cfr_sections
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95 rows where agency = "RHS" and part_number = 3550 sorted by section_id
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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 7:7:15.1.14.2.2.1.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.1 Applicability. | RHS | This part sets forth policies for the direct single family housing loan programs operated by the Rural Housing Service (RHS) of the U.S. Department of Agriculture (USDA). It addresses the requirements of sections 502 and 504 of the Housing Act of 1949, as amended, and includes policies regarding both loan and grant origination and servicing. Procedures for implementing these regulations can be found in program handbooks, available in any Rural Development office. Any provision on the expenditure of funds under this part is contingent upon the availability of funds. | |||||
| 7:7:15.1.14.2.2.1.1.10 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.10 Definitions. | RHS | [61 FR 59779, Nov. 22, 1996; 61 FR 65266, Dec. 11, 1996, as amended at 67 FR 78329, Dec. 24, 2002; 70 FR 6552, Feb. 8, 2005; 72 FR 73255, Dec. 27, 2007; 73 FR 49592, Aug. 22, 2008; 79 FR 74016, Dec. 15, 2014; 80 FR 23678, Apr. 29, 2015; 84 FR 29038, June 21, 2019; 87 FR 6770, Feb. 7, 2022; 90 FR 203, Jan. 3, 2025] | Acceleration. Demand for immediate repayment of the entire balance of a debt if the security instruments are breached. Adjusted income. Used to determine whether an applicant is income-eligible. Adjusted income provides for deductions to account for varying household circumstances and expenses. See § 3550.54 for a complete description of adjusted income. Adjustment. An agreement to release a debtor from liability generally upon receipt of an initial lump sum representing the maximum amount the debtor can afford to pay and periodic additional payments over a period of up to 5 years. Agency-approved intermediary. An affordable housing nonprofit, public agency, or State Housing Finance Agency approved by RHS to perform quality assurance reviews on packages prepared by Agency-certified loan application packagers through their qualified employers. See § 3550.75 for further details. Agency-certified loan application packager. An individual certified by RHS under this subpart to package section 502 loan applications while employed (either as an employee or as an independent contractor) by a qualified employer. See § 3550.75 for further details. Amortized payment. Equal monthly payments under a fully amortized mortgage loan that provides for the scheduled payment of interest and principal over the term of the loan. Applicant. An adult member of the household who will be responsible for repayment of the loan. Assumption. The procedure whereby the transferee becomes liable for all or part of the debt of the transferor. Borrower. A recipient who is indebted under the section 502 or 504 programs. Cancellation. A decision to cease collection activities and release the debtor from personal liability for any remaining amounts owed. Compromise. An agreement to release a debtor from liability upon receipt of a specified lump sum that is less than the total amount due. Conditional commitment. A determination that a proposed dwelling will qualify as a program-eligible property. The conditional commitment does… | ||||
| 7:7:15.1.14.2.2.1.1.11 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.11 State Director assessment of homeownership education. | RHS | [72 FR 5156, Feb. 5, 2007, as amended at 87 FR 6770, Feb. 7, 2022] | (a) State Directors will assess the availability of certified homeownership education in their respective states on an as-needed basis but at a minimum every three years and maintain an updated listing of providers and their reasonable costs. (b) The order of preference for homeownership education formats will be determined by the Agency based on factors such as industry practice and availability. (c) Homeownership education must include a letter or certificate of completion and be provided by homeownership education counselors that are certified by any of the following: (1) The Department of Housing and Urban Development (HUD); (2) NeighborWorks America (NWA); (3) The National Federation of Housing Counselors (NFHC); (4) National American Indian Housing Council (NAIHC); or (5) The State Housing Finance Agency or other qualified organization approved by the State Director. (d) The provider will issue a letter or certificate of completion to document that the borrower has satisfactory knowledge of these minimum topics: (1) Preparing for homeownership (evaluate readiness to go from rental to homeownership), (2) Budgeting (pre and post-purchase), (3) Credit counseling, (4) Shopping for a home, (5) Lender differences (predatory lending), (6) Obtaining a mortgage (mortgage process, different types of mortgages), (7) Loan closing (closing process, documentation, closing costs), (8) Post-occupancy counseling (delinquency and foreclosure prevention), (9) Life as a homeowner (homeowner warranties, maintenance and repairs), (e) The provider may tailor the homeownership education training to the needs of the borrower to ensure satisfactory knowledge of the topics listed in paragraph (d) of this section. | ||||
| 7:7:15.1.14.2.2.1.1.12 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | §§ 3550.12-3550.49 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.1.1.13 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.50 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78329, Dec. 24, 2002] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. You are not required to respond to this collection of information unless it displays a currently valid OMB control number. | ||||
| 7:7:15.1.14.2.2.1.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.2 Purpose. | RHS | The purpose of the direct RHS single family housing loan programs is to provide low- and very low-income people who will live in rural areas with an opportunity to own adequate but modest, decent, safe, and sanitary dwellings and related facilities. The section 502 program offers persons who do not currently own adequate housing, and who cannot obtain other credit, the opportunity to acquire, build, rehabilitate, improve, or relocate dwellings in rural areas. The section 504 program offers loans to very low-income homeowners who cannot obtain other credit to repair or rehabilitate their properties. The section 504 program also offers grants to homeowners age 62 or older who cannot obtain a loan to correct health and safety hazards or to make the unit accessible to household members with disabilities. | |||||
| 7:7:15.1.14.2.2.1.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.3 Civil rights. | RHS | RHS will administer its programs fairly, and in accordance with both the letter and the spirit of all equal opportunity and fair housing legislation and applicable executive orders. Loans, grants, services, and benefits provided under this part shall not be denied to any person based on race, color, national origin, sex, religion, marital status, familial status, age, physical or mental disability, receipt of income from public assistance, or because the applicant has, in good faith, exercised any right under the Consumer Credit Protection Act (15 U.S.C. 1601 et seq. ). All activities under this part shall be accomplished in accordance with the Fair Housing Act (42 U.S.C. 3601-3620), Executive Order 11246, and Executive Order 11063, as amended by Executive Order 12259, as applicable. The civil rights compliance requirements for RHS are in 7 CFR part 1901, subpart E. | |||||
| 7:7:15.1.14.2.2.1.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.4 Reviews and appeals. | RHS | Whenever RHS makes a decision that is adverse to a participant, RHS will provide the participant with written notice of such adverse decision and the participant's rights to a USDA National Appeals Division hearing in accordance with 7 CFR part 11. Any adverse decision, whether appealable or non-appealable may be reviewed by the next-level RHS supervisor. | |||||
| 7:7:15.1.14.2.2.1.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.5 Environmental requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 81 FR 11048, Mar. 2, 2016] | (a) Policy. RHS will consider environmental quality as equal with economic, social, and other relevant factors in program development and decision-making processes. RHS will take into account potential environmental impacts of proposed projects by working with RHS applicants, other federal agencies, Indian tribes, State and local governments, and interested citizens and organizations in order to formulate actions that advance the program's goals in a manner that will protect, enhance, and restore environmental quality. (b) Regulatory references. Processing or servicing actions taken under this part must comply with the environmental review requirements in accordance with 7 CFR part 1970, and 7 CFR part 1924, which addresses lead-based paint. | ||||
| 7:7:15.1.14.2.2.1.1.6 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.6 State law or State supplement. | RHS | State and local laws and regulations, and the laws of federally recognized Indian tribes, may affect RHS implementation of certain provisions of this regulation, for example, with respect to the treatment of liens, construction, or environmental policies. Supplemental guidance may be issued in the case of any conflict or significant differences. | |||||
| 7:7:15.1.14.2.2.1.1.7 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.7 Demonstration programs. | RHS | From time to time, RHS may authorize limited demonstration programs. The purpose of these demonstration programs is to test new approaches to offering housing under the statutory authority granted to the Secretary. Therefore, such demonstration programs may not be consistent with some of the provisions contained in this part. However, any program requirements that are statutory will remain in effect. Demonstration programs will be clearly identified as such. | |||||
| 7:7:15.1.14.2.2.1.1.8 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.8 Exception authority. | RHS | An RHS official may request, and the Administrator or designee may make, an exception to any requirement or provision of this part or address any omission of this part that is consistent with the applicable statute if the Administrator determines that application of the requirement or provision, or failure to take action in the case of an omission, would adversely affect the Government's interest. | |||||
| 7:7:15.1.14.2.2.1.1.9 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | A | Subpart A—General | § 3550.9 Conflict of interest. | RHS | [61 FR 59779, Nov. 22, 1996; 61 FR 65266, Dec. 11, 1996; 75 FR 59060, Sept. 27, 2010] | (a) Objective. It is the objective of RHS to maintain the highest standards of honesty, integrity, and impartiality by employees. To reduce the potential for employee conflict of interest, all processing, approval, servicing, or review activity will be conducted in accordance with 7 CFR part 1900, subpart D by RHS employees who: (1) Are not themselves the applicant or borrower; (2) Are not members of the family or close known relatives of the applicant or borrower; (3) Do not have an immediate working relationship with the applicant or borrower, the employee related to the applicant or borrower, or the employee who would normally conduct the activity; or (4) Do not have a business or close personal association with the applicant or borrower. (b) Applicant or borrower responsibility. The applicant or borrower must disclose any known relationship or association with an RHS employee when such information is requested. (c) RHS employee responsibility. An RHS employee must disclose any known relationship or association with a recipient, regardless of whether the relationship or association is known to others. RHS employees or members of their families may not purchase a Real Estate Owned (REO) property, security property from a borrower, or security property at a foreclosure sale. Loan closing agents who have been involved with a particular property, as well as members of their families, are also precluded from purchasing such properties. | ||||
| 7:7:15.1.14.2.2.2.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.51 Program objectives. | RHS | Section 502 of the Housing Act of 1949, as amended authorizes the Rural Housing Service (RHS) to provide financing to help low- and very low-income persons who cannot obtain credit from other sources obtain adequate housing in rural areas. Resources for the section 502 program are limited, and therefore, applicants are required to use section 502 funds in conjunction with funding or financing from other sources, if feasible. Sections 3550.52 through 3550.73 set forth the requirements for originating loans on program terms. Section 3550.74 describes the differences for originating loans on nonprogram (NP) terms. | |||||
| 7:7:15.1.14.2.2.2.1.10 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.60 Escrow account. | RHS | RHS may require that customers deposit into an escrow account amounts necessary to ensure that the account will contain sufficient funds to pay real estate taxes, hazard and flood insurance premiums, and other related costs when they are due in accordance with the Real Estate Settlement and Procedures Act of 1974 (RESPA) (12 U.S.C. 2601, et seq. ) and section 501(e) of the Housing Act of 1949, as amended. | |||||
| 7:7:15.1.14.2.2.2.1.11 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.61 Insurance. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 70 FR 6552, Feb. 8, 2005; 73 FR 49592, Aug. 22, 2008] | (a) Borrower responsibility. Any borrower with a secured indebtedness in excess of $15,000 at the time of loan approval must furnish and continually maintain hazard insurance on the security property, with companies, in amounts, and on terms and conditions acceptable to RHS including a “loss payable clause” payable to RHS to protect the Government's interest. (b) Amount. The borrower is required to insure the dwelling and any other essential buildings in an amount equal to the insurable value of the dwelling and other essential buildings. However, in cases where the borrower's outstanding secured indebtedness is less than the insurable value of the dwelling and other essential buildings, the borrower may elect a lower coverage provided it is not less than the outstanding secured indebtedness. If the borrower fails, or is unable, to insure the secured property, RHS will force place insurance and charge the cost to the borrower's account. Force place insurance only provides insurance coverage to the Agency and does not provide any direct coverage or benefit to the borrower. The amount of the lender-placed coverage will generally be the property's last known insured value. (c) Flood insurance. Flood insurance must be obtained and maintained for the life of the loan for all property located in a Special Flood Hazard Area (SFHA) as determined by the Federal Emergency Management Agency (FEMA). RHS actions will be consistent with 7 CFR part 1806, subpart B which addressed flood insurance requirements. If flood insurance through FEMA's National Flood Insurance Program is not available in an SFHA, the property is not eligible for federal financial assistance. (d) Losses. (1) Loss deductible clauses for required insurance coverage may not exceed the generally accepted minimums based on current industry standards and local market conditions. (2) Customers must immediately notify RHS of any loss or damage to insured property and collect the amount of the loss from the insurance company. (3) Depending on the amount o… | ||||
| 7:7:15.1.14.2.2.2.1.12 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.62 Appraisals. | RHS | (a) Requirement. An appraisal is required when the debt to be secured exceeds $15,000 or whenever RHS determines that it is necessary to establish the adequacy of the security. Appraisals must be made in accordance with the Uniform Standards of Professional Appraisal Practices. When other real estate is taken as additional security, it will be appraised if it represents a substantial portion of the security for the loan. (b) Fees. RHS will charge a fee for each loan application that requires an appraisal, except the appraisal fee is not required on appraisals done for subsequent loans needed to make minimal, essential repairs or in cases where another party provides an appraisal which is acceptable to RHS. Fees collected in connection with a dwelling constructed under an approved conditional commitment will be paid to the contractor at closing to offset the cost of the real estate appraisal that is included in the conditional commitment fee. | |||||
| 7:7:15.1.14.2.2.2.1.13 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.63 Maximum loan amount. | RHS | [61 FR 59779, Nov. 22, 1996; 61 FR 65266, Dec. 11, 1996, as amended at 67 FR 78330, Dec. 24, 2002; 84 FR 29038, June 21, 2019] | Total secured indebtedness must not exceed the area loan limit or market value limitations specified in paragraphs (a) or (b) of this section, whichever is lower. Any loan amount for the RHS appraisal, tax monitoring fee, and the charge to establish an escrow account for taxes and insurance will not be subject to the limitations specified below. This section does not apply to loans on NP terms. (a) Area loan limit. (1) The area loan limit is the maximum value of the property RHS will finance in a given locality. This limit is based on a percentage(s) of the applicable local HUD section 203(b) limit. The percentage(s) will be determined by the Agency and published in the program handbook. The area loan limits will be reviewed at least annually and posted to the Agency website. (2) The maximum loan limit calculated under paragraph (a)(1) will be reduced in the following situations: (i) When the applicant owns the site or is purchasing the site at a sales price below market value, the market value of the lot will be deducted from the maximum loan limit, and (ii) When an applicant is receiving a housing grant or other form of affordable housing assistance for purposes other than closing costs, the amount(s) of such grants and affordable housing assistance will be deducted from the maximum loan limit. (3) The maximum loan limit for self-help housing will be calculated by adding the total of the market value of the lot (including reasonable and typical costs of site development), the cost of construction, and the value of sweat equity. The total of these three factors cannot exceed the limit established in paragraph (a)(1) of this section. (b) Market value limitation. (1) The market value limitation is 100 percent of market value for existing housing and for new dwellings for which RHS will receive adequate documentation of construction quality and the source of such documentation is acceptable to RHS. (2) The market value limitation is 90 percent of market value for new dwellings for which adequate docume… | ||||
| 7:7:15.1.14.2.2.2.1.14 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.64 Down payment. | RHS | [73 FR 49593, Aug. 22, 2008] | Elderly families must use any net family assets in excess of $20,000 towards a down payment on the property. Non-elderly families must use net family assets in excess of $15,000 towards a down payment on the property. Applicants may contribute assets in addition to the required down payment to further reduce the amount to be financed. | ||||
| 7:7:15.1.14.2.2.2.1.15 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.65 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.2.1.16 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.66 Interest rate. | RHS | [67 FR 78330, Dec. 24, 2002] | Loans will be written using the applicable RHS interest rate in effect at loan approval or loan closing, whichever is lower. Information about current interest rates is available in any Rural Development office. | ||||
| 7:7:15.1.14.2.2.2.1.17 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.67 Repayment period. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6772, Feb. 7, 2022] | Loans will be scheduled for repayment over a period that does not exceed the expected useful life of the property as a dwelling. The loan repayment period will not exceed: (a) Thirty-three years in all cases except as noted in paragraphs (b), (c), and (d) of this section. (b) Thirty-eight years: (1) For initial loans, or subsequent loans made in conjunction with an assumption, if the applicant's adjusted income does not exceed 60 percent of the area adjusted median income and the longer term is necessary to show repayment ability. (2) For subsequent loans not made in conjunction with an assumption if the applicant's initial loan was for a period of 38 years, the applicant's adjusted income at the time the subsequent loan is approved does not exceed 60 percent of area adjusted median income, and the longer terms is necessary to show repayment ability. (c) Ten years for loans not exceeding an amount determined by the Agency based on factors such as the performance of unsecured loans in the Agency's portfolio and the Agency's budgetary needs, but not to exceed eight percent of the national average area loan limit. (d) Thirty years for manufactured homes. | ||||
| 7:7:15.1.14.2.2.2.1.18 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.68 Payment subsidies. | RHS | [72 FR 73255, Dec. 27, 2007, as amended at 79 FR 28810, May 20, 2014; 84 FR 29038, June 21, 2019] | RHS administers three types of payment subsidies: interest credit, payment assistance method 1, and payment assistance method 2. Payment subsidies are subject to recapture when the borrower transfers title or ceases to occupy the property. (a) Eligibility for payment subsidy. (1) Applicants or borrowers who receive loans on program terms are eligible to receive payment subsidy if they personally occupy the property and have adjusted income at or below the applicable moderate-income limit. (2) Payment subsidy may be granted for initial loans or subsequent loans made in conjunction with an assumption only if the term of the loan is 25 years or more. (3) Payment subsidy may be granted for subsequent loans not made in conjunction with an assumption if the initial loan was for a term of 25 years or more. (b) Determining type of payment subsidy. (1) A borrower currently receiving interest credit will continue to receive it for the initial loan and for any subsequent loan for as long as the borrower is eligible for and remains on interest credit. (2) If a borrower receiving payment assistance using payment assistance method 1 receives a subsequent loan, payment assistance method 2 will be used to calculate the subsidy for the initial loan and subsequent loan. (3) A borrower who has never received payment subsidy, or who has stopped receiving interest credit or payment assistance method 1, and at a later date again qualifies for a payment subsidy, will receive payment assistance method 2. (4) A borrower may not opt to change payment assistance methods. (c) Calculation of payment assistance. Regardless of the method used, payment assistance may not exceed the amount necessary if the loan were amortized at an interest rate of one percent. (1) Payment Assistance Method 2. The amount of payment assistance granted is the lesser of the difference between: (i) The annualized promissory note installments for the combined RHS loan and eligible leveraged loans plus the cost of taxes and insurance less twenty-four… | ||||
| 7:7:15.1.14.2.2.2.1.19 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.69 Deferred mortgage payments. | RHS | For qualified borrowers, RHS may defer up to 25 percent of the monthly principal and interest payment at 1 percent for up to 15 years. This assistance may be granted only at initial loan closing and is reviewed annually. Deferred mortgage payments are subject to recapture when the borrower transfers title or ceases to occupy the property. (a) Eligibility. In order to qualify for deferred mortgage payments, all of the following must be true: (1) The applicants adjusted income at the time of initial loan approval does not exceed the applicable very low-income limits. (2) The loan term is 38 years, or 30 years for a manufactured home. (3) The applicant's payments for principal and interest, calculated at a one percent interest rate for the maximum allowable term, plus estimated costs for taxes and insurance exceeds: (i) For applicants receiving payment assistance, 29 percent of the applicants repayment income by more than $10 per month; or (ii) For applicants receiving interest credit, 20 percent of adjusted income by more than $10 per month. (b) Amount and terms. (1) The amount of the mortgage payment to be deferred will be the difference between the applicants payment for principal and interest, calculated at one percent interest for the maximum allowable term, plus estimated costs for taxes and insurance and: (i) For applicants receiving payment assistance, 29 percent of the applicants repayment income. (ii) For applicants receiving interest credit, 20 percent of adjusted income. (2) Deferred mortgage payment agreements will be effective for a 12-month period. (3) Deferred mortgage assistance may be continued for up to 15 years after loan closing. Once a borrower becomes ineligible for deferred mortgage assistance, the borrower can never again receive deferred mortgage assistance. (c) Annual review. The borrower's income, taxes, and insurance will be reviewed annually to determine eligibility for continued deferred mortgage assistance. The borrower must notify RHS whenever an adult member of the… | |||||
| 7:7:15.1.14.2.2.2.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.52 Loan purposes. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78329, Dec. 24, 2002; 72 FR 5157, Feb. 5, 2007; 80 FR 23678, Apr. 29, 2015; 87 FR 6771, Feb. 7, 2022; 90 FR 203, Jan. 3, 2025] | Section 502 funds may be used to buy, build, rehabilitate, improve, or relocate an eligible dwelling and provide related facilities for use by the borrower as a permanent residence. In limited circumstances section 502 funds may be used to refinance existing debt. (a) Purchases from existing RHS borrowers. To purchase a property currently financed by an RHS loan, the new borrower will assume the existing RHS indebtedness or receive new loan funds as determined by the Agency. The Agency will periodically determine whether assumptions or new loans are appropriate on a program wide basis based on the best interest of the government, taking into account factors such as funding availability and staff resources. Regardless of the method, loan funds may be used for eligible costs as defined in paragraph (d) of this section or to permit a remaining borrower to purchase the equity of a departing co-borrower. (b) Refinancing non-RHS loans. Debt from an existing non-RHS loan may be refinanced if the existing debt is secured by a lien against the property, RHS will have a first lien position on the security property after refinancing, and: (1) In the case of loans for existing dwellings, if: (i) Due to circumstances beyond the applicant's control, the applicant is in danger of losing the property, the debt is over $5,000, and the debt was incurred for eligible program purposes prior to loan application or was a protective advance made by the mortgagee for items covered by the loan to be refinanced, including accrued interest, insurance premiums, real estate tax advances, or preliminary foreclosure costs; or (ii) If a loan of $5,000 or more is necessary for repairs to correct major deficiencies and make the dwelling decent, safe and sanitary and refinancing is necessary for the borrower to show repayment ability, regardless of the delinquency. (2) In the case of loans for a building site without a dwelling, if: (i) The debt to be refinanced was incurred for the sole purpose of purchasing the site; (ii) The applica… | ||||
| 7:7:15.1.14.2.2.2.1.20 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.70 Conditional commitments. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78330, Dec. 24, 2002] | A conditional commitment is a determination by RHS that a dwelling offered for sale will be acceptable for purchase by a qualified RHS loan applicant if it is built or rehabilitated in accordance with RHS-approved plans, specifications, and regulations and priced within the lesser of the property's appraised value or the applicable maximum load limit. The conditional commitment does not reserve funds, does not guarantee funding, and does not ensure that an eligible loan applicant will be available to buy the dwelling. (a) Eligibility. To be eligible to request a conditional commitment, the builder, dealer-contractor, or seller must: (1) Have an adequate ownership interest in the property, as defined in § 3550.58, prior to the beginning of any planned construction; (2) Have the experience and ability to complete any proposed work in a competent and professional manner; (3) Have the legal capacity to enter into the required agreements; (4) Be financially responsible and have the ability to finance or obtain financing for any proposed construction or rehabilitation; and (5) Comply with the requirements of 7 CFR part 1901, subpart E and all applicable laws, regulations, and Executive Orders relating to equal opportunity. Anyone who receives 5 or more conditional commitments during a 12-month period must obtain RHS approval of an affirmative marketing plan. (b) Limitations. Conditional commitments for new or substantially rehabilitated dwellings will not be issued after construction has started. RHS may limit the total number of conditional commitments issued in any locality based on market demand. (c) Commitment period. A conditional commitment will be valid for 12 months from the date of issuance. The commitment may be extended for up to an additional 6 months if there are unexpected delays in construction caused by such factors as bad weather, materials shortages, or marketing difficulties. Conditional commitments may be canceled if construction does not begin within 60 days after the commitment is is… | ||||
| 7:7:15.1.14.2.2.2.1.21 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.71 Special requirements for condominiums. | RHS | RHS loans may be made for condominium units under the following conditions: (a) The unit is in a project approved or accepted by U.S. Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), or the Federal Home Loan Mortgage Corporation (Freddie Mac). (b) The condominium project complies with the requirements of the condominium enabling statute and all other applicable laws. Any right of first refusal in the condominium documents will not impair the rights of RHS to: (1) Foreclose or take title to a condominium unit pursuant to the remedies in the mortgage; (2) Accept a deed in lieu of foreclosure in the event of default by a mortgagor; and (3) Sell or lease a unit acquired by RHS. (c) If RHS obtains title to a condominium unit pursuant to the remedies in its mortgage or through foreclosure, RHS will not be liable for more than 6 months of the unit's unpaid regularly budgeted dues or charges accrued before acquisition of the title to the unit by RHS. The homeowners association's lien priority may include costs of collecting unpaid dues. (d) In case of condemnation or substantial loss to the units or common elements of the condominium project, unless at least two-thirds of the first mortgagees or unit owners of the individual condominium units have given their consent, the homeowners association may not: (1) By act or omission seek to abandon or terminate the condominium project; (2) Change the pro rata interest or obligations of any condominium unit in order to levy assessments or charges, allocate distribution of hazard insurance proceeds or condemnation awards, or determine the pro rata share of ownership of each condominium unit in the common elements; (3) Partition or subdivide any condominium unit; (4) Seek to abandon, partition, subdivide, encumber, sell, or transfer the common elements by act or omission (the granting of easements for public utilities or other public purposes consistent with the intended use of the common elements by the condomin… | |||||
| 7:7:15.1.14.2.2.2.1.22 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.72 Community land trusts. | RHS | Eligible dwellings located on land owned by a community land trust may be financed if: (a) The loan meets all the requirements of this subpart; and (b) Any restrictions, imposed by the community land trust on the property or applicant are: (1) Reviewed and accepted by RHS before loan closing; and (2) Automatically and permanently terminated upon foreclosure or acceptance by RHS of a deed in lieu of foreclosure. | |||||
| 7:7:15.1.14.2.2.2.1.23 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.73 Manufactured homes. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 90 FR 203, Jan. 3, 2025] | With the exception of the restrictions and additional requirements contained in this section, section 502 loans on manufactured homes are subject to the same conditions as all other section 502 loans. (a) Eligible costs. In addition to the eligible costs described in § 3550.52(d), RHS may finance the following activities related to manufactured homes when a real estate mortgage covers both the unit and the site: (1) Purchase of an eligible unit, transportation, and set-up costs, and purchase of an eligible site if not already owned by the applicant; (2) Site development work in accordance with 7 CFR part 1924, subpart A: (3) Subsequent loans in conjunction with an assumption or sale of an REO property; or (4) Subsequent loans for repairs of units financed under section 502. (b) Loan restrictions. In addition to the loan restrictions described in § 3550.52(e), RHS may not use loan funds to finance: (1) An existing unit and site unless it is already financed with a section 502 loan; or is an RHS REO property; or the unit was constructed in conformance with FMHCSS standards as evidenced by both an affixed HUD Certification label and a HUD Data Plate on or after date determined by the Agency, is installed on a permanent foundation which meets HUD regulations and 7 CFR part 1924, subpart A, exhibit J, and has not been previously installed on a different homesite or had any alterations since construction in the factory, except as specified in the program handbook. (2) The purchase of a site without also financing the unit. (3) Alteration or remodeling of the unit when the initial loan is made. (4) Furniture, including movable articles of personal property such as drapes, beds, bedding, chairs, sofas, divans, lamps, tables, televisions, radios, stereo sets, and other similar items of personal property. Furniture does not include wall-to-wall carpeting, refrigerators, ovens, ranges, washing machines, clothes dryers, heating or cooling equipment, or other similar items. (c) Loan term. The maximum term of … | ||||
| 7:7:15.1.14.2.2.2.1.24 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.74 Nonprogram loans. | RHS | NP terms may be extended to applicants who do not qualify for program credit, or for properties that do not qualify as program properties, when it is in the best interest of the Government. NP loans are originated and serviced according to the requirements for program loans except as indicated in this section. (a) Purpose. NP terms may be offered to expedite: (1) Sale of an REO property. (2) Assumption of an existing program loan on new rates and terms. If additional funds are required to purchase the property, the applicant must obtain them from another source. (3) Conversion of a program loan that has received unauthorized assistance. (4) Continuation of a loan on a portion of a security property when the remainder is being transferred and the RHS debt is not paid in full. (b) Terms. (1) Rate and term: (i) For an applicant who intends to occupy the property, the term will not exceed 30 years. (ii) For other applicants, the term will not exceed 10 years. If more favorable terms are necessary to facilitate the sale, the loan may be amortized over a period of up to 20 years with payment in full due not later than 10 years from the date of closing. (iii) An applicant with an NP loan under paragraph (b)(1)(i) of this section who wishes to retain the property and purchase a new property with RHS credit must purchase the second property according to the terms of paragraph (b)(1)(ii) of this section, even if the new property will serve as the applicant's principal residence. (2) NP loans are written at the NP interest rate in effect at the time of loan approval. (3) NP borrowers are not eligible for payment assistance or a moratorium. (c) Additional requirements. (1) NP applicants other than public bodies and nonprofit organizations must pay a nonrefundable application fee. (2) NP applicants must make a down payment based upon the purchase price and whether the applicant intends to personally occupy the property or use it for other purposes. (3) NP applicants cannot finance loan closing costs or esc… | |||||
| 7:7:15.1.14.2.2.2.1.25 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.75 Certified loan application packaging process. | RHS | [80 FR 23678, Apr. 29, 2015] | Persons interested in applying for a section 502 loan may, but are not required to, submit an application through the certified loan application packaging process. (a) General. The certified loan application packaging process involves individuals who have been designated as an Agency-certified loan application packager, their qualified employers, and, if required by the State Director, Agency-approved intermediaries. (b) Process requirements. To package section 502 loan applications under this process, each of the following conditions must be met: (1) Agency-certified loan application packager. An individual who wishes to acquire RHS certification as a loan application packager must meet all of the following conditions: (i) Have at least one year of affordable housing loan origination and/or affordable housing counseling experience; (ii) Be employed (either as an employee or as an independent contractor) by a qualified employer as outlined in paragraph (b)(2) of this section; (iii) Complete an Agency-approved loan application packaging course and successfully pass the corresponding test as specified in paragraph (c) of this section; and (iv) Submit applications to the Agency via an intermediary if determined necessary by a State Director. (2) Qualified employer. Individuals who have been designated as an Agency-certified loan application packager must be employed (either as an employee or as an independent contractor) by a qualified employer. To be considered a qualified employer, the packager's employer must meet each of the conditions specified in paragraphs (b)(2)(i) through (v) of this section. Tribal housing authorities and the States' Housing Finance Agencies are eligible and are exempt from the conditions specified in paragraphs (b)(2)(i) through (ii) of this section. (i) Be a nonprofit organization or public agency in good standing in the State(s) of its operation. (ii) Be tax exempt under the Internal Revenue Code and be engaged in affordable housing per their regulations, articles of i… | ||||
| 7:7:15.1.14.2.2.2.1.26 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | §§ 3550.75-3550.99 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.2.1.27 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.100 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78330, Dec. 24, 2002] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. You are not required to respond to this collection of information unless it displays a currently valid OMB control number. | ||||
| 7:7:15.1.14.2.2.2.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.53 Eligibility requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78330, Dec. 24, 2002; 72 FR 5157, Feb. 5, 2007; 84 FR 29038, June 21, 2019; 87 FR 6771, Feb. 7, 2022] | (a) Income eligibility. At the time of loan approval, the household's adjusted income must not exceed the applicable low-income limit for the area, and at closing, must not exceed the applicable moderate-income limit for the area (see § 3550.54). When an existing RHS loan is being refinanced as a special servicing action under § 3550.201), the household's adjusted income must not exceed the applicable moderate-income limit for the area at the time of loan approval and closing. (b) Citizenship status. The applicant must be a United States citizen or a noncitizen who qualifies as a legal alien as defined in § 3550.10. (c) Principal residence. Applicants must agree to and have the ability to occupy the dwelling in accordance with the definition found in § 3550.10. If the dwelling is being constructed or renovated, an adult member of the household must be available to make inspections and authorize progress payments as the dwelling is constructed. (d) Eligibility of current homeowners. Current homeowners are not eligible for initial loans except as follows: (1) Current homeowners may receive RHS loan funds to: (i) Refinance an existing loan under the conditions outlined in § 3550.52(b); (ii) Purchase a new dwelling if the current dwelling is deficient housing as defined in § 3550.10; or (iii) Make necessary repairs to the property which is financed with an affordable non- RHS loan. (2) Current homeowners with an RHS loan may receive a subsequent loan. (e) Legal capacity. Applicants must have the legal capacity to incur the loan obligation, or have a court appointed guardian or conservator who is empowered to obligate the applicant in real estate matters. (f) Suspension or debarment. Applications from applicants who have been suspended or debarred from participation in Federal programs will be handled in accordance with 2 CFR parts 180 and 417. (g) Repayment ability. Repayment ability means applicants must demonstrate adequate and dependably available income. The determination of income depend… | ||||
| 7:7:15.1.14.2.2.2.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.54 Calculation of income and assets. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78329, Dec. 24, 2002; 84 FR 29038, June 21, 2019] | (a) Repayment income. Repayment income is the annual amount of income from all sources that are expected to be received by those household members who are parties to the promissory note, except for any student financial aid received by these household members for tuition, fees, books, equipment, materials, and transportation. Repayment income is used to determine the household's ability to repay a loan. (b) Annual income. Annual income is the income of all household members from all sources except those listed in (b)(1) through (b)(12) of this section: (1) Earned income of persons under the age of 18 unless they are a borrower or a spouse of a member of the household; (2) Payments received for the care of foster children or foster adults; (3) Amounts granted for or in reimbursement of the cost of medical expenses; (4) Earnings of each full-time student 18 years of age or older, except the head of household or spouse, that are in excess of any amount determined pursuant to section 501(b)(5) of the Housing Act of 1949, as amended; (5) Temporary, nonrecurring, or sporadic income (including gifts); (6) Lump sum additions to family assets such as inheritances; capital gains; insurance payments under health, accident, or worker's compensation policies; settlements for personal or property losses; and deferred periodic payments of supplemental security income and Social Security benefits received in a lump sum; (7) Any earned income tax credit; (8) Adoption assistance in excess of any amount determined pursuant to section 501(b)(5) of the Housing Act of 1949, as amended; (9) Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling; (10) Amounts paid by a State agency to a family with a developmentally disabled family member living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; (11) The full amount of any student financial aid; and (12) Any other revenue exempt… | ||||
| 7:7:15.1.14.2.2.2.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.55 Applications. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 80 FR 23678, Apr. 29, 2015; 87 FR 6771, Feb. 7, 2022] | (a) Application submissions. All persons applying for RHS loans must file a complete written application in a format specified by RHS. Applications will be accepted even when funds are not available. (b) Application processing. (1) Incomplete applications will be returned to the applicant specifying in writing the additional information that is needed to make the application complete. (2) An applicant may voluntarily withdraw an application at any time. (3) RHS may periodically request in writing that applicants reconfirm their interest in obtaining a loan. RHS may withdraw the application of any applicant who does not respond within the specified timeframe. (4) Applicants who are eligible will be notified in writing. If additional information becomes available that indicates that the original eligibility determination may have been incorrect, or that circumstances have changed, RHS may reconsider the application and the applicant may be required to submit additional information. (5) Applicants who are ineligible will be notified in writing and provided with the specific reasons for the rejection. (c) Selection for processing and funding. Applications will be selected for processing using the priorities specified in this paragraph (c). Within priority categories, applications will be processed in the order that the completed applications are received. In the case of applications with equivalent priority status that are received on the same day, preference will first be extended to applicants qualifying for a veterans' preference. When funds are limited and eligible applicants will be placed on the waiting list, the priorities specified in this paragraph (c) will be used to determine the selection of applications for available funds. (1) First priority will be given to existing customers who request subsequent loans to correct health and safety hazards. (2) Second priority will be given to loans related to the sale of an REO property or the transfer of an exisiting RHS financed property. (3) Third p… | ||||
| 7:7:15.1.14.2.2.2.1.6 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.56 Site requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6772, Feb. 7, 2022] | (a) Rural areas. Loans may be made only in rural areas designated by RHS. If an area designation is changed to non-rural: (1) New conditional commitments will be made and existing conditional commitments will be honored only in conjunction with an applicant for a section 502 loan who applied for assistance before the area designation changed. (2) REO property sales and transfers with assumption may be processed. (3) Subsequent loans may be made either in conjunction with a transfer with assumption of an RHS loan or to repair properties that have RHS loans. (b) Site standards. Sites must be developed in accordance with 7 CFR part 1924, subpart C and any applicable standards imposed by a State or local government. (1) The site must not be large enough to subdivide into more than one site under existing local zoning ordinances and (2) The site must not include farm service buildings, though small outbuildings such as a storage shed may be included. | ||||
| 7:7:15.1.14.2.2.2.1.7 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.57 Dwelling requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78329, Dec. 24, 2002; 72 FR 70222, Dec. 11, 2007; 87 FR 6772, Feb. 7, 2022] | (a) Modest dwelling. The property must be one that is considered modest for the area, must not be designed for income producing purposes, or have a market value in excess of the applicable maximum area loan limit, in accordance with § 3550.63, unless RHS authorizes an exception under this paragraph (a). An exception may be granted on a case-by-case basis to accommodate the specific needs of an applicant, such as to serve exceptionally large households or to provide reasonable accommodation for a household member with a disability. Any additional loan amount approved must not exceed the amount required to address the specific need. Existing properties with in-ground swimming pools may be considered modest; however, in-ground swimming pools with new construction or with properties which are purchased new are prohibited. (1) Area-wide exception. Area-wide exceptions may be granted when RHS determines that the section 203(b) limit is too low to enable applicants to purchase adequate housing. (2) Individual exceptions. Individual exceptions may be granted to accommodate the specific needs of an applicant, such as to serve exceptionally large households or to provide reasonable accommodation for a household member with a disability. Any additional loan amount approved must not exceed the amount required to address the specific need. (b) New dwellings. Construction must meet the requirements in 7 CFR part 1924, subpart A. (c) Existing dwellings. Existing dwellings must be structurally sound; functionally adequate; in good repair, or to be placed in good repair with loan funds; have adequate electrical, heating, plumbing, water, and wastewater disposal systems; and be free of termites and other wood damaging pests and organisms. | ||||
| 7:7:15.1.14.2.2.2.1.8 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.58 Ownership requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 90 FR 203, Jan. 3, 2025] | After the loan is closed, the borrower must have an acceptable interest in the property as evidenced by one of the following. (a) Fee-simple ownership. Acceptable fee-simple ownership is evidenced by a fully marketable title with a deed vesting a fee-simple interest in the property to the borrower. (b) Secure leasehold interest. A written lease is required. To be acceptable, a leasehold interest must have an unexpired term that is at least 150 percent of the term of the mortgage, unless the loan is guaranteed, in which case the unexpired term of the lease must be at least 2 years longer than the loan term. In no case may the unexpired term be less than 25 years. For new energy efficient manufactured and modular home financing in land-lease communities operating on a nonprofit basis, and on Tribal Trust land, individual (allotted) Trust land, or Tribal restricted fee land, the Agency will accept a lease with an unexpired term that is at least 2 years longer than the loan term. (c) Life estate interest. To be acceptable a life estate interest must provide the borrower with rights of present possession, control, and beneficial use of the property. Generally, persons with any remainder interests must be signatories to the mortgage. All of the remainder interests need not be included in the mortgage to the extent that one or more of the persons holding remainder interests are not legally competent (and there is no representative who can legally consent to the mortgage), cannot be located, or if the remainder interests are divided among such a large number of people that it is not practical to obtain the signatures of all of the remainder interests. In such cases, the loan may not exceed the value of the property interests owned by the persons executing the mortgage. (d) Undivided interest. All legally competent co-owners will be required to sign the mortgage. When one or more of the co-owners are not legally competent (and there is no representative who can legally consent to the mortgage), cannot be locat… | ||||
| 7:7:15.1.14.2.2.2.1.9 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | B | Subpart B—Section 502 Origination | § 3550.59 Security requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78330, Dec. 24, 2002; 87 FR 6772, Feb. 7, 2022] | Before approving any loan, RHS will impose requirements to secure its interests. (a) Adequate security. A loan will be considered adequately secured only when all of the following requirements are met: (1) RHS obtains at closing a mortgage on all ownership interests in the security property or the requirements of § 3550.58 are satisfied. (2) No liens prior to the RHS mortgage exist at the time of closing and no junior liens are likely to be taken immediately after or at the time of closing, unless the other liens are taken as part of a leveraging strategy or the RHS loan is essential for repairs. Any lien senior to the RHS lien must secure an affordable non-RHS loan. Liens junior to the RHS lien may be allowed at loan closing if the junior lien will not interfere with the purpose or repayment of the RHS loan. When the junior lien involves a grant or a forgivable affordable housing product, the total debt may exceed the market value provided: (i) The RHS loan is fully secured (with allowable exceptions for the tax service fee, appraisal fee, homebuyer education and initial escrow for taxes and insurance); (ii) The junior lien is for an authorized loan purpose identified in § 3550.52; and (iii) The grant or forgivable affordable housing product comes from a recognized grant source such as a Community Development Block Grant or a HOME Investment Partnerships Program (HOME). (3) The provisions of 7 CFR part 1927, subpart B regarding title clearance and the use of legal services have been followed. (4) Existing and proposed property improvements are totally on the site and do not encroach on adjoining property. (b) Guaranteed payment. Mortgage insurance guaranteeing payment from a Government agency or Indian tribe is adequate security. | ||||
| 7:7:15.1.14.2.2.3.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.101 Program objectives. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002] | This subpart sets forth policies for administering loans and grants under section 504(a) of title V of the Housing Act of 1949, as amended. Section 504 loans and grants are intended to help very low-income owner-occupants in rural areas repair their properties. This subpart also covers Water and Waste Disposal (WWD) Grants to individuals authorized by Section 306C(b) of the Consolidated Farm and Rural Development Act, (7 U.S.C. 1926c). | ||||
| 7:7:15.1.14.2.2.3.1.10 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.110 Insurance (loans only). | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 70 FR 6552, Feb. 8, 2005; 73 FR 49593, Aug. 22, 2008] | (a) Borrower responsibility. Any borrower with a secured indebtedness in excess of $15,000 at the time of loan approval must furnish and continually maintain hazard insurance on the security property, with companies, in amounts, and on terms and conditions acceptable to RHS including a “loss payable clause” payable to RHS to protect the Government's interest. (b) Amount. The borrower is required to insure the dwelling and any other essential buildings in an amount equal to the insurable value of the dwelling and other essential buildings. However, in cases where the borrower's outstanding secured indebtedness is less than the insurable value of the dwelling and other essential buildings, the borrower may elect a lower coverage provided it is not less than the outstanding secured indebtedness. If the borrower fails, or is unable to insure the secured property, RHS will force place insurance and charge the cost to the borrower's account. Force place insurance only provides insurance coverage to the Agency and does not provide any direct coverage or benefit to the borrower. The amount of the lender-placed coverage generally will be the property's last known insured value. (c) Flood insurance. Flood insurance must be obtained and maintained for the life of the loan for all property located in Special Flood Hazard Areas (SFHA) as determined by the Federal Emergency Management Agency (FEMA). RHS actions will be consistent with 7 CFR part 1806, subpart B which addresses flood insurance requirements. If flood insurance through FEMA's National Flood Insurance Program is not available in a SFHA, the property is not eligible for federal financial assistance. (d) Losses. (1) Loss deductible clauses for required insurance coverage may not exceed the generally accepted minimums based on current and local market conditions. (2) Borrowers must immediately notify RHS of any loss or damage to insured property and collect the amount of the loss from the insurance company. (3) RHS may require that loss payments be supervise… | ||||
| 7:7:15.1.14.2.2.3.1.11 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.111 Appraisals (loans only). | RHS | An appraisal is required when the section 504 debt to be secured exceeds $15,000 or whenever RHS determines that it is necessary to establish the adequacy of the security. RHS may charge an appraisal fee. Appraisals must be made in accordance with the Uniform Standards of Professional Appraisal Practices. When other real estate is taken as additional security it will be appraised if it represents a substantial portion of the security for the loan. | |||||
| 7:7:15.1.14.2.2.3.1.12 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.112 Maximum loan and grant. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6772, Feb. 7, 2022] | (a) Maximum loan permitted. The sum of all outstanding section 504 loans to one household for one dwelling may not exceed an amount determined by the Agency based on factors such as average loan amounts and repair costs, but no greater than twenty percent of the national average area loan limit. (1) Transferees who have assumed a section 504 loan and wish to obtain a subsequent section 504 loan are limited to the difference between the unpaid principal balance of the debt assumed and the maximum loan permitted. (2) For a secured loan, the total of all debts on the secured property may not exceed the value of the security, except by the amount of any required appraisal and tax monitoring fees, and the contributions to an escrow account for taxes and insurance. (b) Maximum loan based upon ability to pay. The maximum loan is limited to the principal balance that can be supported given the amount the applicant has available, as determined by RHS, to repay a loan at 1 percent interest with a 20-year term. (c) Maximum grant. The lifetime total of the grant assistance to any one household or one dwelling may not exceed ten percent of the national average area loan limit. | ||||
| 7:7:15.1.14.2.2.3.1.13 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.113 Rates and terms (loans only). | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6773, Feb. 7, 2022] | (a) Interest rate. The interest rate for all section 504 loans will be 1 percent. (b) Loan term. The repayment period for all section 504 loans will be 20 years. | ||||
| 7:7:15.1.14.2.2.3.1.14 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.114 Repayment agreement (grants only). | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002] | Grant recipients are required to sign a repayment agreement which specifies that the full amount of the grant must be repaid if the property is sold in less than 3 years from the date the grant agreement was signed. | ||||
| 7:7:15.1.14.2.2.3.1.15 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.115 WWD grant program objectives. | RHS | [67 FR 78331, Dec. 24, 2002] | The objective of the WWD individual grant program is to facilitate the use of community water and waste disposal systems by the residents of colonias along the border between the U.S. and Mexico. WWD grants are processed the same as Section 504 grants, except as specified in this subpart. | ||||
| 7:7:15.1.14.2.2.3.1.16 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.116 Definitions applicable to WWD grants only. | RHS | [67 FR 78331, Dec. 24, 2002, as amended at 80 FR 9911, Feb. 24, 2015] | (a) Colonia. Any identifiable community designated in writing by the State or county in which it is located; determined to be a colonia on the basis of objective criteria including lack of a potable water supply, lack of adequate sewage systems, and lack of decent, safe, and sanitary housing, inadequate roads, and drainage; and existed and was generally recognized as a colonia before October 1, 1989. (b) Individual. Resident of a colonia located in a rural area. (c) Rural areas. Includes unincorporated areas and any city or town with a population not in excess of 10,000 inhabitants. The population figure is obtained from the most recent decennial Census of the United States (decennial Census). If the applicable population figure cannot be obtained from the most recent decennial Census, RD will determine the applicable population figure based on available population data. (d) System. A community or central water supply or waste disposal system. (e) WWD. Water and Waste Disposal grants to individuals. | ||||
| 7:7:15.1.14.2.2.3.1.17 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.117 WWD grant purposes. | RHS | [67 FR 78331, Dec. 24, 2002] | Grant funds may be used to pay the reasonable costs for individuals to: (a) Extend service lines from the system to their residence. (b) Connect service lines to residence's plumbing. (c) Pay reasonable charges or fees for connecting to a system. (d) Pay for necessary installation of plumbing and related fixtures within dwellings lacking such facilities. This is limited to one bathtub, sink, commode, kitchen sink, water heater, and outside spigot. (e) Construction and/or partitioning off a portion of the dwelling for a bathroom, not to exceed 4.6 square meters (48 square feet) in size. (f) Pay reasonable costs for closing abandoned septic tanks and water wells when necessary to protect the health and safety of recipients of a grant for a purpose provided in paragraph (a) or (b) of this section and is required by local or State law. (g) Make improvements to individual's residence when needed to allow the use of the water and/or waste disposal system. | ||||
| 7:7:15.1.14.2.2.3.1.18 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.118 Grant restrictions. | RHS | [67 FR 78331, Dec. 24, 2002] | (a) Maximum grant. Lifetime assistance to any individual for initial or subsequent Section 306C WWD grants may not exceed a cumulative total of $5,000. (b) Limitation on use of grant funds. WWD grant funds may not be used to: (1) Pay any debt or obligation of the grantees other than obligations incurred for purposes listed in § 3550.117. (2) Pay individuals for their own labor. | ||||
| 7:7:15.1.14.2.2.3.1.19 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.119 WWD eligibility requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002] | In addition to the eligibility requirements of § 3550.103, WWD applicants must meet the following requirements: (a) An applicant need not be 62 years of age or older. (b) Own and occupy a dwelling located in a colonia. Evidence of ownership will be presented as outlined in § 3550.107. (c) Have a total taxable income from all individuals residing in the household that is below the most recent poverty income guidelines established by the Department of Health and Human Services. (d) Must not be delinquent on any Federal debt. (e) The household income must be verified at the time they apply for assistance through verification of employment and benefits. Federal tax returns are used as further verification of household income. | ||||
| 7:7:15.1.14.2.2.3.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.102 Grant and loan purposes. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6772, Feb. 7, 2022] | (a) Grant funds. Grant funds may be used only to pay costs for repairs and improvements that will remove identified health and safety hazards or to repair or remodel dwellings to make them accessible and useable for household members with disabilities. Unused grant funds must be returned to the Rural Housing Service (RHS). (b) Loan funds. Loan funds may be used to make general repairs and improvements to properties or to remove health and safety hazards, as long as the dwelling remains modest in size and design. (c) Eligibility of mobile and manufactured homes. Repairs necessary to remove health and safety hazards may be made to mobile or manufactured homes provided: (1) The applicant owns the home and site and has occupied the home prior to filing an application with RHS; and (2) The mobile or manufactured home is on a permanent foundation or will be put on a permanent foundation with section 504 funds. (d) Eligible costs. In addition to construction costs to make necessary repairs and improvements, loan and grant funds may be used for: (1) Reasonable expenses related to obtaining the loan or grant, including legal, architectural and engineering, title clearance, and loan closing fees; and appraisal, surveying, environmental, tax monitoring, and other technical services. (2) The cost of providing special design features or equipment when necessary because of a physical disability of the applicant or a member of the household. (3) Reasonable connection fees, assessments, or the pro rata installation costs for utilities such as water, sewer, electricity, and gas for which the borrower is liable and which are not paid from other funds. (4) Real estate taxes that are due and payable on the property at the time of closing and for the establishment of escrow accounts for real estate taxes, hazard and flood insurance premiums, and related costs. (5) Fees to public and private nonprofit organizations that are tax exempt under the Internal Revenue Code for the development and packaging of applications. … | ||||
| 7:7:15.1.14.2.2.3.1.20 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | §§ 3550.120-3550.149 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.3.1.21 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.150 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002; 80 FR 81738, Dec. 31, 2015] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. You are not required to respond to this collection of information unless it displays a currently valid OMB control number. | ||||
| 7:7:15.1.14.2.2.3.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.103 Eligibility requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002; 73 FR 49593, Aug. 22, 2008; 80 FR 9911, Feb. 24, 2015; 87 FR 6772, Feb. 7, 2022] | To be eligible, applicants must meet the following requirements: (a) Owner-occupant. Applicants must own, as described in § 3550.107, and occupy the dwelling. (b) Age (grant only). To be eligible for grant assistance, an applicant must be 62 years of age or older at the time of application. (c) Income eligibility. At the time of loan or grant approval, the household's adjusted income must not exceed the applicable very low-income limit. Section 3550.54 provides a detailed discussion of the calculation of adjusted income. (d) Citizenship status. The applicant must be a U.S. citizen or a non-citizen who qualifies as a legal alien, as defined in § 3550.10. (e) Need and use of personal resources. Applicants must be unable to obtain financial assistance at reasonable terms and conditions from non-RHS credit or grant sources and lack the personal resources to meet their needs. Elderly families must use any net family assets in excess of $20,000 to reduce their section 504 request. Non-elderly families must use any net family assets in excess of $15,000 to reduce their section 504 request. Applicants may contribute assets in excess of the aforementioned amounts to further reduce their request for assistance. The definition of assets for the purpose of this paragraph (e) is net family assets as described in § 3550.54, less the value of the dwelling and a minimum adequate site. (f) Legal capacity. The applicant must have the legal capacity to incur the loan obligation or have a court appointed guardian or conservator who is empowered to obligate the applicant in real estate matters. (g) Suspension or debarment. Applications from applicants who have been suspended or debarred from participation in federal programs will be handled in accordance with RD Instruction 1940-M (available in any Rural Development office). (h) Repayment ability (loans only). Applicants must demonstrate adequate repayment ability as supported by a budget. (1) If an applicant does not meet the repayment ability requirements, … | ||||
| 7:7:15.1.14.2.2.3.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.104 Applications. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6772, Feb. 7, 2022] | (a) Application submissions. All persons applying for section 504 loans or grants must file a complete written application in a format specified by RHS. Applications will be accepted even when funds are not available. (b) Application processing. (1) Incomplete applications will be returned to the applicant specifying in writing the additional information that is needed to make the application complete. (2) An applicant may voluntarily withdraw an application at any time. (3) RHS may periodically request in writing that applicants reconfirm their interest in obtaining a loan or grant. RHS may withdraw the application of any applicant who does not respond within the specified timeframe. (4) Applicants who are eligible will be notified in writing. If additional information becomes available that indicates that the original eligibility determination may have been in error or that circumstances have changed, RHS may reconsider the application and the applicant may be required to submit additional information. (5) Applicants who are ineligible will be notified in writing and provided with the specific reasons for the rejection. (c) Processing priorities. When funding is not sufficient to serve all eligible applicants, applications for assistance to remove health and safety hazards will receive priority for funding. In the case of applications with equivalent priority status that are received on the same day, preference will be extended to applicants qualifying for a veterans' preference. After selection for processing, requests for assistance are funded on a first-come, first-served basis. | ||||
| 7:7:15.1.14.2.2.3.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.105 Site requirements. | RHS | (a) Rural areas. Loans may be made only in rural areas designated by RHS. If an area designation is changed to nonrural an existing RHS borrower may receive 504 assistance. (b) Not subdividable. The site must not be large enough to subdivide into more than one site under existing local zoning ordinances. | |||||
| 7:7:15.1.14.2.2.3.1.6 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.106 Dwelling requirements. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002; 72 FR 70222, Dec. 11, 2007; 87 FR 6772, Feb. 7, 2022] | (a) Modest dwelling. The property must be one that is considered modest for the area, must not be designed for income producing purposes, or have a market value in excess of the applicable maximum area loan limit, in accordance with § 3550.63. (b) Post-repair condition. Dwellings repaired with section 504 funds need not be brought to the agency development standards of 7 CFR part 1924, subpart A, nor must all existing hazards be removed. However, the dwelling may not continue to have major health or safety hazards. (c) Construction standards. All work must be completed in accordance with local construction codes and standards. When potentially hazardous equipment or materials are being installed, all materials and installations must be in accordance with the applicable standards in 7 CFR part 1924, subpart A. | ||||
| 7:7:15.1.14.2.2.3.1.7 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.107 Ownership requirements. | RHS | The applicant must have an acceptable ownership interest in the property as evidenced by one of the following: (a) Full fee ownership. Acceptable full fee ownership is evidenced by a fully marketable title with a deed vesting a fee interest in the property to the applicant. (b) Secure leasehold interest. A written lease is required. For loans, the unexpired portion of the lease must not be less than 2 years beyond the term of the promissory note. For grants, the remaining lease period must be at least 5 years. A leasehold for mutual help housing financed by U.S. Department of Housing and Urban Development (HUD) on Indian lands requires no minimum lease period and constitutes acceptable ownership. (c) Life estate interest. To be acceptable, a life estate interest must provide the applicant with rights of present possession, control, and beneficial use of the property. For secured loans, generally persons with any remainder interests must be signatories to the mortgage. All of the remainder interests need not be included in the mortgage to the extent that one or more of the persons holding remainder interests are not legally competent (and there is no representative who can legally consent to the mortgage), cannot be located, or if the remainder interests are divided among such a large number of people that it is not practical to obtain the signatures of all of the remainder interests. In such cases, the loan may not exceed the value of the property interests owned by the persons executing the mortgage. (d) Undivided interest. An undivided interest is acceptable if there is no reason to believe that the applicant's position as an owner-occupant will be jeopardized as a result of the improvements to be made, and: (1) In the case of unsecured loans or grants, if any co-owners living or planning to live in the dwelling sign the repayment agreement. (2) In the case of a secured loan, when one or more of the co-owners are not legally competent (and there is no representative who can legally consent to the … | |||||
| 7:7:15.1.14.2.2.3.1.8 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.108 Security requirements (loans only). | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78331, Dec. 24, 2002; 87 FR 6772, Feb. 7, 2022] | When the total section 504 indebtedness is $7,500 or more, the property will be secured by a mortgage on the property, leasehold interest, or land purchase contract. (a) RHS does not require a first lien position, but the total of all debts on the secured property may not exceed the value of the security, except by the amount of any required contributions to an escrow account for taxes and insurance and any required appraisal fee. (b) Title clearance and the use of legal services generally must be conducted in accordance with 7 CFR part 1927, subpart B. These requirements need not be followed for: (1) Loans where the total section 504 indebtedness does not exceed an amount determined by the Agency based on factors such as average costs for title insurance and closing agents compared to average housing repair costs, but no greater than twenty percent of the national average area loan limit. (2) Subsequent loans made for minimal essential repairs necessary to protect the Government's interest. | ||||
| 7:7:15.1.14.2.2.3.1.9 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | C | Subpart C—Section 504 Origination and Section 306C Water and Waste Disposal Grants | § 3550.109 Escrow account (loans only). | RHS | RHS may require that borrowers deposit into an escrow account amounts necessary to ensure that the account will contain sufficient funds to pay real estate taxes, hazard and flood insurance premiums, and other related costs when they are due in accordance with the Real Estate Settlement and Procedures Act of 1974 (RESPA) and section 501(e) of the Housing Act of 1949, as amended. | |||||
| 7:7:15.1.14.2.2.4.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.151 Servicing goals. | RHS | This subpart sets forth the Rural Housing Service (RHS) policies for managing the repayment of loans made under sections 502 and 504 of the Housing Act of 1949, as amended. | |||||
| 7:7:15.1.14.2.2.4.1.10 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.160 Refinancing with private credit. | RHS | (a) Objective. RHS direct loan programs are not intended to supplant or compete with private credit sources. Therefore, borrowers are required to refinance RHS loans with private credit sources when RHS determines that the borrower meets RHS criteria. (b) Criteria for refinancing with private credit. Borrowers must refinance with private credit when RHS determines that the borrower has the ability to obtain other credit at reasonable rates and terms based on their income, assets, and credit history. Reasonable rates and terms are those commercial rates and terms that borrowers are expected to meet when borrowing for similar purposes. Differences in interest rates and terms between RHS and other lenders will not be an acceptable reason for a borrower to fail to refinance with private credit if the available rates and terms are within the borrower's ability to pay. (c) Notice of requirement to refinance with private credit. The financial status of all borrowers may be reviewed periodically to determine their ability to refinance with private credit. A borrower's financial status may be reviewed at any time if information becomes available to RHS that indicates that the borrower's circumstances have changed. (1) A borrower undergoing review is required to supply, within 30 days of a request from RHS, sufficient financial information to enable RHS to determine the borrowers ability to refinance with private credit. Foreclosure action may be initiated against any borrower who fails to respond. (2) When RHS determines that a borrower has the ability to refinance with private credit, the borrower will be required to refinance within 90 days. (3) Within 30 days after being notified of the requirement to refinance with private credit, a borrower may contest the RHS decision and provide additional financial information to document an inability to refinance with private credit. (d) Failure to refinance with private credit. (1) If the borrower is unable to secure private credit, the borrower must submit written… | |||||
| 7:7:15.1.14.2.2.4.1.11 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.161 Final payment. | RHS | (a) Payment in full. Full payment of a borrower's account includes repayment of principal and outstanding interest, unauthorized assistance, recapture amounts, and charges made to the borrower's account. Any supervised funds or funds remaining in a borrower's escrow account will be applied to the borrower's account or returned to the borrower. (b) Release of security instruments. RHS may release security instruments when full payment of all amounts owed has been received and verified. If RHS and the borrower agree to settle the account for less than the full amount owed, the security instruments may be released when all agreed-upon amounts are received and verified. Security instruments will not be released until any deferred recapture amount has been paid in full. (c) Payoff statements. At the borrower's request, RHS will provide a written statement indicating the amount required to pay the account in full. RHS may charge a fee for statements for the same account if more than 2 statements are requested in any 30 day period. (d) Suitable forms of payment. Suitable forms of payment are: check, money order, or bank draft. Borrowers who make cash payments will be assessed a fee to cover conversion to a money order. (e) Recording costs. Recording costs for the release of the mortgage will be the responsibility of the borrower, except where State law requires the mortgagee to record or file the satisfaction. | |||||
| 7:7:15.1.14.2.2.4.1.12 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.162 Recapture. | RHS | [77 FR 3378, Jan. 24, 2012, as amended at 87 FR 6773, Feb. 7, 2022] | (a) Recapture policy. Borrowers with loans approved or assumed on or after October 1, 1979, will be required to repay subsidy amounts received through payment subsidy (including the former interest credit program) or deferred mortgage assistance in accordance with paragraph (b) of this section. Amounts to be recaptured are due and payable when the borrower transfers title or ceases to occupy the property, including but not limited to, in the event of foreclosure or deed in lieu of foreclosure. Such recapture will include the amount of principal reduction attributed to subsidy (for loans subject to recapture that were approved, and received interest credit, between October 1, 1979, and December 31, 1989), except in cases of foreclosure and deed in lieu of foreclosure. (b) Amount to be recaptured —(1) General. The amount to be recaptured is determined by a calculation specified in the borrower's subsidy repayment agreement and is based on the borrower's equity in the property at the time of loan pay off. If there is no equity based on the recapture calculation, the amount of principal reduction attributed to subsidy is not collected. The recapture calculation includes the amount of principal reduction attributed to subsidy plus the lesser of: (i) The amount of subsidy received; or (ii) A portion of the value appreciation of the property subject to recapture. In order for the value appreciation to be calculated, the borrower will provide a current appraisal, including an appraisal for any capital improvements, or arm's length sales contract as evidence of market value upon Agency request. Appraisals must meet Agency standards under § 3550.62. (2) Foreclosure or deed in lieu of foreclosure. Notwithstanding paragraph (b)(1) of this section, the amount to be recaptured in a foreclosure or deed in lieu of foreclosure is the amount of subsidy received, not including any principal reduction attributed to subsidy. Foreclosure actions will seek to recover such amounts only from the proceeds of the property. Liqui… | ||||
| 7:7:15.1.14.2.2.4.1.13 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.163 Transfer of security and assumption of indebtedness. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | (a) General policy. RHS mortgages contain due-on-sale clauses that generally require RHS consent before title to a security property can be transferred with an assumption of the indebtedness. If it is in the best interest of the Government, RHS will approve the transfer of title and assumption of indebtedness on program or nonprogram (NP) terms, depending on the transferee's eligibility and the property's characteristics. (b) RHS approval of assumptions. (1) A borrower with a loan on program terms who wishes to transfer a security property restricted by a due-on-sale clause to a purchaser who wishes to assume the debt must receive prior authorization from RHS. If RHS authorizes the transfer and assumption, the account will be serviced in the purchaser's name and the purchaser will be liable for the loan under the terms of the security instrument. (2) If a borrower transfers title to the security property with a due-on-sale clause without obtaining RHS authorization, RHS will not approve assumption of the indebtedness, and the loan will be liquidated unless RHS determines that it is in the Government's best interest to continue the loan. If RHS decides to continue the loan, the account will be serviced in the original borrower's name and the original borrower will remain liable for the loan under the terms of the security instrument. (c) Exceptions to due-on-sale clauses. (1) Due-on-sale clauses are not triggered by the following types of transfers: (i) A transfer from the borrower to a spouse or children not resulting from the death of the borrower. (ii) A transfer to a relative, joint tenant, or tenant by the entirety resulting from the death of the borrower. (iii) A transfer to a spouse or ex-spouse resulting from a divorce decree, legal separation agreement, or property settlement agreement. (iv) A transfer to a person other than a deceased borrower's spouse who wishes to assume the loan for the benefit of persons who were dependent on the deceased borrower at the time of death, if the dwelling wi… | ||||
| 7:7:15.1.14.2.2.4.1.14 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.164 Unauthorized assistance. | RHS | (a) Definition. Unauthorized assistance includes any loan, payment subsidy, deferred mortgage payment, or grant for which the recipient was not eligible. (b) Unauthorized assistance due to false information. (1) False information includes information that the recipient knew was incorrect or should have known was incorrect that was provided or omitted for the purposes of obtaining assistance for which the recipient was not eligible. (2) If the recipient receives an unauthorized loan due to false information, RHS will adjust the account using the NP interest rate that was in effect when the loan was approved. The recipient must pay the account in full within 30 days. (3) If the recipient receives unauthorized subsidy due to false information, RHS will require the recipient to repay it within 30 days. The account cannot be reamortized to include the unauthorized subsidy. If the recipient repays the unauthorized subsidy, the loan may be continued. (c) Unauthorized assistance due to inaccurate information. (1) Inaccurate information includes incorrect information inadvertently provided, used, or omitted without the intent to obtain benefits for which the recipient was not eligible. (2) RHS will permit a recipient who receives an unauthorized loan due to inaccurate information to retain the loan under the following conditions. (i) If the inaccurate information was related to the purpose of the loan or the recipient's eligibility, with the exception of income, or the income used was incorrect, but the recipient still qualified as income-eligible, RHS will allow the recipient to continue the loan on existing terms. (ii) If a section 502 recipient's income was above the moderate-income level, RHS will convert the loan to an NP loan, using the nonprogram interest rate in effect on the date the loan was approved. (iii) If a section 504 recipient's income was above the very low-income level, RHS will apply the applicable 502 or nonprogram interest rate in effect on the date the loan was approved. (iv) If an in… | |||||
| 7:7:15.1.14.2.2.4.1.15 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | §§ 3550.165-3550.199 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.4.1.16 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.200 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. You are not required to respond to this collection of information unless it displays a currently valid OMB control number. | ||||
| 7:7:15.1.14.2.2.4.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.152 Loan payments. | RHS | (a) Payment terms. Unless the loan documents specify other loan repayment terms, borrowers are required to make monthly payments. Borrowers with existing loans specifying annual payments may request conversion to monthly payments, and must convert to a monthly payment schedule before any subsequent loan or new payment assistance is approved. Suitable forms of payment are: check, money order, or bank draft. Borrowers who make cash payments will be assessed a fee to cover the cost of conversion to a money order. (b) Application of payments. If a borrower makes less than the scheduled payment, the payment is held in suspense and is not applied to the borrower's account. When subsequent payments are received in an amount sufficient to equal a scheduled payment, the amount will be applied in the following order: (1) Protective advances charged to the account. (2) Accrued interest due. (3) Principal due. (4) Escrow for taxes and insurance. (c) Multiple loans. When a borrower with multiple loans for the same property makes less than the scheduled payment on all loans, the payment will be applied to the oldest loan and then in declining order of age. Future remittances will be applied beginning with the oldest unpaid installment. (d) Application of excess payments. Borrowers can elect to make payments in excess of the scheduled amount to be applied to principal, provided there are no outstanding fees. | |||||
| 7:7:15.1.14.2.2.4.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.153 Fees. | RHS | RHS may assess reasonable fees including a tax service fee, fees for late payments, and fees for checks returned for insufficient funds. | |||||
| 7:7:15.1.14.2.2.4.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.154 Inspections. | RHS | RHS or its agent may make reasonable entries upon and inspections of any property used as security for an RHS loan as necessary to protect the interest of the Government. RHS will give the borrower notice at the time of or prior to an inspection. | |||||
| 7:7:15.1.14.2.2.4.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.155 Escrow account. | RHS | Escrow accounts will be administered in accordance with RESPA and section 501(e) of the Housing Act of 1949, as amended. (a) Upon creation of the escrow account, RHS may require borrowers to deposit funds sufficient to pay taxes and insurance premiums applicable to the mortgage for the period since the last payments were made and to fund a cushion as permitted by RESPA. (b) Borrowers may elect to escrow at any time during the terms of the loan if the outstanding RHS loan balance is over $2,500. (c) RHS may require borrowers to escrow in conjunction with any special servicing action. | |||||
| 7:7:15.1.14.2.2.4.1.6 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.156 Borrower obligations. | RHS | (a) After receiving a loan from RHS, borrowers are expected to meet a variety of obligations outlined in the loan documents. In addition to making timely payments, these obligations include: (1) Maintaining the security property; and (2) Maintaining an adequately funded escrow account, or paying real estate taxes, hazard and flood insurance, and other related costs when due. (b) If a borrower fails to fulfill these obligations, RHS may obtain the needed service and charge the cost to the borrowers account. | |||||
| 7:7:15.1.14.2.2.4.1.7 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.157 Payment subsidy. | RHS | (a) Borrowers currently receiving payment subsidy. (1) RHS will review annually each borrower's eligibility for continued payment subsidy and determine the appropriate level of assistance. To be eligible for payment subsidy renewal, the borrower must also occupy the property. (2) If the renewal is not completed before the expiration date of the existing agreement, the effective date of the renewal will be either the expiration date of the previous agreement if RHS error caused the delay, or the next due date after the renewal is approved in all other cases. (3) The borrower must notify RHS whenever an adult member of the household becomes employed or changes employment, there is a change in household composition, or if income increases by at least 10 percent. The household may also report decreases in income. If the change in the household's income will cause the payment for principal and interest to change by at least 10 percent, the household's payment subsidy may be adjusted for a new 12-month period. The new agreement will be effective the due date following the date the borrower's information is verified by RHS. (b) Borrowers not currently receiving payment subsidy. Payment assistance may be granted to borrowers not currently receiving payment subsidy whose loans were approved on or after August 1, 1968, whose income does not exceed the applicable low-income limit for the area, are personally occupying the RHS financed property, and who meet the requirements of § 3550.53(b), (e), and (f). In general, to receive payment assistance the term of the loan at closing must have been at least 25 years. If an account has been reamortized and the initial term of the loan was at least 25 years, payment assistance may be granted even though the term of the reamortized loan is less than 25 years. Payment assistance may be granted on a subsequent loan for repairs with a term of less than 25 years. (c) Cancellation of payment subsidy. RHS will cancel a payment subsidy if the borrower does not occupy the property,… | |||||
| 7:7:15.1.14.2.2.4.1.8 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.158 Active military duty. | RHS | The Soldiers and Sailors Relief Act requires that the interest rate charged a borrower who enters full-time active military duty after a loan is closed not exceed six percent. Active military duty does not include participation in a military reserve or the National Guard unless the borrower is called to active duty. (a) Amount of assistance. If a borrower qualifies for payment subsidy after reduction of the interest rate to six percent, the amount of payment subsidy received during the period of active military duty will be the difference between the amount due at the subsidized rate for principal and interest and the amount due at a six percent interest rate. The six percent interest rate will be effective with the first payment due after RHS confirms the active military status of the borrower. (b) Change of active military status. The borrower must notify RHS when he or she is no longer on active military duty. RHS will cancel the six percent interest rate and resume use of the promissory note interest rate. A new payment subsidy agreement may be processed if the borrower is eligible. | |||||
| 7:7:15.1.14.2.2.4.1.9 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | D | Subpart D—Regular Servicing | § 3550.159 Borrower actions requiring RHS approval. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 81 FR 11048, Mar. 2, 2016] | (a) Mineral leases. Borrowers who wish to lease mineral rights to a security property must request authorization from RHS. RHS may consent to the lease of mineral rights and subordinate its liens to the lessee's rights and interests in the mineral activity if the security property will remain suitable as a residence and the Government's security interest will not be adversely affected. Subordination of RHS loans to a mineral lease does not entitle the leaseholder to any proceeds from the sale of the security property. (1) If the proposed activity is likely to decrease the value of the security property, RHS may consent to the lease only if the borrower assigns 100 percent of the income from the lease to RHS to be applied to reduce principal and the rent to be paid is at least equal to the estimated decrease in the market value of the security. (2) If the proposed activity is not likely to decrease the value of the security property, RHS may consent to the lease if the borrower agrees to use any damage compensation received from the lessee to repair damage to the site or dwelling, or to assign it to RHS to be applied to reduce principal. (b) Subordination. RHS may subordinate its interests to permit a borrower to defer recapture amounts and refinance the loan, or to obtain a subsequent loan with private credit. (1) When it is in the best interest of the Government, subordination will be permitted if: (i) The other lender will verify that the funds will be used for purposes for which an RHS loan could be made; (ii) The prior lien debt will be on terms and conditions that the borrower can reasonably be expected to meet without jeopardizing repayment of the RHS indebtedness; (iii) Any proposed development will be planned and performed in accordance with 7 CFR part 1924, subpart A or directed by the other lender in a manner which is consistent with that subpart; and (iv) An agreement is obtained in writing from the prior lienholder providing that at least 30 days prior written notice will be given to RHS b… | ||||
| 7:7:15.1.14.2.2.5.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.201 Purpose of special servicing actions. | RHS | [87 FR 6773, Feb. 7, 2022] | The Rural Housing Service (RHS) may approve special servicing actions to reduce the number of borrower failures that result in liquidation. Borrowers who have difficulty keeping their accounts current may be eligible for one or more available servicing options including: Payment assistance; delinquency workout agreements that temporarily modify payment terms; protective advances of funds for taxes, insurance, and other approved costs; and payment moratoriums. Subject to the availability of funds and Agency priorities, refinancing may be available as a special servicing option in accordance with § 3550.52(c). | ||||
| 7:7:15.1.14.2.2.5.1.10 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.210 Offsets. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 69672, Nov. 19, 2002] | Any money that is or may become payable from the United States to an RHS borrower may be subject to administrative, salary, or Internal Revenue Service (IRS) offsets for the collection of a debt owed to RHS. (a) IRS offset. RHS may take action to effect offset of claims due RHS against tax refunds due to RHS debtors under 31 U.S.C. 3720a and 31 CFR 285.2. (b) Salary offset. Offset of claims due to RHS may be collected pursuant to the salary offset provisions in 7 CFR part 3, subpart C for a federal employee or other persons covered in that subpart. (c) Administrative offset. RHS may take action to effect administrative offset to recover delinquent claims due to it in accordance with the procedures in 7 CFR part 3, subpart B. (d) Offset by other federal agencies. Escrow funds and loan and grant funds held or payable by RHS are not subject to offset by other federal agencies. | ||||
| 7:7:15.1.14.2.2.5.1.11 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.211 Liquidation. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | (a) Policy. When RHS determines that a borrower is unable or unwilling to meet loan obligations, RHS may accelerate the loan and, if necessary, acquire the security property. The borrower is responsible for all expenses associated with liquidation and acquisition. If the account is satisfied in full, the borrower will be released from liability. If the account is not satisfied in full, RHS may pursue any deficiency unless the borrower received a moratorium at any time during the life of the loan and faithfully tried to repay the loan. (b) Tribal allotted or trust land. Liquidations involving a security interest in tribal allotted or trust land shall only be pursued after offering to transfer the account to an eligible tribal member, the tribe, or the Indian Housing Authority. Forced liquidation of RHS security interests in Indian trust lands or on tribal allotted land will be recommended only after the State Director has determined it is in the best interest of the Government. (c) Acceleration and foreclosure. If RHS determines that foreclosure is in the best interest of the Government, RHS will send an acceleration notice to each borrower and any cosigner. (d) Voluntary liquidation. Borrowers may voluntarily liquidate through: (1) Refinancing or sale. The borrower may refinance or sell the security property for at least net recovery value and apply the proceeds to the account. (2) Deed in lieu of foreclosure. RHS may accept a deed in lieu of foreclosure to convey title to the security property only after the debt has been accelerated and when it is in the Government's best interest. (3) Offer by third party. If a junior lienholder or cosigner makes an offer in the amount of at least the net recovery value, RHS may assign the note and mortgage. (e) Bankruptcy. (1) When a petition in bankruptcy is filed by a borrower after acceleration, collection actions and foreclosure actions are suspended in accordance with the provisions of the Bankruptcy Code. (2) RHS may accept conveyance of security… | ||||
| 7:7:15.1.14.2.2.5.1.12 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | §§ 3550.212-3550.249 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.5.1.13 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.250 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for reviewing insurrections, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. You are not required to respond to this collection of information unless it displays a currently valid OMB control number. | ||||
| 7:7:15.1.14.2.2.5.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.202 Past due accounts. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 77 FR 3379, Jan. 24, 2012] | An account is past due if the scheduled payment is not received by the due date, or as authorized by State law. (a) Late fee. A late fee will be assessed if the full scheduled payment is not received by the 15th day after the due date. (b) Liquidation —(1) For borrowers with monthly payments. The account may be accelerated without further servicing when at least 3 scheduled payments are past due or an amount equal to at least 2 scheduled payments is past due for at least 3 consecutive months. In such cases RHS may pursue voluntary liquidation and foreclosure. (2) For borrowers with annual payments. The account may be accelerated without further servicing when at least 3/12 of 1 scheduled payment has not been received by its due date. In such cases, RHS may pursue voluntary liquidation and foreclosure. (3) Subsidy recapture. Acceleration under this section will take into account any subsidy recapture due under § 3550.162. | ||||
| 7:7:15.1.14.2.2.5.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.203 General servicing actions. | RHS | Whenever any of the servicing actions described in this subpart result in reamortization of the account RHS may: (a) Require a borrower who currently makes annual payments, but receives a monthly income, to convert to monthly payments. (b) Require the creation and funding of an escrow account for real estate taxes and insurance, if one does not already exist for any borrower with monthly payments. (c) Convert the method of calculating interest for any account being charged daily simple interest to an amortized payment schedule. | |||||
| 7:7:15.1.14.2.2.5.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.204 Payment assistance. | RHS | Borrowers who are eligible may be offered payment assistance in accordance with subpart B of this part. Borrowers who are not eligible for payment assistance because the loan was approved before August 1, 1968, or the loan was made on above-moderate or nonprogram (NP) terms, may refinance the loan in order to obtain payment assistance if: (a) The borrower is eligible to receive a loan with payment assistance; (b) Due to circumstances beyond the borrower's control, the borrower is in danger of losing the property; and (c) The property is program-eligible. | |||||
| 7:7:15.1.14.2.2.5.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.205 Delinquency workout agreements. | RHS | Borrowers with past due accounts may be offered the opportunity to avoid liquidation by entering into a delinquency workout agreement that specifies a plan for bringing the account current. To receive a delinquency workout agreement, the following requirements apply: (a) A borrower who is able to do so will be required to pay the past-due amount in a single payment. (b) A borrower who is unable to pay the past-due amount in a single payment must pay monthly all scheduled payments plus an agreed upon additional amount that brings the account current within 2 years or the remaining term of the loan, whichever is shorter. (c) If a borrower becomes more than 30 days past due under the terms of a delinquency workout agreement, RHS may cancel the agreement. | |||||
| 7:7:15.1.14.2.2.5.1.6 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.206 Protective advances. | RHS | RHS may pay for fees or services and charge the cost against the borrower's account to protect the Governments interest. (a) Advances for taxes and insurance. RHS may advance funds to pay real estate taxes, hazard and flood insurance premiums, and other related costs, as well as amounts needed to fund the current escrow cycle. (b) Advances for costs other than taxes and insurance. Protective advances for costs other than taxes and insurance, such as emergency repairs, will be made only if the borrower cannot obtain a subsequent loan. (c) Repayment arrangements. (1) Advances for borrowers with multiple loans will be charged against the largest loan. (2) Amounts advanced will be due with the next scheduled payment. RHS may schedule repayment consistent with the borrowers ability to repay or reamortize the loan. (3) Advances will bear interest at the promissory note rate of the loan to which the advance was charged. | |||||
| 7:7:15.1.14.2.2.5.1.7 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.207 Payment moratorium. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 87 FR 6773, Feb. 7, 2022] | RHS may defer a borrowers scheduled payments for up to 2 years. NP borrowers are not eligible for a payment moratorium. (a) Borrower eligibility. For a borrower to be eligible for a moratorium, all of the following conditions must be met: (1) Due to circumstances beyond the borrower's control, the borrower is temporarily unable to continue making scheduled payments because: (i) The borrower's repayment income fell by at least 20 percent within the past 12 months; (ii) The borrower must pay unexpected and unreimbursed expenses resulting from the illness, injury, or death of the borrower or a family member; or (iii) The borrower must pay unexpected and unreimbursed expenses resulting from damage to the security property in cases where adequate hazard insurance was not available or was prohibitively expensive. (2) The borrower occupies the dwelling, unless RHS determines that it is uninhabitable. (3) The borrower's account is not currently accelerated. (b) Reviews of borrower eligibility. (1) Periodically RHS may require the borrower to submit financial information to demonstrate that the moratorium should be continued. The moratorium may be canceled if: (i) The borrower does not respond to a request for financial information; (ii) RHS receives information indicating that the moratorium is no longer required; or (iii) In the case of a moratorium granted to pay unexpected or unreimbursed expenses, the borrower cannot show that an amount at least equal to the deferred payments has been applied toward the expenses. (2) At least 30 days before the moratorium is scheduled to expire, the borrower must provide financial information needed to process the re-amortization of the loan(s). (c) Resumption of scheduled payments. When the moratorium expires or is cancelled, the loan will be re-amortized to include the amount deferred during the moratorium and the borrower will be required to escrow. If the new monthly payment, after consideration of the maximum amount of payment subsidy available to the borrower… | ||||
| 7:7:15.1.14.2.2.5.1.8 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.208 Reamortization using promissory note interest rate. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | Reamortization using the promissory note interest rate may be authorized when RHS determines that reamortization is required to enable the borrower to meet scheduled obligations, and only if the Government's lien priority is not adversely affected. (a) Permitted uses. Reamortization at the promissory note interest rate may be used to accomplish a variety of servicing actions, including to: (1) Repay unauthorized assistance due to inaccurate information. (2) Repay principal and interest accrued and advances made during a moratorium. (3) Bring current an account under a delinquency workout agreement after the borrower has demonstrated the willingness and ability to meet the terms of the loan and delinquency workout agreement and reamortization is in the borrower's and Government's best interests. (4) Bring a delinquent account current in the case of an assumption where the due on sale clause is not triggered as described in § 3550.163(c). (5) Cover the remaining debt when a portion of the security property is being transferred but the acquisition price does not cover the outstanding debt. The remaining balance will be reamortized for a period not to exceed 10 years or the final due date of the note being reamortized, whichever is sooner. (6) Bring an account current where the National Appeals Division (NAD) reverses an adverse action, the borrower has adequate repayment ability, and RHS determines the reamortization is in the best interests of the Government and the borrower. (b) Payment term of reamortized loan. Except as noted in paragraph (a)(5) of this section, the term of the reamortized loan may be extended to the maximum term for which the borrower was eligible at the time the loan was originally made, less the number of years the loan has been outstanding. In all cases, the term must not exceed the remaining security life of the property. | ||||
| 7:7:15.1.14.2.2.5.1.9 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | E | Subpart E—Special Servicing | § 3550.209 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.6.1.1 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | F | Subpart F—Post-Servicing Actions | § 3550.251 Property management and disposition. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002; 87 FR 6773, Feb. 7, 2022] | (a) Policy. Rural Housing Service (RHS) will manage custodial property and Real Estate Owned (REO) property to protect the Government's interest, and may dispose of REO property through direct sales, sealed bid, or auction. RHS will follow affirmative fair housing marketing policies. (b) Custodial property. RHS may take custodial possession of security property that has been abandoned, or for other reasons necessary to protect the Government's security. After taking custodial possession of a security property, RHS may maintain and repair the security property as needed to protect the Government's interest, pay required real estate taxes and assessments, and secure personal property left on the premises. Expenses will be charged to the borrower's account. Custodial property may be leased when it is in the Government's best interest and in such cases the borrower's account will be credited for income from the security property. (c) REO property —(1) Classification. When RHS takes title to a security property, it is classified as either program or nonprogram (NP) property. An REO property that is eligible for financing under the section 502 program, or which could reasonably be repaired to be eligible, is classified as program property. An REO property that cannot reasonably be repaired to be eligible as section 502 property, and property that has been improved to a point that it will no longer qualify as modest under section 502, is classified as NP property. (2) Disclosing decent, safe, and sanitary defects. When RHS determines that an REO property to be sold is not decent, safe, and sanitary, or does not meet cost-effective energy conservation standards, it will disclose the reasons why. The deed by which such an REO property is conveyed will contain a covenant restricting it from residential use until it is decent, safe, and sanitary and meets the RHS cost-effective energy conservation standards. RHS will also notify any potential purchaser of any known lead-based paint hazards. (3) Property on Ind… | ||||
| 7:7:15.1.14.2.2.6.1.2 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | F | Subpart F—Post-Servicing Actions | § 3550.252 Debt settlement policies. | RHS | (a) Applicability. Debt settlement procedures may be initiated to collect any amounts due to RHS including: (1) Balances remaining on loan accounts after all liquidation proceeds or credits have been applied; (2) Subsidy recapture or grant amounts due; and (3) Unauthorized assistance due. (b) Judgment. RHS may seek a judgment whenever a judgment might enable RHS to collect all or a significant portion of an amount owed. (c) Multiple loans. RHS does not settle debts for one loan while other RHS loans on the same security property remain active. (d) Cosigners and claims against estates. RHS may use any and all remedies available under law to collect from any cosigner and from a deceased borrower's estate. (e) Reporting. RHS will report to the Internal Revenue Service and credit reporting agencies any debt settled through cancellation, compromise, or adjustment. (f) Settlement during legal or investigative action. Cases that are under investigation for fiscal irregularity or have been referred to the Office of the Inspector General, the Office of the General Counsel, or the U.S. Attorney will not be considered for debt settlement until final action by the investigating or prosecuting entity has been taken. (g) Offsets. RHS may request offsets as described in § 3550.210 to collect amounts owed. (h) Escrow funds. At liquidation all funds held in escrow or unapplied funds will be applied against the debt. | |||||
| 7:7:15.1.14.2.2.6.1.3 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | F | Subpart F—Post-Servicing Actions | § 3550.253 Settlement of a debt by compromise or adjustment. | RHS | Compromise or adjustment offers may be initiated by the debtor or by RHS. RHS will approve only those compromises and adjustments that are in the best interest of the Government. (a) Compromise. A compromise is an agreement by RHS to release a debtor from liability upon receipt of a specified lump sum that is less than the total amount due. (b) Adjustments. An adjustment is an agreement by RHS to release a debtor from liability generally upon receipt of an initial lump sum representing the maximum amount the debtor can afford to pay and periodic additional payments over a period of up to 5 years. (c) Timing of offers. (1) For a settlement offer to be considered, secured debts must be fully matured under the terms of the debt instrument or must have been accelerated by RHS. (2) Unsecured debts owed after the sale of the security property may be proposed for compromise or adjustment at any time. Debts that were never secured may be proposed for compromise or adjustment when they are due and payable. (d) Retention of security property. The debtor may retain the security property if the compromise payment is at least equal to the net recovery value, and it is in the best interest of the Government to allow the debtor to retain the security property. | |||||
| 7:7:15.1.14.2.2.6.1.4 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | F | Subpart F—Post-Servicing Actions | §§ 3550.254-3550.299 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.2.6.1.5 | 7 | Agriculture | XXXV | 3550 | PART 3550—DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS | F | Subpart F—Post-Servicing Actions | § 3550.300 OMB control number. | RHS | [61 FR 59779, Nov. 22, 1996, as amended at 67 FR 78332, Dec. 24, 2002] | The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0172. Public reporting burden for this collection of information is estimated to vary from 5 minutes to 3 hours per response, with an average of 1 1/2 hours per response, including time for review instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. |
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chapter TEXT,
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