Lender Responsibility for Loan Applications

• Lenders must work with the applicant to ensure all necessary documentation is obtained to satisfy loan eligibility requirements, according to 7 CFR 3555.107.
• Lenders can use industry-standard forms when putting together the loan application.
• The lender has to have the loan underwritten and approved before it's sent to the Agency.
• Lenders should use the Guaranteed Underwriting System (GUS), the Agency's automated system, for all supported loan products.
• When a loan is submitted as "final," lenders must certify that it has been reviewed, underwritten, and that all data entered in GUS is correct, complete, accurate, and saved.
• Lenders have to review the GUS Underwriting Findings Report to make sure all requirements are met.
• Attachment 15-A, Guaranteed Rural Housing – Loan Origination Checklist has a list of what must be given to the Agency for a full loan application package.

Lender Responsibility

• The originating lender has to make sure all information used to get a Rural Development guarantee is correct, as per 7 CFR 3555 and the Handbook.
• The permanent loan file has to contain all the information that proves household eligibility for the SFHGLP and the lender's approval of the loan request.
• Lenders can't close loans before the Conditional Commitment is issued.
• If a loan is closed before getting a Conditional Commitment from the Agency, it might not be eligible for a Loan Note Guarantee and could affect the lender's approval status in the program.

Manually Underwritten Loans

• Manually underwritten loans include GUS applications that get a "Refer" or "Refer with Caution" underwriting recommendation.
• Also included as manually underwritten are applications that are reviewed and approved but not supported in GUS, like Streamlined Assist Refinance transactions and select pilot programs.
• These loan application packages need to be emailed to the appropriate Rural Development Production Team and the email address to use can be found on the SFH Guaranteed Lender webpage.
• Lenders need to make sure all personally identifiable information (PII) is protected.

Guaranteed Underwriting System - GUS Accept Loans

• Lenders using GUS will have a more streamlined process for delivery, review, and issuance of a Conditional Commitment.
• Loans that are underwritten with GUS and get an "Accept" recommendation might allow the lender to submit fewer documents when asking for a Conditional Commitment.
• Information about processing procedures can be found in the GUS User Guide.

Full Documentation Loan Files

• GUS “Accept with Full Documentation” loan files need additional items to be submitted to the Agency.
• The Agency won't re-underwrite full documentation submissions.
• A review of full documentation loan files will happen to compare the data entered by the lender to the submitted documentation.
• The Agency will review any discrepancies found with the approved lender before the file is released for correction or denied.

Electronic signatures

• Rural Development will accept electronic signatures for documents related to origination, loan closing, and servicing, if not prohibited by law.
• The 7 CFR 3555 rule does not prohibit or consent to electronic signatures.
• Lenders can use electronic signatures if they maintain a first lien position, an enforceable promissory note, and meet all agency requirements, including electronic promissory notes (eNotes).
• If an electronically signed document is deemed unenforceable and connected to fraud, misrepresentation, or negligent servicing, the lender bears the risk, and loss claims may be denied or reduced.
• Failure to collect on the promissory note or enforce the security instrument due to the electronic signature will be treated as negligent servicing under SFHGLP regulations.
• Not complying with Federal statutes or regulations can lead to denial of a loan guarantee or claim, withdrawal of lending authority, and/or debarment from Federal programs.

Agency Review of Application Package

• The Agency's automated system will track when the application package is received and review it in order.
• The Agency might need to do a more thorough review in some cases, and they will contact the lender if this happens.
• In general, The Agency will review applications to determine that all program requirements have been met
• The lender has sole responsibility to properly underwrite the loan and ensure program requirements have been met.
• Agency review of the application does not relieve the lender of these responsibilities.
• Agency staff will utilize the SFHGLP Documentation and Processing Checklist in their review of Conditional Commitment requests, which assists in the review, processing, and closing of a guaranteed loan.

Lender Underwriting Review

• The approved lender is responsible for underwriting loans, but the Agency might do a more thorough review of the lender's submission under limited circumstances.
• The Agency will notify the lender in writing of the additional review.
• When a new lender is approved, the initial application submissions will be thoroughly reviewed, including the lender's underwriting decisions.
• The Agency will keep reviewing new lender underwriting decisions until they are confident the lender is performing well, providing additional training if incomplete or deficient packages are received.
• If a lender submits incomplete or inaccurate applications, the Agency may choose to review the lender's underwriting to ensure understanding of the Agency's requirements.
• Lenders with above-average default, foreclosure, and loss claim activity may have their current loan submissions reviewed more thoroughly by the Agency, and will be referred to the Lender Oversight Branch for monitoring.
• Agency staff will determine if any conditions must be met for the loan to qualify for a guarantee and will be listed and issued to the lender on Form RD 3555-18 or Form RD 3555-18E, Conditional Commitment for a Single Family Housing Loan Guarantee.

Lender Notification on Request For Loan Guarantee

• The Agency will notify the lender of the results of the application review.
• If the loan file meets Agency requirements, the Agency will issue Form RD 3555-18/18E, Conditional Commitment for Single Family Housing Loan Guarantee via email.
• If the application has missing information, the Agency will suspend it and request the missing documents from the lender.
• The loan guarantee request will be denied if the loan doesn't meet program requirements.
• The Agency will notify the lender in writing of the reason for the denial and will provide review and appeal rights as indicated in Appendix 3 of this Handbook.

Lender Response to Conditional Commitment

• The lender has three responses to the issuance of Form RD 3555-18/18E; the lender may accept the terms and conditions, decline the terms and conditions for loan guarantee, or request that the terms and conditions be altered.
• Accepting the Conditions: If the lender understands and agrees to accept the conditions listed on Form RD 3555-18/18E, no further communication with the Agency is required until the lender is ready to request the loan guarantee.
• Declining the Conditions for Loan Guarantee: If the lender determines that the terms and conditions stated on Form RD 3555-18/18E cannot be met, that the loan guarantee is not needed, or that the loan will not go to closing, the lender must inform the Agency in writing as soon as possible.
• Requesting Changes in Conditions: Requests to close the loan at a lower loan amount or interest rate than those authorized on the issued Conditional Commitment do not require any action.