The U.S. Department of Agriculture (“USDA” or “Agency”) has announced updates to Chapter 4, Lender Responsibilities; Chapter 11, Ratio Analysis; and Chapter 18, Servicing Non-Performing Loans – Accounts with Repayment Problems, of the Single Family Housing Guaranteed Loan Program Technical Handbook (“HB-1-3555”). The updates became effective on January 5, 2024, as published in Procedure Notice 602.
The notable updates in each Section are indicated below as excerpted from the USDA Announcement:
Chapter 4 – Lender Responsibilities
- Paragraph 4.6 replaced instructions to mail Form RD 3555-11, Lender Record Change, with instructions to send to a USDA email address. Also, a new definition was added for negligent servicing, to clarify when a Loan Note Guarantee will be unenforceable.
- Paragraph 4.9 was revised to add guidance regarding the conditions under which the Agency could seek indemnification within 60 months of closing. Scenarios were added to clarify and provide context on how a claim will be paid when a loss claim is presented to the Servicing Office.
- Paragraph 4.10 was revised to add department specific contact information for lenders to use when contacting the Agency to report mortgage fraud.
- Paragraph 4.12 was updated with an email address for the Agency’s Servicing Office, which should be used by lenders with inquiries regarding the Economic Research Service (“ERS”) system. Paragraph 8.2F was revised to update the expiration date of the Non-U.S. Citizen Wavier to May 2, 2025, as well as to update guidance on the SAVE verification process in GUS.
Chapter 11 Ratio Analysis
- Paragraph 11.2 terminology was updated to correspond with verbiage on the Uniform Residential Loan Application.
- Paragraph 11.2 B. was updated to clarify that if an amount other that what is reflected on the borrower’s credit report is used to calculate the total debt ratio, the lender must submit documentation regarding the actual amount used with the loan submission.
- Paragraph 11.5 added clarification for loans with buydown agreements. Both the full note rate and initial buydown rate must be added into the Guaranteed Underwriting System (“GUS”). Additionally, lenders must retain a copy of the executed escrow agreement for a temporary buydown account in the loan file.
Chapter 18 Servicing of Non-Performing Loans – Accounts with Repayment Problems
- Attachment 18-A, Loss Mitigation Guide, was revised to clarify that all documents must be submitted electronically though the USDA LINC website. Additionally, an update was made to the address where payments for “Mortgage Recovery Advances” are to be sent.
DocMagic will continue to provide USDA updates as they become available. If you have additional questions about this topic, please contact DocMagic’s Compliance Department.
