USDA Technical Handbook HB-1-3555 §4.12 — Additional Lender Responsibilities Upon Approval
USDA HB-1-3555 §4.12 (Additional Lender Responsibilities Upon Approval). Gap-fill (verbatim).
Verbatim regulatory text
Verbatim provisions from USDA Technical Handbook HB-1-3555 §4.12 — Additional Lender Responsibilities Upon Approval — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
DITIONAL LENDER RESPONSIBILITIES UPON APPROVAL x Guaranteed Underwriting System (GUS). An automated underwriting system is available to approved participating lenders. Lenders will utilize GUS and must enter into a User Agreement. Information on obtaining access to GUS is provided in Chapter 5 of this Handbook and at http://www.rd.usda.gov/resources/usda-linc- training-resource-library/guaranteed-underwriting-system. x Electronic Lender Loan Closing System. Lenders must submit closed loans electronically upon execution of a User Agreement. Access to the system provides the benefit of paying guarantee and technology fees electronically in lieu of paper checks. Additionally, the lender will have access to the Loan Note Guarantee electronically. Additional information is provided in Chapter 16 of this Handbook. An online user guide is available at http://www.rd.usda.gov/resources/usda-linc-training-resource-library/loan- closing. x Payment of Annual Fees. Lenders will pay annual fees electronically. Lender/servicers will enter into a User Agreement to receive automatic notification and electronically pay annual fees due. Additional information is provided Chapter 16 of this Handbook. x Electronic Status Reporting. Servicers must submit monthly default reports and portfolio reports indicating the status of loans they are servicing via Electronic Status Reporting (ESR) to the Servicing Office. The link https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource- library provides information on completing a Trading Partner Agreement and utilizing the Electronic Status Reporting (ESR) system. Questions or requests for assistance may be emailed to [email protected]. Refer to Chapter 17 and Appendix 8 of this Handbook for additional information regarding electronic reporting. x Loss Mitigation and Loss Claim Administration. An automated method of processing loss mitigation requests pre-liquidation and loss claim administration post-liquidation is available to participating lender/servicers. Lenders will enter into a User Agreement. Servicers will utilize USDA LINC (Lender Interactive
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
08-05-25) PN 649 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts Network Connection) to submit loss mitigation plans and loss claims, which can be accessed at http://usdalinc.sc.egov.usda.gov/RHShome.do. x Post-Closing Lender Self Report. Once a loan closes and the Loan Note Guarantee has been issued, the Agency will not release the loan in GUS/GLS for corrections. If the lender determines that information was not accurately reported during the underwriting process or changes occurred between issuance of the Conditional Commitment and the Loan Note Guarantee, the lender will submit a self-report to the Agency with a detailed description of the issue along with supporting documentation. The Loan Note Guarantee will not be revoked. The Agency will review the lender’s documentation and provide the lender with a written response. The Agency’s correspondence should be sufficient to satisfy most investor’s concerns regarding lender oversights. Additional information on submitting a self-report can be found in
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
08-05-25) PN 649 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts ATTACHMENT 4-A CONDITIONS FOR LENDERS NOT HOLDING FUNDS IN ESCROW A lender who does not hold borrower funds in escrow for taxes and insurance should consider the following: x The Agency’s loan guarantee covers a maximum of twelve months’ past-due real estate taxes and hazard insurance. x Loan losses attributable to the borrower’s failure to maintain appropriate hazard insurance will not be covered by the Agency’s loan guarantee. x Loan losses attributable to the borrower’s failure to pay real estate taxes when due will not be covered by the Agency’s loan guarantee. x The lender will report annually to the Agency the number of borrowers who failed to pay real estate taxes and/or hazard insurance premiums which resulted in the lender advancing funds on the borrowers’ behalf. Lenders who do not hold borrower funds in escrow should consider doing the following to minimize the risk of taxes and insurance not being paid: x Prior to loan closing, the lender must extensively counsel applicants about the need for prompt payment of real estate taxes and hazard insurance premiums. Applicants must sign a statement indicating that they fully understand the significance of these obligations. x The lender must include the estimated monthly tax and insurance expenses in the ratio calculations when determining the borrower’s loan eligibility. x The lender should encourage applicants to set money aside for taxes and insurance through payroll deductions or bank accounts with direct deposit. x The lender must ensure that taxes and insurance are paid by monitoring insurance policy expiration, contacting the taxing authority annually, and reviewing local newspapers for tax delinquencies.
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
08-05-25) PN 649 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts ATTACHMENT 4-B SAMPLE FOR ACKNOWLEDGMENT OF REAL ESTATE TAX AND HAZARD INSURANCE REQUIREMENTS (Date) I (We), ____________________________________________, hereby acknowledge that ________________________________________(lender), has explained the requirements for monthly deposits, or set-asides for payment of annual real estate taxes and hazard insurance premiums. I (We), the undersigned, do state that I (We) understand and agree to set-aside _______ dollars each month ($ monthly amount) to pay real estate taxes and hazard insurance premiums when they are due. ____________________________________(Borrower Signature) ____________________________________(Borrower Signature) ____________________________________(Lender)
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
05-05-25) PN 640 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. CHAPTER 5: ORIGINATION AND UNDERWRITING OVERVIEW
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
TRODUCTION [7 CFR 3555.51(B)] Single Family Housing Guaranteed Loan Program (SFHGLP) loans are originated and underwritten by approved lenders. However, the process of requesting, issuing, and receiving the loan guarantee is one in which the lender and the Agency must cooperate closely. Lenders must provide the Agency with clear and accurate information so that Agency staff can promptly determine whether the loan qualifies for a guarantee. At the same time, Agency staff must process loan applications quickly and accurately to avoid delays that might hamper the lender’s efforts to close the loan efficiently.
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
QUESTING A GUARANTEE [7 CFR 3555.151] Not all loans are appropriate for the SFHGLP. The lender should determine whether, based on preliminary information, it appears that the loan will meet the program’s criteria. The lender should answer the preliminary eligibility questions below to assist in making this determination. The lender should also ensure that the applicants are fully informed about the requirements of the program. A. Preliminary Determination of Applicant Eligibility In general, the program is most appropriately used to offset the risk of making high loan-to-value loans in rural areas. It is not intended to offset risks that stem from a poor credit history or poor property condition. In particular, the lender should review the following items to make a preliminary determination of the applicants’ eligibility. x Applicant Characteristics (Chapter 8) Are the applicants able to secure conventional credit? Do the applicants own a dwelling? Are the applicants U.S. citizens or eligible non-U.S. citizens as detailed in Chapter 8? If the applicants are not U.S. citizens, they must produce evidence per Agency guidelines to qualify as a non-U.S. citizen. x Income (Chapter 9) At the time of loan approval, is the household's adjusted income below the applicable moderate-income limit? To determine eligibility for the SFHGLP, the lender is responsible for documenting the income of all adult members of the applicants’ household (not just those who will be signatories to the note). Current income limits are referenced in Appendix 5, and can be located on the USDA Income and Property Eligibility website at
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
05-05-25) PN 640 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. http://eligibility.sc.egov.usda.gov/eligibility/, or by using the Agency’s automated underwriting system, GUS. In addition to meeting adjusted annual income requirements, the applicants must also have sufficient repayment income and meet additional program requirements. Chapter 9 provides more detailed information about annual, adjusted, and repayment income. x Credit (Chapter 10) Is the credit history consistent with program guidelines? The applicants must have a credit history that demonstrates the ability and willingness to repay the loan. GUS is unable to render an underwriting recommendation on supplemental credit reports. These should be uploaded with the application package. x Ratios (Chapter 11) Do the applicants’ PITI (Principal, Interest, Taxes and Insurance) and total debt (TD) ratios fall at or below the limits established by the Agency? Ratios are calculated using repayment income from applicants who will be a party to the Promissory Note. x Appraised Value/Loan amount (Chapter 12) Is the loan amount supported by the appraisal’s fair market value? If there is not yet a current appraisal, is the loan amount expected to be supported by the appraisal? x Site and Property (Chapter 12) Does the property appear to be in an eligible rural area as designated by program guidelines? If warranted, did Agency staff confirm that the property location was rural? The Agency encourages lenders and those involved in the origination package to verify a property’s eligibility on the Agency’s property eligibility website. Property eligibility may be checked online at http://eligibility.sc.egov.usda.gov/eligibility/, or by using the Agency’s automated underwriting system, GUS. B. Informing the Applicant Before requesting a loan guarantee, the lender should take the following steps to ensure that applicants have a general understanding of the SFHGLP. x Concept of a loan guarantee. Describe to the applicants what a loan guarantee is, why it is used, and the benefits of a loan guarantee. Benefits include, but are not limited to, no required down payment and a fixed interest rate. x Loan guarantee fee (Chapter 16) Inform the applicants of the upfront guarantee fee to be paid at loan closing.
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
05-05-25) PN 640 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. x Annual fee (Chapter 16) Inform the applicants of the annual guarantee fee, if applicable. x Occupancy (Chapter 8) Inform the applicants that they must occupy the property as their principal residence. x SFHGLP requirements. Inform the applicants of program requirements such as income limits, property location eligibility, debt ratio thresholds, and other requirements such as the certifications outlined on Form RD 3555-21, Request for Single Family Housing Loan Guarantee.
USDA HB-1-3555 4.12 — Additional Lender Responsibilities Upon Approval
ILIZING THE GUARANTEED UNDERWRITING SYSTEM [7 CFR 3555.107(b)] The Guaranteed Underwriting System (GUS) was developed to automate the process of credit risk evaluation for the SFHGLP. Automated underwriting (AU) systems are an efficient, consistent, objective, and accurate method of mortgage underwriting compared with traditional manual methods. GUS is a tool that helps evaluate the credit risk of the loan request. It compliments but DOES NOT replace the considered judgment of experienced underwriters. GUS incorporates applicants’ eligibility and underwriting requirements of this Handbook by utilizing a modified version of the Federal Housing Administration (FHA) mortgage scorecard known as Technology Open to Approved Lenders (TOTAL), concurrently with a rules based engine. GUS is accessed through a secure web-based automated underwriting environment at https://usdalinc.sc.egov.usda.gov/. GUS considers mortgage loan application data entered by the approved lender, credit repository data, and income and property information to evaluate the potential applicants’ ability to meet a proposed mortgage obligation. GUS evaluates select components in a mortgage loan application and provides a credit evaluation and underwriting recommendation within seconds. GUS is not designed to evaluate the dependability of the applicants’ income proposed for repayment. This remains the underwriter’s responsibility to determine prior to final submission. Refer to Chapter 9 of this Handbook to determine adequate and dependable income for repayment ability. Lenders are reminded that data entered in GUS must coincide with that of the lender’s permanent loan file. A. Functionality of GUS Incorporated within the functionality of GUS are the following components: