PROCEDURE NOTICE

RD HANDBOOK CHANGES INSERT RD HB-1-3555 SFH GUARANTEED LOAN PROGRAM TECHNICAL (WSAL) HANDBOOK. This Handbook is partially revised. The specific revisions are outlined below.

Chapter 17:

The following updates were made to HB-1-3555, Chapter 17 to remove references to recapture of shared equity and include information for servicer responsibilities on loan status with errors and assumption submission and closing guidance. Additionally, minor grammatical and formatting edits were made to be consistent with other handbook chapter revisions.

Paragraph 17.2E – Obtaining Final Payments:

• Removed “recapture of shared equity” from the title in this paragraph.
• Added “mortgage recovery advances (MRA)”, which would include secured and unsecured, to clarify that security instruments are not released until the MRA is paid as well.

Paragraph 17.3 – Reporting Requirements:

• Added that servicers are required to review and correct status and default reject errors by the 13th business day of the month through the last calendar day of the month.

Paragraph 17.8B – Transfer Under Garn-St. Germain:

• Added property eligibility guidance as it relates to transfer with an assumption.
• Added guidance that the priority of the existing lien on the guaranteed loan must be maintained and approved.
• Added guidance that GUS is unavailable for transfer and assumptions and must be manually submitted and underwritten.
• Added guidance for “closing a transfer with an assumption” in that these type applications are treated like any other request for a loan guarantee.

Chapter 18:

The following updates were made to HB-1-3555, Chapter 18 to update the requirements for servicing non-performing loans, remove Attachment’s 18-B through E and added a link to notate that the attachments can be found on the USDA LINC library website. Additionally, changes were made to correspond with the publishing of the requirements for the Special Servicing Options Final Rule; the term “special” was removed throughout the chapter and replaced with “streamline” as well as making minor grammatical and formatting edits.

Paragraph 18.1 – Introduction

• Added guidance that all servicing related cost and fee schedules can now be found on the LINC Training and Resource Library webpage.

Paragraph 18.3 – Minimum Requirements

• Revised and removed “restrict creditor action to collect a debt or take action. An example that may be a violation of an applicable law is if the commencement of debtor’s bankruptcy case occurs” as this would be an example as to what type of violation would fall under laws related to debt collection and could vary from state to state.

Paragraph 18.3 D - Inspect the Property

• Removed “60th day of delinquency” and replaced with “60 days past due” which aligns with what is stated in 7 CFR 3555.301(f).

Paragraph 18.5 - Loss Mitigation Options

• Added “Mortgage Recovery Advance (unrecorded)” as the Final Rule will no longer require a mortgage in recordable form perfecting a lien. An unrecorded MRA would still be required in order to document that this event has occurred.

Paragraph 18.7 – Property Management Methods and Activities

• Removed reference to Attachment 18-E, Maximum Property Preservation Allowances, as this document can now be found on the LINC Training and Resource Library webpage.

Paragraph 18.8 – Environmental Hazards

• Added email guarantee.svc@usda.gov to reference where the documentation to support lien valueless because of environmental hazards should be submitted.

Chapter 19:

The following updates were made to HB-1-3555, Chapter 19 to update servicing requirements for collecting on the guarantee when loss claims occur and the Agency review process. Additionally, minor grammatical and formatting edits have been made.

Paragraph 19.5 – Agency Review:

• Removed “utilize the Add/Update Loss Claim transaction in the Loss Claim Administration menu of USDA LINC to” as this process is no longer applicable to Agency staff.

INSERT Chapter 17 revised. Chapter 18 revised. Chapter 19 revised.