The U.S. Department of Agriculture - Rural Development (“USDA”) is asking for feedback on proposed revisions to several chapters of the Single Family Housing Guaranteed Loan Program Technical Handbook (“HB-1-3555”) and to Form RD 3555-21, Request for Single Family Housing Loan Guarantee.
Drafts of the proposed revisions to Chapters 4, 5, 8, 9, 10, 15, and 16, plus Form RD 3555-21 have been posted to the Single Family Housing Guaranteed Loan Program (“SFHGLP”) Policy Desk. The USDA is asking for comments from stakeholders through November 3, 2024. Comments can be submitted by email to sfhgld.policydesk@usda.gov. or through a Stakeholder Comment Form found on the Policy Desk webpage.
Highlights of the updates to each Section are indicated below as excerpted from the USDA announcement:
Chapter 4 – Lender Responsibilities
- Revision to conflict of interest guidance to clarify that only employees that have a direct impact on the mortgage transaction are prohibited from having multiple sources of income from a single Rural Development transaction.
Chapter 5 – Originating and Underwriting Review
- Clarify that all loan applications should be submitted through the USDA’s Guaranteed Underwriting System (“GUS”). Also, a refence to the Manual File Submission job aid is added.
- Clarify that lenders must use a login.gov account to access GUS.
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Chapter 8 – Applicant Characteristics
- Clarify that upon submission of the application, the lender will ensure that a U.S. General Services Administration’s (“GSA”) System for Award Management (“SAM”) check was performed by documenting the date in GUS.
- Reference that the Manual File Submission Job Aid should be used for the submission of files not supported by GUS.
Chapter 9 – Income Analysis
- Clarify that taxable income for housing allowances should be included in annual income.
- Add guidance for verifying previous employment.
- Clarify IRS Form 8821 is an acceptable method to request IRS tax transcripts.
- Clarify that the number of household members must be identified in GUS.
- Add direct third-party verifications to the options for verifying assets.
- Clarify that reserves entered into GUS must not exceed the balance on the most recent official monthly bank statement, however lenders may choose to use a lower balance at their discretion.
Chapter 10 – Credit Analysis
- Clarify that multiple Verifications of Rent may be combined to make up the required 12-month history when no gaps exist.
- Guidance for disputed accounts combined into one section.
- Clarify that the credit report for a non-purchasing spouse is to be maintained in the lender’s permanent loan file.
Revision to the list of community property states and territories.
Chapter 15 – Submitting the Application Package
- Clarify that all loan applications should be submitted through GUS. Also, a reference to the Manual File Submission Job Aid is added.
- Revision to checklists to correspond with the numerous chapter revisions being proposed.
Chapter 16 – Closing the Loan and Requesting the Guarantee
- Clarify that attorney opinion letters are acceptable alternatives to title insurance in some instances and provide a chart to indicate the requirements of each one.
- Update to the email address for self-reports.
In addition to the proposed chapter changes for the SFHGLP Technical Handbook, HB-1-3555, proposed revisions for Form RD 3555-21, Request for Single Family Housing Loan Guarantee, are published for review and comment. The new format is a streamlined version that removes information that is captured elsewhere, but still includes the required certifications.
DocMagic will continue to provide USDA updates, including the finalized revisions to Form RD 3555-21 when it becomes available. If you have additional questions, please contact DocMagic’s Compliance Department.
