cfr_sections
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70 rows where part_number = 3555 and title_number = 7 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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| 7:7:15.1.14.2.3.1.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.1 Applicability. | RHS | This part sets forth policies for the Single Family Housing Guaranteed Loan Program (SFHGLP) administered by USDA Rural Development. It addresses the requirements of section 502(h) of the Housing Act of 1949, as amended, and includes policies regarding originating, servicing, holding and liquidating SFHGLP loans. Any provision regarding the expenditure of funds under this part is contingent upon the availability of funds. | |||||
| 7:7:15.1.14.2.3.1.1.10 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.10 Definitions and abbreviations. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 26464, May 3, 2016; 84 FR 29038, June 21, 2019; 84 FR 35006, July 22, 2019; 84 FR 70886, Dec. 26, 2019; 90 FR 203, Jan. 3, 2025] | The definitions and abbreviations in this section apply to this part. Acceleration. Demand for immediate repayment of the entire balance of a debt if the covenants in the promissory note, assumption agreement, or security instruments are breached. Adjusted annual income. Income from all household members who live or propose to live in the dwelling as their primary residence for all or part of the ensuing 12 months. Adjusted annual income is used to determine whether an applicant is income-eligible for a guaranteed loan, or interest assistance, if applicable. Adjusted annual income provides for deductions to account for varying household circumstances and expenses. See § 3555.152(c) for a complete description of adjusted annual income. Agency. The Rural Housing Service of the U.S. Department of Agriculture, Rural Development. Agency employee. Any employee of the Rural Housing Service, or any employee of the Rural Development mission area who carries out SFHGLP functions. Alien. See “Qualified alien.” Amortization. A gradual reduction of the mortgage debt through equal monthly principal and interest payments sufficient to fully repay the unpaid principal balance over the mortgage term. 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. Annual fee. A periodic amount that is based on the average annual scheduled unpaid principal balance of the loan and is paid by the servicing lender to Rural Development on an annual basis for issuance of a Loan Note Guarantee. The fee may be passed on to the borrower and included in the monthly mortgage payment of a borrower and is used when calculating payment ratios. Annual income. The income of all household members calculated according to § 3555.152(b). Annual income is used to determine adjusted annual income in § 3555.152(c) for program eligibility purposes. Applicant. An individual applying to a lender for a guaranteed loan. Area media… | ||||
| 7:7:15.1.14.2.3.1.1.11 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | §§ 3555.11-3555.49 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.1.1.12 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.50 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart have been approved by the Office of Management and Budget and have been assigned OMB control number 0575-0179. | |||||
| 7:7:15.1.14.2.3.1.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.2 Purpose. | RHS | (a) General. The purpose of the SFHGLP is to provide low- and moderate-income persons who will live in rural areas with an opportunity to own decent, safe and sanitary dwellings and related facilities. The SFHGLP offers applicants without sufficient resources to provide the necessary housing on their own account, and unable to secure the credit necessary for such housing from other sources upon terms and conditions, which the applicant can reasonably be expected to fulfill without the guarantee, an opportunity to acquire, build, rehabilitate, improve, or relocate dwellings in rural areas. (b) Demonstration programs. Rural Development may authorize limited demonstration programs as allowed by law. The objective of these demonstration programs will be to test new approaches to offering housing under the statutory authority granted to the Secretary. Therefore, such demonstration programs may not be consistent with all of the provisions contained in this part. However, any statutory SFHGLP requirements will remain in effect. | |||||
| 7:7:15.1.14.2.3.1.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.3 Civil rights. | RHS | Rural Development, lenders, and their agents must administer the program fairly, and in accordance with both the letter and the spirit of all equal opportunity, equal credit opportunity and fair housing legislation, and applicable executive orders. Loan guarantees, 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 (provided the applicant has the capacity to enter into a binding contract), handicap, receipt of income from public assistance, sexual orientation, 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), the Equal Credit Opportunity Act (15 U.S.C. 1691), and Executive Order 11063 as amended by Executive Order 12259, as applicable. Rural Development's civil rights compliance requirements are provided in 7 CFR part 1901, subpart E. | |||||
| 7:7:15.1.14.2.3.1.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.4 Mediation and appeals. | RHS | Whenever Rural Development makes a decision that will adversely affect a participant, the participant may proceed with alternative dispute resolution including mediation and a USDA National Appeals Division hearing in accordance with 7 CFR parts 1 and 11. The participant also may request an informal review of the adverse decision made by Rural Development. Except when the adverse decision applies to a loss claim, the applicant or borrower and the lender may participate in the appeal process. Adverse decisions made by the lender cannot be appealed unless concurrence by Rural Development was required by this subpart and obtained by the lender. | |||||
| 7:7:15.1.14.2.3.1.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.5 Environmental requirements. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6428, Feb. 8, 2016; 81 FR 11048, Mar. 2, 2016] | (a) Policy. Rural Development will consider environmental quality, economic, social, and other relevant factors in program development and decision-making processes. Rural Development will take into account potential environmental impacts of proposed projects by working with applicants, other Federal agencies, American 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 environmental quality. (b) Regulatory references. Loan 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. (c) Agency responsibilities. Rural Development is responsible for compliance with all applicable environmental regulations and statutes. (d) Lender and loan applicant responsibilities. (1) Lenders must use due diligence in regard to potential environmental hazards to ensure the property is decent, safe and sanitary and of sufficient value to adequately secure the loan. The level of due diligence review to determine potential environmental hazards must be equivalent to the standards established by Fannie Mae, Freddie Mac, FHA, or the VA. (2) Mortgage loan transactions will be subject to the requirements of the 1994 National Flood Insurance Reform Act to determine if the dwelling is located in a Special Flood Hazard Area (SFHA). (3) On an as needed basis, lenders and loan applicants will assist Rural Development in obtaining such information as Rural Development needs to complete its environmental review and to cooperate in the resolution of environmental problems. (4) Lenders will become familiar with Agency environmental requirements, so they can advise applicants and reduce the probability of unacceptable applications being submitted to Rural Development. (5) The lender must comply with Federally mandated flood insurance purchase requirements. Existing dwel… | ||||
| 7:7:15.1.14.2.3.1.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.6 State and local law. | RHS | Lenders will comply with applicable State and local laws and regulations, including the laws of American Indian tribes. Supplemental guidance will be issued in the case of any conflict with or significant differences from provisions of this part. | |||||
| 7:7:15.1.14.2.3.1.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.7 Exception authority. | RHS | The Administrator of the Agency, or a designee, may make an exception to any requirement or provision of this part or to address any omissions in this part, when the Administrator, or designee, determines that application of the requirement or failure to take action would adversely affect the Government's interest. Any exception must be consistent with the authorizing statute and other applicable laws. | |||||
| 7:7:15.1.14.2.3.1.1.8 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.8 Conflict of interest. | RHS | (a) Applicant or borrower responsibility. The applicant or borrower must disclose to the lender any prohibited relationship or association with any Rural Development employee, and the lender must disclose that information to Rural Development. (b) Lender responsibility. The lender must disclose to Rural Development any prohibited relationship or association it, or any of its employees, has with any Rural Development employee. (c) Prohibited relationships and associations. Prohibited relationships and associations include the following: (1) Immediate family members, including parents and children, whether related by blood or marriage; (2) Close relatives, including grandmother, grandfather, aunt, uncle, sister, brother, niece, nephew, granddaughter, grandson, or first cousin, whether related by blood or marriage; (3) Any household residents; (4) Immediate working relationships, including coworkers in the same office, subordinates, and immediate supervisors; and (5) Close business associations, including business partnerships, joint ventures, or closely held corporations. (d) Result of disclosure. Disclosure of prohibited relationships and associations under this section will not necessarily result in applicant, borrower or lender ineligibility. Disclosures may result in reassignment with regard to the loan guarantee in question so that no prohibited relationships or associations exist between the Rural Development employees responsible for loan guarantee transactions and lenders, borrowers, or applicants. | |||||
| 7:7:15.1.14.2.3.1.1.9 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | A | Subpart A—General | § 3555.9 Enforcement. | RHS | Rural Development will take such actions as are appropriate and necessary to enforce the provisions of these regulations. Such actions will include, but not be limited to, reduction of the loss claim payment; termination of a lender's or servicer's participation in the SFHGLP; suspension and debarment of participation in this or other Federal programs; and, any other appropriate administrative, civil, or criminal actions as allowed by law. Rural Development may assess civil monetary penalties pursuant to Section 543 of the Housing Act of 1949, 42 U.S.C. 1409s(b). | |||||
| 7:7:15.1.14.2.3.2.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.51 Lender eligibility. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 84 FR 70886, Dec. 26, 2019; 87 FR 53371, Aug. 31, 2022] | A lender must meet the requirements described in this section to be approved for participation in the SFHGLP. (a) Ability to underwrite and service loans. The lender must have a demonstrated ability to underwrite and service single-family home loans. A lender will be considered to have such a demonstrated ability if it qualifies as one of the following: (1) A State Housing Agency; (2) A lender approved as a supervised or nonsupervised mortgagee by HUD with direct endorsement authority for submission of applications for Federal Housing Mortgage Insurance; (3) A supervised or nonsupervised mortgagee with authority to close VA-guaranteed loans on the automatic basis; (4) A lender approved by Fannie Mae for single-family loans; (5) A lender approved by Freddie Mac for single-family loans; (6) A Farm Credit System institution that provides documentation of its ability to underwrite and service single-family loans. Lenders who are a Farm Credit System lender with direct lending authority meet demonstrated ability; (7) A lender participating in other Rural Development or Farm Service Agency guaranteed loan programs that provide documentation of its ability to underwrite and service single family loans. Documentation criteria for other Rural Development or Farm Service Agency guarantee loan programs require an active lender agreement; or (8) A Federally supervised lender that provides documentation of its ability to originate, underwrite, and service single-family loans. Acceptable sources of supervision include: (i) Being a member of the Federal Reserve System. (ii) The Federal Deposit Insurance Corporation (FDIC). (iii) The National Credit Union Administration (NCUA). (iv) The Office of the Comptroller of the Currency (OCC). (v) The Federal Housing Finance Board regulating lenders within the Federal Home-Loan Bank (FHLB) system. (9) If lenders cannot meet the requirements under paragraphs (a)(1) through (8) of this section, they may demonstrate its ability to originate and underwrite loans by submittin… | ||||
| 7:7:15.1.14.2.3.2.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.52 Lender approval. | RHS | (a) Initial approval. The lender must apply for and receive approval from Rural Development to participate in the SFHGLP. Application forms are available from Rural Development. (b) Conditions of approval. The lender must provide evidence to support their ability to originate, underwrite and/or service SFHGLP loans as outlined in § 3555.51(a), including evidence of the lender's internal loan criteria and quality control. New lenders will be subject to mandatory training prior to lender approval in accordance with Agency procedures. (c) Termination of approval. Lender approval may be terminated in any of the following situations: (1) Lapse of any eligibility requirement. In the event that a lender fails to meet any of the requirements described in § 3555.51, the lender must notify Rural Development immediately. Rural Development may terminate the lender's approval upon written notice and in accordance with the lender's agreement. The Agency may take other appropriate corrective action due to non-compliance with any of the requirements in this part and the lender's agreement. A lender whose approval has been terminated must sell any SFHGLP loans it holds to an approved lender immediately, and in no event later than 6 months, after termination of approval. (2) Voluntary withdrawal. The lender may choose to end participation in the SFHGLP at any time. If the withdrawing lender has originated SFHGLP loans and obtained conditional commitments but has not closed the loans, or is holding or servicing SFHGLP loans, the lender must make arrangements prior to withdrawing for the transfer of such loans to lenders approved to participate in the SFHGLP. | |||||
| 7:7:15.1.14.2.3.2.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.53 Contracting for loan origination. | RHS | Lenders may contract with mortgage brokers, non-approved lenders, or other entities for loan origination services, closing services, or both, provided the loan is transferred immediately after closing to an Agency approved lender to which the guarantee will be issued. The approved lender is responsible for ensuring that the loan is properly underwritten, obtaining the conditional commitment, ensuring that the loan is properly closed, and ensuring that all closing costs, financing, and settlement fees meet Agency program requirements. | |||||
| 7:7:15.1.14.2.3.2.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.54 Sale of loans to approved lenders. | RHS | Lenders may sell SFHGLP loans only to other Agency-approved lenders, Fannie Mae, Freddie Mac, or the Federal Home Loan Banks. In such a sale, the purchasing lender acquires all rights of the selling lender under the Loan Note Guarantee, and assumes all of the selling lender's obligations contained in any note, security instrument, or Loan Note Guarantee in connection with the loan purchased. The purchasing lender may be subject to any defenses, claims, or offsets that Rural Development would have had against the selling lender if the selling lender had continued to hold the loan. The lender must notify Rural Development immediately upon the sale or transfer of servicing of a SFHGLP loan. | |||||
| 7:7:15.1.14.2.3.2.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.55 xxx | RHS | ||||||
| 7:7:15.1.14.2.3.2.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | §§ 3555.56-3555.99 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.2.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | B | Subpart B—Lender Participation | § 3555.100 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart have been approved by the Office of Management and Budget and have been assigned OMB control number 0575-0179. | |||||
| 7:7:15.1.14.2.3.3.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.101 Loan purposes. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6428, Feb. 8, 2016; 81 FR 26464, May 3, 2016] | Loan funds must be used to acquire a new or existing dwelling to be used by the applicant as a principal residence. (a) Eligible purposes. Loan funds may be used for: (1) The construction or purchase of a new dwelling; (2) The cost of acquisition of an existing dwelling; (3) The cost of repairs associated with the acquisition of an existing dwelling; or (4) Acquisition and relocation of an existing dwelling. (b) Eligible costs. Loan funds also may be used to pay for the following items associated with the acquisition of a dwelling: (1) Purchase and installation of essential household equipment in the dwelling such as wall-to-wall carpeting, ovens, ranges, refrigerators, washing machines, clothes dryers, heating and cooling equipment, and other similar items as long as the equipment is conveyed with the dwelling and such items are typically included in the purchase of similar dwellings in the area. (2) Purchase and installation of energy-saving measures. (3) Site preparation including grading, foundation, plantings, seeding or sodding, trees, walks, fences, and driveways to the home. (4) A supplemental loan to provide funds for seller equity or essential repairs when an existing guaranteed loan is assumed simultaneously. (5) Special design features or equipment when necessary because of a physical disability of the applicant or a member of the household. (6) Loan funds may be used to pay for reasonable and customary expenses related to obtaining the loan. Allowable loan expenses include: (i) Legal, architectural, and engineering fees; (ii) Title exam, title clearance and title insurance; (iii) Transfer taxes and recordation fees; (iv) Appraisal, property inspection, surveying, environmental, tax monitoring, and technical services; (v) Homeownership education. (vi) Reasonable and customary loan discount points to reduce the note interest rate from the rate authorized in § 3555.104(a). (vii) Reasonable and customary non-recurring closing costs associated with the mortgage transaction that do n… | ||||
| 7:7:15.1.14.2.3.3.1.10 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | §§ 3555.110-3555.149 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.3.1.11 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.150 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. | |||||
| 7:7:15.1.14.2.3.3.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.102 Loan restrictions. | RHS | A guarantee will not be issued if loan funds are to be used for: (a) Existing manufactured homes. Purchase of an existing manufactured home, except as provided in § 3555.208(b)(3); (b) Income producing land or buildings. Purchase or improvement of land or buildings that are typically used principally for income-producing purposes; (c) Business or income-producing enterprise. Purchase or the construction of buildings which are largely or in part specifically designed to accommodate a business or income-producing enterprise; (d) Loan discount points. Loan discount points, except as provided in § 3555.101(b)(6)(vi); (e) Refinancing. Refinancing, except as provided in § 3555.101(d); (f) Buydown. Establishing a buydown account; (g) Lease. Payments on a lease; or (h) Seller concessions. Purchasing a home if the seller, or other interested third party, contributes more than 6 percent, unless otherwise provided by the Agency, of the property's sales price toward the purchaser's mortgage financing costs, closing costs, escrow accounts, furniture or other giveaways. | |||||
| 7:7:15.1.14.2.3.3.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.103 Maximum loan amount. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6428, Feb. 8, 2016] | The amount of the loan must not exceed the lesser of: (a) Market value. The market value of the property as determined by an appraisal that meets Agency requirements plus the amount of the up-front loan guarantee fee required by § 3555.107(g), or (b) Purchase price and acquisition costs. The total of the purchase price and all eligible acquisition costs as permitted by § 3555.101. (c) Newly constructed dwelling—limited to 90 percent. A newly constructed dwelling that does not meet the definition of an existing dwelling, as defined at § 3555.10, and cannot meet the inspection and warranty requirements of § 3555.202(a) of this subpart is limited to 90 percent of the present market value. The dwelling must meet or exceed the International Energy Conservation Code (IECC) in effect at the time of construction. | ||||
| 7:7:15.1.14.2.3.3.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.104 Loan terms. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6428, Feb. 8, 2016; 84 FR 35006, July 22, 2019] | (a) Interest rate. The loan must be written at an interest rate that: (1) Is fixed over the term of the loan; (2) Shall be negotiated between the lender and the borrower to allow the borrower to obtain the best available rate in compliance with all applicable laws. (3) If the interest rate increases between the time of the issuance of the conditional commitment and the loan closing, the lender will submit appropriate documentation and underwriting analysis to confirm that the applicant is still eligible. (4) The warehouse lender may charge an interest rate for interim construction financing that exceeds the underlying promissory note rate. After construction ends, the interest rate must revert to a rate that is no higher than the underlying promissory note rate. The Agency reserves the right to establish a maximum amount for the interim construction financing interest rate in the handbook, as necessary to further program goals and protect the best interests of the government. (b) Repayment period. The term of the loan may not exceed 30 years. Adjustable rate mortgages, balloon term mortgages or mortgages requiring prepayment penalties are ineligible terms. (c) Repayment schedule. Amortized payments will be due and payable monthly. (d) Negative amortization. The loan note must not provide for interest on interest. | ||||
| 7:7:15.1.14.2.3.3.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.105 Combination construction and permanent loans. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 84 FR 35006, July 22, 2019; 87 FR 53372, Aug. 31, 2022] | Guarantees of combination construction and permanent loans are subject to the following conditions: (a) Lender requirements. In addition to other lender requirements of this part, lenders seeking guarantees of combination construction and permanent loans must: (1) Have two or more years experience making and administering construction loans. (2) Submit an executed construction contract with each loan application package. (3) Review and approve construction contractors or builders. The lender will conduct due diligence investigations to determine that the contractor or builder meets the minimum requirements in paragraph (b) of this section. Evidence of the contractor or builder's compliance must be made available by the lender upon request of the Agency. (4) Close the loan prior to the start of construction with proceeds disbursed to cover the cost of, or balance owed on, the land and the balance into escrow. (5) Pay out monies from escrow to the builder during construction. The lender must obtain written approval from the borrower before each draw payment is provided to the builder. The borrower and lender are jointly responsible for approving disbursements during the construction phase. The lender must ensure that the appropriate work has been completed prior to releasing each draw. The Agency may require the lender to submit a draw and disbursement ledger for any loan guarantee upon request. (6) Obtain documentation that confirms the construction of the subject property is complete. (b) Contractor or builder requirements. Contractors or builders of homes financed with guaranteed combination construction and permanent loans must at least have: (1) Two or more years experience building or constructing all aspects of single family dwellings similar to the type of project being proposed; (2) State-issued construction or contractor licenses, as required by State or local law; (3) Insurance for commercial general liability of at least $500,000; (4) Contractors or builders who are constructing their ow… | ||||
| 7:7:15.1.14.2.3.3.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.106 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.3.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.107 Application for and issuance of the loan guarantee. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 87 FR 6776, Feb. 7, 2022] | (a) Processing of applications. Except as provided in this section, Rural Development will process loan guarantee applications in the order that completed applications are received. Application forms and instruction procedures are available at any Rural Development office. (1) If analysis of the utilization of funds during the fiscal year indicates that, at the rate of current utilization, funds may not be sufficient to sustain that level of activity for the remainder of the fiscal year, the Agency may determine a shortage of funds exists. (2) When there is a shortage of funds, the Agency will limit SFHGLP loans to first-time homebuyers or veterans. First-time homebuyers and veterans will be served in the order their applications are received. (b) Automated underwriting. Approved lenders are required to process SFHGLP loans using Rural Development's automated systems. The automated underwriting system is a tool to help evaluate credit risk but does not substitute or replace the careful judgment of experienced underwriters and shall not be the exclusive determination on extending credit. The lender must apply for and receive approval from Rural Development to utilize the automated underwriting system. Rural Development reserves the right to terminate the lender's use of the automated underwriting system. (1) Lenders are responsible for ensuring all data is true and accurately represented in the automated underwriting system. (2) Full documentation and verification, in accordance with Subparts C, D and E of this part, will be retained in the lender's permanent loan file and must confirm the applicant's eligibility, creditworthiness, repayment ability, eligible loan purpose, sufficient collateral, and all other regulatory requirements. (3) The use of Rural Development's automated underwriting system subjects the lender to indemnification requirements in accordance with § 3555.108. (4) If a loan receives an “Accept” underwriting recommendation, the lender is generally permitted to submit minimal documentat… | ||||
| 7:7:15.1.14.2.3.3.1.8 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.108 Full faith and credit. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 81 FR 26464, May 3, 2016] | (a) General. The Loan Note Guarantee constitutes an obligation supported by the full faith and credit of the United States and is incontestable except for fraud or misrepresentation of which the lender has actual knowledge at the time it becomes such lender or which the lender participates in or condones. Misrepresentation includes negligent misrepresentation. (b) Interest. A note that provides for the payment of interest on interest, however, shall not be guaranteed. If the note to which the Loan Note Guarantee is attached or relates provides for the payment of interest on interest, then the Loan Note Guarantee is void. Notwithstanding the prohibition of interest on interest, interest may be capitalized in connection with re-amortization under subpart G of this part. (c) Violations. The Loan Note Guarantee will be unenforceable by the lender to the extent any loss is occasioned by violation of usury laws, civil rights laws, negligent servicing, failure to obtain the required security or use of loan funds for unauthorized purposes, regardless of the time at which Rural Development acquires knowledge of the foregoing. Negligent servicing is defined as servicing that is inconsistent with this subpart and includes the failure to perform those services which a reasonably prudent Lender would perform in servicing its own loan portfolio of loans that are not guaranteed. The term includes not only the concept of a failure to act, but also not acting in a timely manner or acting contrary to the manner in which a reasonably prudent Lender would act up to the time of loan maturity or until a final loss is paid. (d) Indemnification. The loan note guarantee will remain in effect for any holder of the loan who acquired it from an originating lender. If the Agency determines that a lender did not originate a loan in accordance with the requirements in this part, and the Agency pays a claim under the loan guarantee, the Agency may revoke the originating lender's eligibility status in accordance with subpart B of this… | ||||
| 7:7:15.1.14.2.3.3.1.9 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | C | Subpart C—Loan Requirements | § 3555.109 Qualified mortgage. | RHS | [81 FR 26464, May 3, 2016] | A qualified mortgage is a guaranteed loan meeting the requirements of this part and applicable Agency guidance, as well as the requirements in 12 CFR 1026.43(e)(2)(i) through (iii) and 12 CFR 1026.43(e)(3). An extension of credit made pursuant to a program administered by a State Housing Finance Agency is exempt from this requirement as defined in 12 CFR 1026.43(a)(3)(iv). Lenders will be allowed to cure unintentional errors and retain the qualified mortgage status if the conditions set in 12 CFR 1026.31(h) are met. | ||||
| 7:7:15.1.14.2.3.4.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | D | Subpart D—Underwriting the Applicant | § 3555.151 Eligibility requirements. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 87 FR 6776, Feb. 7, 2022; 87 FR 53372, Aug. 31, 2022] | (a) Income eligibility. At the time of loan approval, the household's adjusted income must not exceed the applicable moderate income limit. The lender is responsible for documenting the household's income to determine eligibility for the SFHGLP. (b) Citizenship status. Applicants must provide evidence acceptable to the Agency of their status as United States citizens, U.S. non-citizen nationals, or qualified aliens, as defined in § 3555.10. (c) Principal residence. Applicants must agree and have the ability to occupy the dwelling as their principal residence. The Agency may require evidence of this ability. Rural Development will not guarantee loans for investment properties, or temporary, short-term housing. (d) Adequate dwelling. The dwelling must be modest, decent, safe, and sanitary. (e) Eligibility of current homeowners. Current homeowners may be eligible for guaranteed home loans under this part if all the following conditions are met: (1) The applicants are not financially responsible for another Agency guaranteed or direct home loan by the time the guaranteed home loan is closed; (2) The current home no longer adequately meets the applicants' needs; (3) The applicants will occupy the home financed with the SFHGLP loan as their primary residence; (4) The applicants are without sufficient resources or credit to obtain the dwelling on their own without the guarantee; (5) No more than one single family housing dwelling other than the one associated with the current loan request may be retained; and (6) The applicants must be financially qualified to own more than one home. In order for net rental income from the retained dwelling to be considered for the applicant's repayment ability, the consistency of the rental income must be demonstrated for at least the previous 24 months, and the current lease must be for a term of at least 12 months after the loan is closed. (f) Legal capacity. Applicants must have the legal capacity to incur the loan obligation, or have a court-appointed guardia… | ||||
| 7:7:15.1.14.2.3.4.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | D | Subpart D—Underwriting the Applicant | § 3555.152 Calculation of income and assets. | RHS | The lender must obtain and maintain documentation in the loan file supporting the lender's determination of all income and assets described in this section. (a) Repayment income. Repayment income is the amount of adequate and stable income from all sources that parties to the promissory note are expected to receive. Repayment income is used to determine the applicant's ability to repay a loan. (1) The lender must examine the applicant's past income record for at least the past 2 years and any applicable training and/or education. The Agency may require additional information and documentation from self-employed applicants and applicants employed by businesses owned by family members. (2) The lender must establish an applicant's anticipated amount of repayment income and the likelihood of its continuance for at least the next 3 years to determine an applicant's capacity to repay a requested mortgage loan in accordance with § 3555.151(h)(1). (3) Income may not be used in calculating an applicant's ratios if it is from any source that cannot be verified, is not stable, or is likely not to continue. (4) The following types of income are examples of income not included in repayment income: (i) Any student financial aid received by household members for tuition, fees, books, equipment, materials, and transportation; (ii) Amounts received that are specifically for, or in reimbursement of the cost of medical expenses for any family member; (iii) Temporary, nonrecurring, or sporadic income (including gifts); (iv) Lump sum additions to family assets such as inheritances, capital gains, insurance payments and personal or property settlements; (v) Payments for the care of foster children or adults; and (vi) Supplemental Nutrition Assistance Program payments. (b) Annual income. Annual income is the income of all household members, regardless of whether they will be parties to the promissory note. (1) Applicants must provide the income, expense and household information necessary to enable the lender to make i… | |||||
| 7:7:15.1.14.2.3.4.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | D | Subpart D—Underwriting the Applicant | §§ 3555.153-3555.199 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.4.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | D | Subpart D—Underwriting the Applicant | § 3555.200 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. | |||||
| 7:7:15.1.14.2.3.5.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.201 Site requirements. | RHS | (a) Rural areas. Rural Development will only guarantee loans made in rural areas designated as rural by Rural Development. However, if a rural area designation is changed to nonrural: (1) Existing conditional commitments in the former rural area will be honored; (2) A supplemental loan may be made in accordance with § 3555.101 in conjunction with a transfer and assumption of a guaranteed loan; (3) Loan requests where the application and purchase contract was complete prior to the area designation change may be approved; and (4) REO property sales and transfers with assumption may be processed. (b) Site standards. Sites must be modest and developed in accordance with any standards imposed by a State or local government and must meet all of the following requirements. (1) The site size must be typical for the area. (2) The site must not include income-producing land or buildings to be used principally for income-producing purposes. Vacant land without eligible residential improvements, or property used primarily for agriculture, farming or commercial enterprise is ineligible for a loan guarantee. (3) The site must be contiguous to and have direct access from a street, road, or driveway. Streets and roads must be hard surfaced or all weather surfaced and legally enforceable arrangements must be in place to ensure that needed maintenance will be provided. (4) The site must be supported by adequate utilities and water and wastewater disposal systems. Certain water and wastewater systems that are privately-owned may be acceptable if the lender determines that the systems are adequate, safe, compliant with applicable codes and requirements, and the cost or feasibility to connect to a public or community system is not reasonable. Certain community-owned water and wastewater systems may be acceptable if the lender determines that the systems are adequate, safe, and compliance with applicable codes and requirements. The Agency may require inspections on individual, central, or privately-owned and operated wate… | |||||
| 7:7:15.1.14.2.3.5.1.10 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | §§ 3555.210-3555.249 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.5.1.11 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.250 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. | |||||
| 7:7:15.1.14.2.3.5.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.202 Dwelling requirements. | RHS | (a) New dwellings. New dwellings must be constructed in accordance with certified plans and specifications, and must meet or exceed the International Energy Conservation Code (IECC) in effect at the time of construction. The lender must obtain and retain evidence of construction costs, inspection reports, certifications, and builder warranties acceptable to Rural Development. (b) Existing dwellings. Existing dwellings are considered to meet the following criteria when inspected and certified as meeting HUD requirements for one-to-four unit dwellings in accordance with Agency guidelines: (1) Be structurally sound; (2) Be functionally adequate; (3) Be in good repair, or to be placed in good repair with loan funds; and (4) Have adequate and safe electrical, heating, plumbing, water, and wastewater disposal systems. (c) Escrow account for exterior or interior development. This paragraph does not apply if the development is related to a “combination construction and permanent loan” under § 3555.101(c). If a dwelling is complete with the exception of interior or exterior development work, Rural Development may issue the Loan Note Guarantee on the loan if the following conditions are met: (1) The incomplete work does not affect the habitability of the dwelling, nor the health or safety of the housing occupants. (2) The cost of any remaining interior or exterior work is not greater than 10 percent of the final loan amount. (3) An escrow account is funded in an amount sufficient to assure the completion of the remaining work. This figure must be at least 100 percent of the cost of completion but may be higher if the lender determines a higher amount is needed. (4) The builder or a licensed contractor has executed a contract providing for completion of the planned development within 180 days of loan closing. If the borrower will be completing the planned development on an existing dwelling without the services of a contractor, the requirement for an executed contract is waived when all of the following cond… | |||||
| 7:7:15.1.14.2.3.5.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.203 Ownership requirements. | RHS | [78 FR 73941, December 9, 2013, as amended at 90 FR 203, Jan. 3, 2025] | After the loan is closed, the borrower must have an acceptable ownership 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) Secured leasehold interest. Loans may be guaranteed on leasehold properties. If the conditions in this subsection are met: (1) The applicant is unable to obtain fee simple title to the property; (2) Such leaseholds are fully marketable in the area, except in the case of properties located on American Indian restricted land; (3) The lease has an unexpired term of at least 45 years from the date of loan closing, except in the case of properties located on Tribal Trust land, individual (allotted) Trust land, or Tribal restricted fee land, where the lease must have an unexpired term at least equal to the term of the loan. Leases on Tribal Trust land, individual Trust (allotted) land, or Tribal restricted fee land, for period of 25 years which are renewable for a second 25 year period are permissible, as are leases of a longer duration. For new energy efficient manufactured and modular home financing in land-lease communities operating on a nonprofit basis and on Tribal Trust land, the Agency will accept a lease with an unexpired term that is at least two years longer than the loan term; (4) The mortgage must cover both the property improvements and the leasehold interest in the land; (5) The leasehold estate must constitute real property, be subject to the mortgage lien, be insured by a title policy, be assignable or transferable and cannot be terminated except for nonpayment of lease rents; and (6) The lease must be recorded in the appropriate local real estate records. | ||||
| 7:7:15.1.14.2.3.5.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.204 Security requirements. | RHS | Rural Development will only guarantee loans that are adequately secured. A loan will be considered adequately secured only when all of the following requirements are met: (a) Recorded security document. The lender obtains at closing, a mortgage on all required ownership and leasehold interests in the security property and ensures that the loan is properly closed. (b) Prior liens. No liens prior to the guaranteed mortgage exist except in conjunction with a supplemental loan for transfer and assumption. The guaranteed loan must have first lien position at closing. Junior liens by other parties are permitted as long as the junior liens do not adversely affect repayment ability or the security for the guaranteed loan. (c) Adequate security. Existing and proposed property improvements are completely on the site and do not encroach on adjoining property. (d) Collateral. All collateral secures the entire loan. | |||||
| 7:7:15.1.14.2.3.5.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.205 Special requirements for condominiums. | RHS | Loans may be guaranteed for condominium units in condominium projects that meet all the requirements of this part, as well as the standards for condominium standards established by HUD, Fannie Mae, VA, or Freddie Mac, including those related to self-certification, warranty, underwriting, and ineligible condominium projects. | |||||
| 7:7:15.1.14.2.3.5.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.206 Special requirements for community land trusts. | RHS | A community land trust must meet the definition in accordance with § 3555.10 and other requirements described in this subpart. Loans may be guaranteed for dwellings on land owned by a community land trust only if: (a) Rural Development review. Rural Development reviews and accepts any restrictions imposed by the community land trust on the property or applicant before loan closing. The Agency may place conditions on the approval of restrictions on resale price and rights of first refusal. (b) Foreclosure termination. The community land trust automatically and permanently terminates upon foreclosure or acceptance by the lender of a deed in lieu of foreclosure. (c) Organization. The organization must meet the definition of a community land trust as defined in the Housing Act of 1949 and the following requirements: (1) Be organized under State or local laws. (2) Members, founders, contributors or individuals cannot benefit from any part of net earnings of the organization. (3) The organization must be dedicated to decent affordable housing for low-and moderate-income people. (4) Comply with financial accountability. (d) Lender documentation. The lender's file must contains documentation that the community land trust has community support, local market acceptance and 2 years of prior experience in providing affordable housing. (e) Appraisals. A property located on a site owned by a community land trust must be appraised as leasehold interest and meet the provisions of § 3555.203. | |||||
| 7:7:15.1.14.2.3.5.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.207 Special requirements for Planned Unit Developments (PUDs). | RHS | Loans may be guaranteed for PUDs that meet all of the requirements of this part, as well as the criteria for PUDs established by HUD, VA, Fannie Mae, or Freddie Mac. | |||||
| 7:7:15.1.14.2.3.5.1.8 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.208 Special requirements for manufactured homes. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 90 FR 203, Jan. 3, 2025] | Loans may be guaranteed for manufactured homes if all the requirements in this section are met. (a) Eligible costs. In addition to the loan purposes described in § 3555.101, Rural Development may guarantee a loan used for the following purposes related to manufactured homes when a real estate mortgage covers both the unit and the site: (1) Purchase of a new manufactured home, transportation, permanent foundation, and installation costs of the manufactured home, and purchase of an eligible site if not already owned by the applicant; and (2) Site development work properly completed to HUD, state and local government standards, as well as the manufacturer's requirements for installation on a permanent foundation. (3) An existing unit and site, provided: (i) The unit was constructed in conformance with the Federal Manufactured Home Construction and Safety Standards (FMHCSS) as evidenced by both an affixed HUD Certification label and HUD Data Plate; and (ii) The unit was installed on a permanent foundation in accordance with the manufacturer's requirements and HUD installation standards. Certification of a proper foundation is required; and (iii) The unit has not been previously installed on a different homesite, or had any alterations since construction in the factory, except for porches, decks or other structures which were built to engineered designs or were approved and inspected by local code officials; and (iv) The unit was constructed on or after a date determined by the Agency. (b) Loan restrictions. The following loan restrictions are in addition to the loan restrictions contained in § 3555.102: (1) A loan will not be guaranteed if it is used to purchase a site without also financing a new unit. (2) A loan will not be guaranteed if it is used to purchase furniture, including but not limited to: movable articles of personal property such as drapes, beds, bedding, chairs, sofas, divans, lamps, tables, televisions, radios, and stereo sets. Furniture does not include wall-to-wall carpeting, refrige… | ||||
| 7:7:15.1.14.2.3.5.1.9 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | E | Subpart E—Underwriting the Property | § 3555.209 Rural Energy Plus loans. | RHS | Loans guaranteed under Rural Energy Plus provisions are for the purchase of energy-efficient homes. Homes that meet the most current IECC standards including existing homes that are retrofitted to those standards are eligible. Energy-efficient homes result in lower utility bills, conserve energy, and thus, make more income available for monthly debt obligations. For loans guaranteed under this subpart, the lender will certify that the home meets the most current IECC standards. The Handbook will define what further flexibilities can be extended. | |||||
| 7:7:15.1.14.2.3.6.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.251 Servicing responsibility. | RHS | (a) Servicing action. Lenders must perform those servicing actions that a reasonable and prudent lender would perform in servicing its own portfolio of non-guaranteed loans. (b) Third party servicer. A lender may contract with a third party to service its loans, but the servicing lender of record remains responsible for the quality and completeness of the servicing. (c) Transfer of servicing. Rural Development may require a lender to transfer its loan servicing activities to an approved lender if Rural Development determines that the lender has failed to provide acceptable servicing. (d) Non-compliance. Lenders who fail to comply with Agency requirements or program guidelines may be subject to withdrawal of lender approval, denial and/or reduction in loss claims, withdrawal of the loan guarantee and/or indemnification in accordance with § 3555.108(d). | |||||
| 7:7:15.1.14.2.3.6.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.252 Required servicing actions. | RHS | Lender servicing responsibility includes, but is not limited to, the following actions. (a) Collecting regularly scheduled payments. Lender must collect regularly scheduled loan payments and apply them to the borrower's account. (b) Payment of taxes and insurance. Lenders must ensure that real estate taxes, assessments, and flood and hazard insurance premiums for all property that secures a guaranteed loan are paid on schedule. (1) Establish escrow account. Lenders with the capacity to escrow funds must establish escrow accounts for all guaranteed loans for the payment of taxes and insurance. Escrow accounts must be administered in accordance with the Real Estate Settlement and Procedures Act (RESPA) of 1974, and insured by the FDIC or the NCUA. (2) Plan and responsibility of lender to ensure payment. Lenders that do not have the capacity to escrow funds must implement procedures, subject to Agency approval, to ensure the borrower pays such obligations on a timely basis. In addition, such lenders must accept the responsibility for payment of taxes and insurance that comes due prior to liquidation. Rural Development will not include any taxes or insurance amounts that accrued prior to acceleration in any potential loss claim. Rural Development may revoke the acceptance of the lender's plan if loan performance indicates that delinquency and loss rates are being affected by the lender's inability to escrow for taxes, assessment, and insurance. This alternative is not available to lenders who contract for servicing. (c) Insurance. (1) Until the loan is paid in full, lenders must ensure that borrowers maintain hazard and flood insurance as required, on property securing guaranteed loans. The insurance must be issued by companies in amounts, and on terms and conditions, acceptable to Rural Development. Flood insurance through the National Flood Insurance Program must be maintained for all property located in special flood or mudslide areas identified by FEMA and must be consistent with mortgage industry … | |||||
| 7:7:15.1.14.2.3.6.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.253 Late payment charges. | RHS | Late payment charges will not be covered by the guarantee and cannot be added to the principal and interest due under any guaranteed note. (a) Maximum amount. Any late payment charge must be reasonable and customary for the area. (b) Loans with interest assistance. The lender must not charge a late fee if the only unpaid portion of the borrower's scheduled payment is interest assistance owed by Rural Development. | |||||
| 7:7:15.1.14.2.3.6.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.254 Final payments. | RHS | [81 FR 6429, Feb. 8, 2016] | Lenders may release security instruments only after payment for the satisfaction of the full debt, including any recapture, has been received and verified. | ||||
| 7:7:15.1.14.2.3.6.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.255 Borrower actions requiring lender approval. | RHS | (a) Mineral leases. A lender may consent to the lease of mineral rights and subordinate its lien to the lessee's rights and interests in the mineral activity if the security property will remain suitable as a residence, the lender's security interest will not be adversely affected, and Rural Development's environmental requirements are met. Concurrence by Rural Development prior to consenting to the lease of mineral rights is required, unless otherwise provided by the Agency. Subordination of guaranteed 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, the lender may consent to the lease only if the borrower assigns 100 percent of the income from the lease to the lender to be applied to reduce the principal balance, and the total rent to be paid is at least equal to the estimated decrease in the market value of the security property. (2) If the proposed activity is not likely to decrease the value of the security property, the lender 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 the lender to be applied to reduce the principal balance. (b) Partial release of security property. A lender may consent to transactions affecting a security property, such as selling or exchanging security property or granting of a right-of-way across the security property, and grant a partial release, provided that the following conditions are met. (1) The borrower will receive adequate compensation, and either make a reduction to the principal balance or make improvements to the security property, in order to maintain the current loan-to-value ratio for the guaranteed loan. (i) For sale of security property, the borrower must receive cash in an amount equal to or greater than the value of the security property being sold or interests being conveyed. (ii) For ex… | |||||
| 7:7:15.1.14.2.3.6.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.256 Transfer and assumptions. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016] | (a) Transfer without assumption. (1) The lender must notify Rural Development if the borrower transfers the security property and the transferee does not assume the debt. (2) Except as described in paragraph (d) of this section, if a security property is transferred with the lender's knowledge without assumption of the debt, Rural Development will void the guarantee. (b) Transfer with assumption. (1) The lender must obtain Agency approval before consenting to a transfer with an assumption of the outstanding debt. (2) Rural Development may approve a transfer with an assumption of the outstanding debt if the following conditions are met: (i) The transferee must assume the entire outstanding debt and acquire all property securing the guaranteed loan balance; however, the transferor must remain personally liable. The transferor must pay any recapture as a result of interest subsidy granted, if applicable, owed at the time of the transfer and assumption. (ii) The transferee must meet the eligibility requirements described in subpart D of this part. (iii) The property must meet the site and dwelling requirements described in subpart E of this part, or be brought to those standards prior to the transfer. Guaranteed loans secured by properties located in areas that have ceased to be rural may be assumed notwithstanding the fact that the property is located in a non-rural area. (iv) The priority of the existing lien securing the guaranteed loan must be maintained or improved. (v) Any new rates and terms must not exceed the rates and terms allowed for new loans under this part, and the interest rate must not exceed the interest rate on the initial loan. (vi) A new guarantee fee, calculated based on the remaining principal balance, must be paid to Rural Development in accordance with § 3555.107(g). (vii) If additional financing is required to complete the transfer and assumption or to make needed repairs, Rural Development may approve a supplemental guaranteed loan provided adequate security exists. (viii) Th… | ||||
| 7:7:15.1.14.2.3.6.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.257 Unauthorized assistance. | RHS | (a) Unauthorized assistance due to false information. (1) If the borrower receives a guaranteed loan based on false information provided by the borrower, Rural Development may require the lender to accelerate the guaranteed loan. After the lender accelerates the loan upon request, the lender may submit a claim for any loss. If the lender fails to accelerate the loan upon request, Rural Development may reduce or void the guarantee. (2) If the borrower receives a guaranteed loan based on false information provided by the lender, Rural Development may void the guarantee subject to the provisions of § 3555.108. (3) If the borrower or lender provides false information, Rural Development may pursue criminal and civil false claim actions, suspension and/or debarment, and take all other appropriate action. (b) Unauthorized assistance due to inaccurate information. Rural Development will honor a guarantee for a loan made to an applicant who receives a guaranteed loan based on inaccurate information if the applicant was eligible to receive the guaranteed loan at the time it was made, and if the loan funds were used only for eligible loan purposes. | |||||
| 7:7:15.1.14.2.3.6.1.8 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | §§ 3555.258-3555.299 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.6.1.9 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | F | Subpart F—Servicing Performing Loans | § 3555.300 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. | |||||
| 7:7:15.1.14.2.3.7.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.301 General servicing techniques. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6429, Feb. 8, 2016; 84 FR 70886, Dec. 26, 2019] | In accordance with industry standards and as provided by the Agency: (a) Prompt action. Lenders shall take prompt action to collect overdue amounts from borrowers to bring a delinquent loan current in as short a time as possible to avoid foreclosure to the extent possible and minimize losses. (b) Evaluation of borrower. Lenders must evaluate loans and take appropriate loss mitigation actions in an effort to resolve any repayment problems and provide borrowers with the maximum opportunity to become successful homeowners. (c) Prompt contact. In the event of default, the lender shall promptly contact the borrower within a timeframe specified by the Agency. (d) Determine ability to cure. The lender must make a reasonable effort to obtain from the borrower information regarding the reason for default, the borrower's current financial situation and any other necessary information to evaluate the borrower's ability to cure the default and determine a feasible plan for collection, and/or alternatives to foreclosure. (e) Communication. Before an account becomes 60 days past due and if there is no payment arrangement in place, the lender must send a certified letter to the borrower requesting an interview for the purpose of resolving the past due account. (f) Prior to liquidation. Before an account becomes 60 days past due or before initiating liquidation, the lender must assess the physical condition of the property, determine whether it is occupied, and take necessary steps to protect the property. (g) Maintain documentation. The lender must maintain documentation demonstrating that requirements in this subpart have been met and what steps have been taken to save a mortgage prior to making a decision to foreclose. (h) Formal servicing plan. The lender must report a formal servicing plan to the Agency utilizing a web-based automated system when a borrower's account is delinquent for 90 days or more and a method other than foreclosure is recommended to solve the delinquency. | ||||
| 7:7:15.1.14.2.3.7.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.302 Protective advances. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6430, Feb. 8, 2016; 84 FR 70886, Dec. 26, 2019] | Lenders may pay the following pre-liquidation expenses necessary to protect the security property and charge the cost against the borrower's account. (a) Advances for taxes and insurance. Without prior Agency concurrence, lenders may advance funds to pay past due real estate taxes, hazard and flood insurance premiums, and other related costs. (b) Advances for costs other than taxes and insurance. Protective advances for costs other than taxes and insurance, such as emergency repairs, can be made only if the borrower cannot, or will not, obtain an additional loan or reimbursement from an insurer or the borrower has abandoned the property. The lender must determine that any repairs funded by protective advances are cost effective. Repairs funded by protective advances must be planned, performed and inspected in accordance with § 3555.202 and as further described by the Agency. The lender must obtain prior Agency concurrence before issuing protective advances under this paragraph of a significant amount as specified by the Agency. | ||||
| 7:7:15.1.14.2.3.7.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.303 Traditional servicing options. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6430, Feb. 8, 2016; 84 FR 70886, Dec. 26, 2019; 89 FR 66193, Aug. 15, 2024; 90 FR 9375, Feb. 12, 2025] | (a) Eligibility. To be eligible for traditional servicing, all the following conditions must be met: (1) The borrower presently occupies the property; (2) The borrower is in default or facing imminent default for an involuntary reason. A borrower is “facing imminent default” if that borrower is current or less than 30 days past due on the mortgage obligation and is experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage during the month in which it is due. The borrower must be able to document the cause of the imminent default, which may include, but is not limited to, one or more of the following types of hardship: (i) A reduction in or loss of income that was supporting the mortgage loan; (ii) A change in household financial circumstances; (3) The borrower demonstrates a reasonable ability to support repayment of the debt in the future; (4) There are no adverse property conditions that inhibit the inhabitability or use of the property; and (5) The borrower has not received assistance due to the submission of false information by the borrower. (b) Servicing options. The lender must consider traditional servicing options in the following order to resolve the borrower's default or imminent default: (1) Repayment agreement. A repayment agreement is an informal plan lasting 3 months or less to cure short-term delinquencies. (2) Special forbearance agreement. A special forbearance agreement is a longer-term formal plan to cure a delinquency not to exceed the equivalent of 12 months of PITI. The agreement may gradually increase monthly payments in an amount sufficient to repay the arrearage over a reasonable amount of time and/or temporarily reduce or suspend payments for a short period. If the borrower is at least 3 months delinquent, the special forbearance agreement may resume normal payments for several months followed by a loan modification. (3) Loan modification plan. A loan modification is a per… | ||||
| 7:7:15.1.14.2.3.7.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.304 Streamline servicing options. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6430, Feb. 8, 2016; 84 FR 70886, Dec. 26, 2019; 89 FR 66194, Aug. 15, 2024; 90 FR 9375, Feb. 12, 2025] | (a) General. (1) Lenders must exhaust traditional servicing options outlined in this part without received a completed package to be used in evaluating the borrower for traditional servicing options and have sent a demand letter in accordance with § 3555.306 to the borrower prior to consideration of streamline servicing options. (2) Use of streamline loan servicing does not change the terms of the loan note guarantee. (3) Streamline options may be provided to the borrower with at least a 10 percent reduction to their principal and interest payment with no consideration of the borrower's financials. (b) Conditions for streamline servicing options. In addition to the requirements in § 3555.303(a), the following conditions apply to all special loan servicing: (1) The borrower must be at least 90 days past due and prior to initiation of any acceleration or foreclosure action. (2) The borrower must successfully complete a trial payment plan of sufficient duration, as determined by the Agency, to demonstrate that the borrower will be able to make regularly scheduled payments as modified by the special loan servicing. (3) Expenses related to streamline loan servicing including, but not limited to, title search and recording fees, shall not be charged to the borrower. (4) Capitalization of late charges and lender fees is not permitted in the special loan servicing option. (c) Extended streamline loan modification. The Lender may modify the loan by reducing the interest rate to a level at or below the maximum allowable interest rate and extending the repayment term to 40 years from the date of loan modification. The servicer may limit the extension to 30 years if limited by any investor or pooling restrictions. The loan guarantee will apply to loan terms extending beyond the 30-year loan term from the date of origination when a loan modification meets the criteria set forth in this section. (1) Streamline loan modifications may capitalize all or a portion of the arrearage and/or reamortization of the balanc… | ||||
| 7:7:15.1.14.2.3.7.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.305 Voluntary liquidation. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 84 FR 70886, Dec. 26, 2019] | The lender must have exhausted the servicing options outlined in §§ 3555.302 through 3555.304 to cure the delinquency before considering voluntary liquidation. The methods of voluntary liquidation of the security property outlined in this section may be used to protect the interests of the Government. (a) Eligibility. To be eligible for voluntary liquidation, the following conditions must be met: (1) The loan is at least 30 days delinquent or meets the imminent default definition as outlined in § 3555.303(a)(2); (2) The default was caused by an involuntary reason; and (3) The borrower must presently occupy the property except in situations where the borrower does not occupy the property due to the same involuntary reason that led to the default. (b) Pre-foreclosure or short sale. The borrower may sell the security property for a price that represents its fair market value. The sale price, less any reasonable and customary sale or closing costs incurred by the borrower, must be applied to the borrower's account. (c) Deed in lieu of foreclosure. The lender may accept a deed in lieu of foreclosure if it will result in a lesser loss claim than if foreclosure occurs. (d) Offer by junior lienholder. If a junior lienholder makes an offer in the amount of at least the anticipated net recovery value, as calculated in accordance with § 3555.353, the lender may assign the note and mortgage to the junior lienholder. (e) Other methods of voluntary liquidation. The lender may propose other methods of voluntary liquidation that are consistent with this section if the lender fully documents how the proposal will result in a savings to the Government. | ||||
| 7:7:15.1.14.2.3.7.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.306 Liquidation. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6430, Feb. 8, 2016; 81 FR 31164, May 18, 2016; 84 FR 70886, Dec. 26, 2019] | (a) General. (1) When a lender determines that a borrower is unable or unwilling to meet loan obligations with servicing options under this subpart, the lender must accelerate the guaranteed loan and, if necessary, foreclose. (2) Prior to acceleration the lender must have advised the borrower, in writing, of available foreclosure avoidance options and the borrower must have failed to request such options. (3) The lender must accelerate the guaranteed loan, with a demand letter, when the account is three scheduled payments past due unless there is a reasonable prospect of resolving the delinquency through another method. (4) The borrower is responsible for all expenses associated with liquidation and acquisition. (b) Foreclosure. (1) The lender must initiate foreclosure within 90 calendar days of the decision to liquidate unless Federal, State, or local law requires that foreclosure action be delayed. When there is a legal delay (such as bankruptcy), foreclosure must be initiated within 90 calendar days after it becomes possible to do so. Foreclosure initiation begins with the first public action required by law such as filing a complaint or petition, recording a notice of default, or publication of a notice of sale. (2) Lenders must exercise due diligence in completing the liquidation process to ensure the foreclosure is cost effective, expeditious, and completed in an efficient manner, as otherwise provided by the Agency. The lender must choose the foreclosure method representing the best interest of the Federal Government. (3) The lender's decision to bid at foreclosure and any bid amount will be based upon the property value, whether the property value is sufficient to cover the existing debt and incurred costs, and any potential to recover a deficiency. The lender will encourage third party bidding at a foreclosure sale when the total debt, including the cost of acquiring, managing and disposing of the property, if acquired, is greater than the gross proceeds expected from a foreclosure sale at mark… | ||||
| 7:7:15.1.14.2.3.7.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.307 Assistance in natural disasters. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 6430, Feb. 8, 2016] | (a) Policy. Servicers must utilize general procedures available under this subpart for servicing borrowers affected by natural disasters, as supplemented by Rural Development, to minimize delinquencies and avoid foreclosure. (b) Evaluating the damage. Servicers are expected to inspect a security property whenever they have reason to believe the property has been damaged. (c) Special relief measures. The servicer must evaluate on an individual case-by-case basis a mortgage that is (or becomes) seriously delinquent as the result of the borrower's incurring extraordinary damages or expenses related to the natural disaster. The servicer should document its individual mortgage file regarding all servicing actions taken during this time period. The lender must consider all special relief alternatives for disaster assistance available to the borrower prior to suspending collection and foreclosure activities. The suspension of servicing actions will expire 90 days from the declaration date of the natural disaster, unless otherwise extended by the Agency. (d) Insurance claim settlements. Prior to release of hazard insurance proceeds because of damage caused by a natural disaster, servicers must complete a cost and benefit analysis on a case-by-case basis to determine if the property can be repaired or rebuilt. The servicer's actions must be based on the status of the mortgage, the amount of insurance proceeds, and the length of time required repairing or reconstructing the property, and the market conditions in the area. If the property will not be repaired or rebuilt, the insurance proceeds must be applied to the unpaid principal loan balance. | ||||
| 7:7:15.1.14.2.3.7.1.8 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | §§ 3555.308-3555.349 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.7.1.9 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | G | Subpart G—Servicing Non-Performing Loans | § 3555.350 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. | |||||
| 7:7:15.1.14.2.3.8.1.1 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.351 Loan guarantee limits. | RHS | (a) Original loan amount. For the purposes of this section, the term “Original Loan Amount” means the original promissory note amount minus any loans funds not actually disbursed to the borrower or on behalf of the borrower at the time the SFHGLP loan was made or thereafter. (b) Maximum loss payment. The maximum payment for a loss sustained by the lender under the SFHGLP is the lesser of: (1) 90 percent of the Original Loan Amount; or (2) 100 percent of any loss equal to or less than 35 percent of the Original Loan Amount plus 85 percent of any remaining loss up to 65 percent of the Original Loan Amount. | |||||
| 7:7:15.1.14.2.3.8.1.2 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.352 Loss covered by the guarantee. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 31164, May 18, 2016; 84 FR 70886, Dec. 26, 2019] | Subject to § 3555.351, the loss claim payment will be calculated as the difference between the Total Indebtedness on the loan and the Net Recovery Value calculated according to § 3555.353. The Total Indebtedness on the loan includes: (a) Principal balance. The unpaid principal balance; (b) Accrued interest. Accrued interest at the guaranteed loan note rate from the last day interest was paid by the borrower to the settlement date, as defined at § 3555.10; (c) Additional interest. Additional interest on the unsatisfied principal accrued from the settlement date to the date the claim is paid, but not more than 60 days from the settlement date; (d) Protective advances. Principal and interest for protective advances, as described in § 3555.303; and (e) Liquidation costs. Reasonable and customary liquidation costs, such as attorney fees, market value appraisals, and foreclosure costs. Annual fees advanced by the lender to the Agency are ineligible for reimbursement when calculating the loss claim payment. | ||||
| 7:7:15.1.14.2.3.8.1.3 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.353 Net recovery value. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 31165, May 18, 2016; 84 FR 70887, Dec. 26, 2019] | The net recovery value of the property is determined differently for properties that have been sold than for properties that remain in the lender's inventory at the time the loss claim is filed. (a) For a property that has been sold. When a loss claim is filed on a property that was sold to a third party at the foreclosure sale or through an approved pre-foreclosure sale, net recovery value is calculated as follows: (1) The proceeds from the sale plus any other amounts recovered, minus (2) The amount of actual liquidation and disposition costs provided those costs are reasonable and customary for the area. Costs incurred by in-house staff may not be included. (b) For a property that has been acquired. When a loss claim is filed on a property acquired by the lender through a foreclosure sale or a deed-in-lieu of foreclosure, the net recovery value is based on an estimated sales price calculated using a market value appraisal along with holding and disposition costs calculated using the acquisition and management factor (also known as the VA Net Value Factor) published by the VA, and other factors as determined by the Agency. The lender must submit a loss claim package, including a market value appraisal, within 60 days of the foreclosure sale date or the date the lender acquires title. If eviction action is required in order to obtain a market value appraisal, the lender must submit the loss claim package, including the market value appraisal, within 60 days of the date the occupants clear the premises and in accordance with other requirements of this subpart. with any loss claim request in accordance with subpart H. | ||||
| 7:7:15.1.14.2.3.8.1.4 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.354 Loss claim procedures. | RHS | [78 FR 73941, Dec. 9, 2013, as amended at 81 FR 31165, May 18, 2016; 84 FR 70887, Dec. 26, 2019] | All lenders must use a web-based automated system designated by the Agency to submit all loss claim requests. (a) Sold property. For property that has been sold, the lender must submit a loss claim within 45 calendar days of the sale. Late claims made beyond this period of time may be rejected or reduced by Rural Development. Instructions and forms may be obtained from Rural Development. (b) REO. If at liquidation, the title to the property is conveyed to the lender, the lender will submit a loss claim package, including a market value appraisal, within 60 days of the foreclosure sale date or the date the lender acquires title. If eviction action is required in order to obtain a market value appraisal, the lender must submit the loss claim package within 60 days of the date the occupants clear the premises. The lender must order a market value appraisal and include the market value appraisal with the loss claim package. The Agency will use the market value appraisal, along with other Agency required documentation, to determine the property value for the basis of the loss claim. The Agency will apply an acquisition and management resale factor to estimate holding and disposition costs, based on the most current VA Management and Acquisition Factor found at https://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp. (c) Deficiency judgments. The lender must enforce any judgment for which there are current prospects of collection before submitting a loss claim, and amounts collected must be applied against the outstanding debt. Rural Development will process the loss claim if there are no current prospects for collection. | ||||
| 7:7:15.1.14.2.3.8.1.5 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.355 Reducing or denying the claim. | RHS | (a) Determination of loss payment. Subject to the requirements of § 3555.108, if Rural Development determines that the amount of the loss was increased due to the lender's failure to comply with the conditions of the Loan Note Guarantee, the Agency may reduce or deny any loss claim by the portion of the loss determined was caused by the lender's action or failure to act. The circumstances under which loss claims may be denied or reduced include, but are not limited to, the following lender actions: (1) Failure to adhere to required servicing and liquidation procedures as set forth in Agency regulations and guidance, including the payment of real estate taxes or hazard insurance when due; (2) Failure to report defaulted loans to Rural Development within required timeframes; (3) Failure to ensure that the security property is adequately maintained during liquidation; (4) Delay in filing a loss claim; (5) Claiming unauthorized expenses; (6) Providing unauthorized assistance; (7) Failure to obtain the required security or maintain the security position; (8) Violating usury laws; (9) Negligence, gross negligence or misrepresentation; or (10) Committing fraud, or failing to report knowledge of fraud or false information. (b) Disputes. If the lender disputes the loss claim amount determined by Rural Development, Rural Development will pay the undisputed portion of the loss claim, and the lender may appeal the decision in accordance with § 3555.4. | |||||
| 7:7:15.1.14.2.3.8.1.6 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | §§ 3555.356-3555.399 [Reserved] | RHS | ||||||
| 7:7:15.1.14.2.3.8.1.7 | 7 | Agriculture | XXXV | 3555 | PART 3555—GUARANTEED RURAL HOUSING PROGRAM | H | Subpart H—Collecting on the Guarantee | § 3555.400 OMB control number. | RHS | The report and recordkeeping requirements contained in this subpart are currently with the Office of Management and Budget under review and awaiting approval. |
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