.4--This paragraph has been renumbered from
343.5.
(16) 343.4(a)--This paragraph has been renumbered from 343.5(a). It
is revised to state that reissues must be sent to the Division of
Special Investments. It also states that a bond will only be reissued
in book-entry form but will continue to bear the same issue date and
maturity as the original bond.
(17) 343.4(b)--This paragraph has been renumbered from 343.5(b).
(18) 343.4(c)--This paragraph has been renumbered from 343.5(c).
(19) 343.4(d)--This paragraph has been renumbered from 343.5(d).
(20) 343.4(e)--This is a new paragraph titled Conversion to book-
entry. It provides that any owner of tax and loss bonds held in
registered form after the effective date of this regulation may submit
the bonds to the Division of Special Investments for conversion to
book-entry.
(21)--Paragraph 343.5--This paragraph has been renumbered from
343.4.
Procedural Requirements
It has been determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866. Therefore, an
assessment of anticipated benefits, costs and regulatory alternatives
is not required.
This final rule relates to matters of public contract. The notice
and public procedures requirements of the Administrative Procedure Act
are inapplicable, pursuant to 5 U.S.C. 553(a)(2). As no notice of
proposed rulemaking is required, the provisions of the Regulatory
Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
Because, as stated above, this regulation is being issued without
prior notice and public procedure, the collection of information
contained in this regulation has been reviewed under the requirements
of the Paperwork Reduction Act (44 U.S.C. 3507 (j)) and, pending
receipt and evaluation of public comments, approved by the Office of
Management and Budget (OMB) under control number 1535-0127. An agency
may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless it displays a valid control number
assigned by OMB.
Comments concerning the collection of information should be
directed to OMB, Attention: Desk Officer for the Bureau of the Public
Debt, Office of Information and Regulatory Affairs, Washington, DC,
20503, with copies to the Bureau of the Public Debt, Office of
Administration, Graphics, Printing and Records Branch, Room 301, 200
Third Street, Parkersburg, WV 26106. Any such comments should be
submitted not later than November 24, 1997. Comments are specifically
requested concerning:
1. Whether the proposed collection of information is necessary for
the proper performance of the functions of the Bureau of the Public
Debt, including whether the information will have practical utility;
2. The accuracy of the estimated burden associated with the
proposed collection of information (see below);
3. How to enhance the quality, utility and clarity of the
information to be collected;
4. How to minimize the burden of complying with the proposed
collection of information, including the application of automated
collection techniques or other forms of information technology; and
5. Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
The collection of information in this regulation is in 31 CFR
343.2, 343.3 and 343.4. This information is required to establish and
maintain accounts for holding Mortgage Guaranty Insurance Company Tax
and Loss Bonds. This information will be used to issue a Statement of
Account to the entity, establish issue and maturity dates for the
bonds, and provide electronic payment routing instructions for the
proceeds. The collection of information is required to obtain a
benefit. The likely respondents are companies engaged in the business
of writing mortgage guaranty insurance with the United States.
The estimated total annual reporting burden: 20 hours.
The estimated average annual burden hours per respondent: 15
minutes.
The estimated number of respondents: 37 respondents.
The estimated annual frequency of responses: 2.16 times.
List of Subjects in 31 CFR Part 343
United States Mortgage Guaranty Insurance Company Tax and Loss
Bonds.
Dated: September 19, 1997.
Gerald Murphy,
Fiscal Assistant Secretary.
For the reasons set forth in the preamble, part 343 of Title 31 of
the Code of Federal Regulations is revised to read as follows:
[[Page 49914]]
PART 343--REGULATIONS GOVERNING THE OFFERING OF UNITED STATES
MORTGAGE GUARANTY INSURANCE COMPANY TAX AND LOSS BONDS
Subpart A--General Information
Sec.
343.0 Offering of bonds.
343.1 General provisions.
Subpart B--Tax and Loss Bonds
343.2 Issue date and purchase.
343.3 Redemption.
343.4 Reissue.
344.5 Taxation.
Authority: 5 U.S.C. 301; 26 U.S.C. 832; 31 U.S.C. 3102.
Subpart A--General Information
Sec. 343.0 Offering of bonds.
The Secretary of the Treasury, under the authority of the Second
Liberty Bond Act, as amended, and pursuant to paragraph 832(e) of the
Internal Revenue Code of 1954, offers for sale only to companies
organized and engaged in the business of writing mortgage guaranty
insurance within the United States, bonds of the United States
designated as Mortgage Guaranty Insurance Company Tax and Loss Bonds,
hereinafter referred to as tax and loss bonds. The bonds are issued in
a minimum amount of $1,000 or in any larger amount, in increments of
not less than $1.00. This offering will continue until terminated by
the Secretary of the Treasury.
Sec. 343.1 General provisions.
(a) Regulations. Tax and loss bonds are subject to the general
regulations with respect to United States securities, which are set
forth in the Department of the Treasury Circular No. 300 (31 CFR part
306), to the extent applicable. Copies of the circular may be obtained
from the Bureau of the Public Debt, Division of Special Investments,
Room 309, 200 Third St., P.O. Box 396, Parkersburg, WV 26106-0396 or
downloaded from Public Debt's home page on the Internet at: http://
www.publicdebt.treas.gov/.
(b) Issuance. Tax and loss bonds are issued in book-entry form on
the books of the Treasury that are maintained by the Division of
Special Investments. The bonds are issued with 10 or 20 year maturities
as designated by the purchaser. These bonds are non-interest bearing.
Any transfer by sale, exchange, assignment, pledge or otherwise, is
prohibited. The bonds may be reissued as provided in Sec. 343.4.
(c) Fiscal agents. Selected Federal Reserve Banks and Branches, as
fiscal agents of the United States, may be designated to perform such
services requested of them by the Secretary of the Treasury in
connection with the purchase, redemption and other transactions
involving these bonds.
(d) Debt limit contingency. The Department of the Treasury reserves
the right to change or suspend the terms and conditions of this
offering, including provisions relating to the purchase of, and
redemption of, the bonds as well as notices relating hereto, at any
time the Secretary determines that the issuance of obligations
sufficient to conduct the orderly financing operations of the United
States cannot be made without exceeding the statutory debt limit.
Announcement of such changes shall be provided by such means as the
Secretary deems appropriate.
(e) General redemption provisions. A bond may not be called for
redemption by the Secretary of the Treasury prior to maturity. When the
bond matures, payment will be made of the principal amount due to the
owner. A bond scheduled for maturity on a non-business day will be
redeemed on the next business day.
(f) Reservations. The Secretary of the Treasury may at any time, or
from time to time, supplement or amend the terms of this circular or
any related amendments or supplements. Transaction requests, including
purchases or redemptions of bonds, are not acceptable if unsigned,
inappropriately completed, or not timely submitted. Any of these
actions shall be final. The authority of the Secretary to waive
regulations under 31 CFR 306.126 applies to part 343.
(g) Forms and additional information. The application form for
subscriptions, Fedwire instructions and other information will be
furnished by the Division of Special Investments upon request by
writing to the Division of Special Investments or by calling (304) 480-
7752. Application forms may also be downloaded from the Internet at
Public Debt's home page at: http://www.publicdebt.treas.gov/.
Subpart B--Tax and Loss Bonds
Sec. 343.2 Issue date and purchase.
(a) Issue date. The issue date must be a business day. The bonds
will be issued as of the date of receipt of Form PD F 3871
``Application for Issue of United States Mortgage Guaranty Insurance
Company Tax and Loss Bonds'' and receipt of the remittance of funds for
the full amount of the bond(s). Applications under this offering must
be submitted to the Division of Special Investments. An application may
be submitted by fax at (304) 480-7786 or (304) 480-6818, by mail, or by
other carrier. Applications submitted by mail should be sent by
certified or registered mail.
(b) Purchase. Tax and loss bonds may only be purchased from the
Division of Special Investments. The purchaser will instruct their
financial institution to submit the exact amount of funds on the
requested issue date to the Division of Special Investments via the
Fedwire funds transfer system, with credit directed to the Treasury's
General Account, according to wire instructions obtained from the
Division of Special Investments (see Sec. 343.1(g)). Full payment
should be submitted by 3:00 P.M. Eastern time to ensure that settlement
of the transaction occurs.
[Approved by the Office of Management and Budget under control
number 1535-0127.]
Sec. 343.3 Redemption.
(a) General. Tax and loss bonds may not be called for redemption by
the Secretary of the Treasury prior to maturity, but may be redeemed in
whole or in part at the owner's option at any time after three months
from issue date. The Director of the Internal Revenue Service District
in which the owner's principal place of business is located will be
given notice of all redemptions. Partial redemptions of bonds may be
requested in any whole dollar amount; however, an account balance of
less than $1,000 will be redeemed in total.
(b) Method of payment. Payment will be made by the Automated
Clearing House (ACH) method for the owner's account at a financial
institution designated by the owner. To the extent applicable,
provisions of Sec. 357.26, Payments, and provisions of 31 CFR part 370,
shall govern ACH payments made under this offering. The Department of
the Treasury may employ alternate payment procedures in lieu of ACH in
any case or class of cases where operational considerations require
such action.
(c) Book-entry. Bonds will be redeemed automatically upon maturity.
Payment will be made in accordance with the ACH payment instructions on
file. Redemptions prior to maturity will be made upon receipt of a
redemption request. Notice of redemption prior to maturity must be
submitted in writing on company letterhead to the Division of Special
Investments, or faxed to (304) 480-7786 or to (304) 480-6818. The
notice must be received by the Division of Special Investments not less
than three business days prior to the requested redemption date. It
must contain the owner's name and Tax Identification Number, the
requested
[[Page 49915]]
redemption date, any changed payment routing instructions, the case
number(s) to be redeemed, including original issue date(s), and the
amount to be redeemed.
(d) Registered. To obtain redemption, a bond with the assignment
for redemption properly completed and executed must be presented to the
Division of Special Investments. Payment routing instructions must also
be included with the bond at redemption. Upon partial redemption of a
registered bond, the remaining balance will be reissued in book-entry
form with the original issue and maturity date.
[Approved by the Office of Management and Budget under control
number 1535-0127.]
Sec. 343.4 Reissue.
(a) General. Reissue of a tax and loss bond may be made only under
the conditions specified in this paragraph. A request for reissue must
be made by an officer of the beneficial owner who is authorized to
assign the bond for redemption. The request must be submitted to the
Division of Special Investments. A bond will only be reissued in book-
entry form and will bear the same issue date and maturity as the
original bond.
(b) Correction of error. The reissue of a bond may be made to
correct an error in the original issue upon an appropriate request,
supported by satisfactory proof of the error.
(c) Change of name. An owner whose name is changed in any legal
manner after the issue of the bond should submit the bond with a
request for reissue, substituting the new name for the name inscribed
on the bond. The signature on the request for reissue should show the
new name, the legal reason which caused the change to be made and the
former name. It must be supported by satisfactory proof of the change
of name.
(d) Legal succession. A bond registered in the name of a company
which has been succeeded by another company as the result of a merger,
consolidation, incorporation, reincorporation, conversion,
reorganization, or which has been lawfully succeeded in any manner
whereby the business or activities of the original organization are
continued without substantial change, will be paid to or reissued in
the name of the successor upon an appropriate request on its behalf,
supported by satisfactory evidence of successorship.
(e) Conversion to book-entry. Although not required, any owner of
tax and loss bonds held in registered form after the effective date of
this regulation, may submit those bonds to the Division of Special
Investments, for conversion to book-entry form.
[Approved by the Office of Management and Budget under control
number 1535-0127.]
Sec. 343.5 Taxation
Tax and loss bonds will be exempt from all taxation now or
hereafter imposed on the principal by any state or any possession of
the United States or of any local taxing authority.
[FR Doc. 97-25450 Filed 9-22-97; 12:17 pm]
BILLING CODE 4810-39-P