CHAPTER 1: OVERVIEW OF GUARANTEED RURAL RENTAL HOUSING
PROGRAM ORIGINATION AND SERVICING HANDBOOK................ 1-1
1.1 Introduction.......................................................................................................1-1
SECTION 1: THE HANDBOOK......................................................................................... 1-1
1.2 Purpose..................................................................................................................... 1-1
1.3 Using the Handbook ................................................................................................ 1-1
A. Handbook Symbols........................................................................................... 1-2
B. Citations and Text Boxes.................................................................................. 1-2
C. Attachments and Appendices............................................................................ 1-3
SECTION 2: THE RURAL HOUSING SERVICE (RHS)................................................ 1-3
1.4 RHS Organization.................................................................................................... 1-3
SECTION 3: OVERVIEW OF THE GUARANTEED
RURAL RENTAL HOUSING PROGRAM................................................. 1-3
1.5 Program Goals ......................................................................................................... 1-3
1.6 Eligible Rural Area .................................................................................................. 1-4
1.7 Program Features ..................................................................................................... 1-4
A. Risk Sharing with Lenders................................................................................ 1-4
B. Affordability Features....................................................................................... 1-5
C. Combination Construction and Permanent Financing ...................................... 1-5
D. Lender Origination, Servicing, and Disposition ............................................... 1-5
E. The NOFA Process ........................................................................................... 1-5
1.8 Roles and Responsibilities of Agency, Lender and Borrower ................................. 1-5
1.9 Identity of Interests .................................................................................................. 1-6
1.10 Agency Exception Authority ................................................................................... 1-7
1.11 Reviews and Appeals............................................................................................... 1-8
SECTION 4: FEDERAL REQUIREMENTS ..................................................................... 1-9
1.12 Intergovernmental Review....................................................................................... 1-9
1.13 National Flood Insurance Program .......................................................................... 1-9
1.14 Historic Preservation................................................................................................ 1-9
1.15 Civil Rights .............................................................................................................. 1-9
A. Nondiscrimination ............................................................................................ 1-9
B. Reasonable Accommodations for Persons with Disabilities .......................... 1-10
1.16 Fair Housing .......................................................................................................... 1-10
1.17 Environmental Requirements................................................................................. 1-11
Attachment 1-A: Review and Appeals of Adverse Agency Decisions
CHAPTER 2: LENDER ELIGIBILITY AND APPROVAL
2.1 Purpose and Overview ............................................................................................. 2-1
SECTION 1: LENDER ELIGIBILITY............................................................................... 2-2
2.2 Purpose..................................................................................................................... 2-2
2.3 Requesting Lender Approval ................................................................................... 2-2
2.4 Basic Eligibility Test Requirements ........................................................................ 2-2
2.5 Demonstrated Eligibility Test Requirements........................................................... 2-3
2.6 Approval Requirements ........................................................................................... 2-3
A. Origination and Servicing Plan......................................................................... 2-3
B. Demonstrate the Lender’s Financial Stability .................................................. 2-5
C. The Lender’s Certification to Comply with Program Requirements................ 2-5
2.7 Additional Requirements for Approval to Originate and Service
Combination Construction/Permanent Loans .......................................................... 2-5
2.8 Participation by Lenders without Demonstrated Ability ......................................... 2-6
SECTION 2: LENDER APPROVAL PROCESS.............................................................. 2-6
2.9 Overview.................................................................................................................. 2-6
2.10 Agency Assessment of the Request ......................................................................... 2-6
2.11 Submission Requirements — Lender Application .................................................. 2-6
2.12 Issuance of Approved Lender Status ....................................................................... 2-7
SECTION 3: MAINTENANCE OF LENDER APPROVAL............................................ 2-8
2.13 Requirements for Retaining Approved Status ......................................................... 2-8
SECTION 4: OTHER ISSUES............................................................................................. 2-9
2.14 Substitution of Lender ............................................................................................. 2-9
2.15 Use of Agents and Brokers by the Approved Lender.............................................. 2-9
2.16 Loan Participations ................................................................................................ 2-10
2.17 Transfer of Servicing ............................................................................................. 2-10
CHAPTER 3: LENDER UNDERWRITING
3.1 Introduction.............................................................................................................. 3-1
SECTION 1: LENDER UNDERWRITING RESPONSIBILITIES ................................ 3-1
3.2 Overview.................................................................................................................. 3-1
3.3 Summary of Lender Responsibilities....................................................................... 3-2
SECTION 2: LENDER NARRATIVE ............................................................................... 3-2
3.4 Narrative Requirements ........................................................................................... 3-2
SECTION 3: BORROWER ELIGIBILITY ...................................................................... 3-3
3.5 Overview.................................................................................................................. 3-3
3.6 Eligible Borrowers................................................................................................... 3-3
3.7 Ineligible Borrowers ................................................................................................ 3-4
3.8 Borrower Types ....................................................................................................... 3-4
A. General or Limited Partnerships ....................................................................... 3-5
B. Corporations...................................................................................................... 3-6
C. Limited Liability Companies ............................................................................ 3-7
D. Trusts ................................................................................................................ 3-7
E. Public Agencies ................................................................................................ 3-7
F. Indian Tribes ..................................................................................................... 3-7
G. Individuals ........................................................................................................ 3-8
3.9 Certification of Legal Eligibility.............................................................................. 3-8
3.10 Borrower Experience and Capacity ......................................................................... 3-8
A. Construction and Rehabilitation Experience .................................................... 3-8
B. Property Management Experience.................................................................... 3-9
C. Financial Capacity .......................................................................................... 3-10
SECTION 4: PROPERTY REQUIREMENTS ............................................................... 3-11
3.11 Overview................................................................................................................ 3-11
3.12 Rural Area Designation ......................................................................................... 3-11
3.13 General Site Requirements .................................................................................... 3-11
A. Public Facilities and Services ......................................................................... 3-11
B. Less Desirable Areas ...................................................................................... 3-12
3.14 Site Standards ........................................................................................................ 3-12
A. Applicable Codes............................................................................................ 3-12
B. Adequate Utilities and Infrastructure.............................................................. 3-12
C. Grading and Drainage..................................................................................... 3-12
D. Size and Shape ................................................................................................ 3-13
E. Undesirable Physical Conditions .................................................................... 3-13
3.15 Site Density............................................................................................................ 3-13
3.16 Non-Contiguous Sites ............................................................................................ 3-13
3.17 Site Control ............................................................................................................ 3-14
A. Land Ownership.............................................................................................. 3-14
B. Land Lease...................................................................................................... 3-14
3.18 Environmental Requirements................................................................................. 3-15
A. Lender Responsibilities Prior to Requesting Guarantee................................. 3-15
B. Agency Environmental Review ...................................................................... 3-15
3.19 Civil Rights ............................................................................................................ 3-16
3.20 Project Development.............................................................................................. 3-16
A. Project Size ..................................................................................................... 3-16
B. Agency Construction Requirements ............................................................... 3-16
C. Federal Accessibility Requirements ............................................................... 3-17
SECTION 5: FINANCING TERMS................................................................................. 3-20
3.21 Overview................................................................................................................ 3-20
3.22 Occupancy and Rent Restrictions .......................................................................... 3-20
3.23 Use of Loan Proceeds ............................................................................................ 3-21
A. Eligible Uses of Loan Proceeds ...................................................................... 3-22
B. Ineligible Uses of Loan Funds ........................................................................ 3-23
3.24 Applying Section 207(c) Loan Limits ................................................................... 3-24
3.25 Mortgage Terms..................................................................................................... 3-24
A. Maximum Loan Term ..................................................................................... 3-24
B. Maximum Interest Rate................................................................................... 3-25
C. Interest Reduction Credit ................................................................................ 3-25
D. Maximum Loan Amount................................................................................. 3-25
SECTION 6: DETERMINING PROPERTY VALUE.................................................... 3-26
3.26 Overview................................................................................................................ 3-26
3.27 Cash Flow Analysis ............................................................................................... 3-26
A. Operating and Maintenance Expense ............................................................. 3-26
B. Debt Service.................................................................................................... 3-27
3.28 Appraisal................................................................................................................ 3-29
A. Appraisal Requirements.................................................................................. 3-29
B. Appraiser Qualifications ................................................................................. 3-29
C. Appraisal Methods.......................................................................................... 3-29
D. Appraisal Report Guidelines........................................................................... 3-30
E. Market Study................................................................................................... 3-30
CHAPTER 4: LOAN GUARANTEE APPLICATION PROCESSING
SECTION 1: AN OVERVIEW OF THE PROCESS ......................................................... 4-1
4.1 Purpose..................................................................................................................... 4-1
SECTION 2: NOTICE OF FUNDING AVAILABILITY (NOFA) ................................. 4-1
4.2 Publication of GRRHP Requirements ..................................................................... 4-1
4.3 Response to the NOFA ............................................................................................ 4-1
4.4 Information to be Included in Response to the NOFA ............................................ 4-2
A. Descriptive Information.................................................................................... 4-2
B. Lender Eligibility and Approval Status ............................................................ 4-3
C. Competitive Criteria ......................................................................................... 4-4
D. Lender Certification.......................................................................................... 4-4
4.5 Agency Review of NOFA Response ....................................................................... 4-4
A. Was the Project Proposal on Time and Complete?........................................... 4-4
B. Is the Borrower An Eligible Entity? ................................................................. 4-4
C. Is the Lender Eligible?...................................................................................... 4-5
D. Is the Proposed Project Eligible? ...................................................................... 4-5
4.6 Scoring and Ranking................................................................................................ 4-6
4.7 Notice to Proceed with Processing .......................................................................... 4-6
SECTION 3: APPLICATION FOR THE GUARANTEE................................................. 4-7
4.8 Purpose of the Application ...................................................................................... 4-7
A. The Proposed Project Meets the GRRHP Threshold Requirements................. 4-7
B. The Proposed Project is Eligible to Receive a Conditional Commitment........ 4-8
4.9 Application Form and Documentation..................................................................... 4-8
A. The Lender’s Certification................................................................................ 4-8
B. Exhibits and Supporting Information to the Lender’s Certification ................. 4-9
4.10 Interest Credit Request and Documentation .......................................................... 4-12
A. Amount of Interest Credit Subsidy ................................................................. 4-13
B. Demonstrated Need......................................................................................... 4-13
C. Limits on Allocation of Interest Credit........................................................... 4-13
D. Payment of Interest Credit .............................................................................. 4-14
E. Cancellation of Interest Credit........................................................................ 4-14
F. Closing a Loan with Interest Credit................................................................ 4-15
4.11 Lender Review of the Borrower Submissions ....................................................... 4-15
A. Borrower Eligibility........................................................................................ 4-15
B. Project Eligibility............................................................................................ 4-15
C. Project Feasibility Analysis ............................................................................ 4-17
4.12 Agency Review of the Loan Guarantee Application ............................................. 4-18
A. Determination that the Loan Guarantee Application Package is Complete ... 4-18
B. Environmental Review by Agency ................................................................. 4-18
C. Civil Rights Impact Analysis.......................................................................... 4-18
D. Review of Other Federal Requirements.......................................................... 4-18
E. Review of Affirmative Fair Housing Marketing Plan (AFHMP)................... 4-18
F. Decision on Interest Credit Subsidy Request ................................................. 4-21
G. Decision on the Guarantee Amount................................................................ 4-21
H. Determination that the Loan is Acceptable for a Conditional Commitment .. 4-21
4.13 Agency Decision.................................................................................................... 4-22
SECTION 4: ISSUANCE OF CONDITIONAL COMMITMENT................................ 4-22
4.14 General Requirements............................................................................................ 4-22
4.15 Terms of Conditional Commitment ....................................................................... 4-23
A. Subsidy Layering Review.............................................................................. 4-23
B. Guarantee Fee ................................................................................................ 4-23
C. Transactions Backed by Ginnie Mae ............................................................. 4-24
D. Termination of the Conditional Commitment................................................ 4-24
E. Substitution of Lender ................................................................................... 4-24
F. Lender’s Agreement....................................................................................... 4-25
G. Loan Note Guarantee Agreement .................................................................. 4-25
SECTION 5: RESPONSE TO THE
CONDITIONAL COMMITMENT AND LOAN CLOSING.......................................... 4-26
4.16 General Conditions ................................................................................................ 4-26
4.17 Development of the Regulatory Agreement .......................................................... 4-26
4.18 Loan Closing.......................................................................................................... 4-26
SECTION 6: GUARANTEE DURING CONSTRUCTION............................................ 4-27
4.19 Combination Construction and Permanent Loan................................................... 4-27
SECTION 7: PERMANENT GUARANTEE.................................................................... 4-28
4.20 Occupancy.............................................................................................................. 4-28
4.21 Documentation Requirements................................................................................ 4-28
SECTION 8: TERMINATION OF THE LOAN GUARANTEE................................... 4-29
4.22 Reasons for Termination........................................................................................ 4-29
A. Repayment of the Loan................................................................................... 4-29
B. Payment of a Claim......................................................................................... 4-29
C. Voluntary Termination of the Guarantee Agreement by the Lender.............. 4-29
D. Non-Compliance with Program Requirements............................................... 4-29
E. Fraud ............................................................................................................... 4-30
CHAPTER 5: CONSTRUCTION REQUIREMENTS
5.1 Introduction.............................................................................................................. 5-1
SECTION 1: PRE-CONSTRUCTION CONFERENCE .................................................. 5-2
5.2 Conference Requirements........................................................................................ 5-2
SECTION 2: BASIC CONSTRUCTION REQUIREMENTS .......................................... 5-2
5.3 Overview.................................................................................................................. 5-2
5.4 Construction Contractor Experience and Capacity.................................................. 5-3
5.5 Debarment and Suspension...................................................................................... 5-3
5.6 Architectural Services.............................................................................................. 5-3
5.7 Plans, Specifications and Cost Estimates ................................................................ 5-4
5.8 Environmental Requirements................................................................................... 5-5
5.9 Construction............................................................................................................. 5-5
5.10 Inspections ............................................................................................................... 5-6
5.11 Warranty .................................................................................................................. 5-7
5.12 Construction Requirements Certification . .............................................................. 5-7
SECTION 3: GUARANTEES OF CONSTRUCTION ADVANCES.............................. 5-9
5.13 Overview.................................................................................................................. 5-9
5.14 Insurance.................................................................................................................. 5-9
5.15 Sureties................................................................................................................... 5-10
5.16 Letters of Credit ..................................................................................................... 5-10
5.17 Payment Procedures............................................................................................... 5-11
5.18 Contract Change Orders......................................................................................... 5-11
5.19 Modification of Maximum Amount Guaranteed During Construction ................. 5-12
5.20 Reporting During Construction Period .................................................................. 5-12
5.21 Final Payment ........................................................................................................ 5-13
5.22 Certification that Additional Requirements Have Been Met................................. 5-14
SECTION 4: APPLICATION PROCESSING FOR GUARANTEES ON
CONSTRUCTION ADVANCES........................................................................................ 5-14
5.23 Overview of Process .............................................................................................. 5-14
SECTION 5: CLAIMS PROCESSING FOR
GUARANTEES ON CONSTRUCTION ADVANCES.................................................... 5-14
5.24 Overview of Process .............................................................................................. 5-14
CHAPTER 6: PROGRAM FEES
6.1 Overview.................................................................................................................. 6-1
6.2 Fees Associated with the Loan Guarantee............................................................... 6-2
A. Guarantee Fee ................................................................................................... 6-2
B. Annual Fee........................................................................................................ 6-2
C. Surcharge for Guarantees on Construction Advances ...................................... 6-2
6.3 Additional Agency Fees........................................................................................... 6-2
A. Application Fee................................................................................................. 6-2
B. Extension and Reopening Fees ......................................................................... 6-2
C. Transfer Fee ...................................................................................................... 6-3
CHAPTER 7: SERVICING PERMANENT LOANS............................................................ 7-1
7.1 Introduction.............................................................................................................. 7-1
SECTION 1: SERVICING GOALS AND OBJECTIVES................................................ 7-1
7.2 Objectives ................................................................................................................ 7-1
7.3 Protecting the Value of the Financial Asset............................................................. 7-1
7.4 Protecting the Tenants’ Rights................................................................................. 7-2
7.5 Protecting the Government’s Interests..................................................................... 7-2
SECTION 2: GENERAL SERVICING REQUIREMENTS............................................ 7-2
7.6 Funds Management.................................................................................................. 7-2
A. Collecting and Processing Borrower Payments................................................ 7-2
B. Escrow and Reserve Account Management ..................................................... 7-2
C. Interest Credit ................................................................................................... 7-3
D. Approval of Reserve Releases .......................................................................... 7-3
E. Approval of Surplus Cash Distribution to the Borrower .................................. 7-5
7.7 Addressing Defaults and Delinquencies .................................................................. 7-7
A. Delinquencies.................................................................................................... 7-7
B. Declaring a Default........................................................................................... 7-7
C. Initiating Special Servicing............................................................................... 7-7
7.8 Transfer of Ownership ............................................................................................. 7-8
A. Changes in the Ownership Entity ..................................................................... 7-8
B. Transfers of Title/Transfers of Physical Assets................................................ 7-8
7.9 Transfer of Loans or Mortgage Servicing................................................................ 7-8
SECTION 3: ASSET MANAGEMENT .............................................................................. 7-9
7.10 Overview.................................................................................................................. 7-9
7.11 Financial Management............................................................................................. 7-9
A. Borrower Reports to the Lender ....................................................................... 7-9
B. Lender Reports to the Agency ........................................................................ 7-11
7.12 Completing the Capital Needs Assessment and Reserve Analysis........................ 7-14
A. The Capital Needs Assessment....................................................................... 7-14
B. Adjusting the Reserve Deposit Requirement.................................................. 7-14
7.13 Physical Maintenance and Oversight..................................................................... 7-15
A. Physical Standards and Inspections ................................................................ 7-15
B. Capital Improvement Plans............................................................................. 7-16
7.14 Compliance with other Federal Requirements....................................................... 7-16
A. Affirmative Fair Housing Marketing Plan...................................................... 7-16
B. Annual Fair Housing Reporting Requirements .............................................. 7-16
C. Other Civil Rights Laws ....................................................................................... 7-16
7.15 Compliance with other Program Requirements..................................................... 7-19
A. Regulatory Agreement Compliance................................................................ 7-19
B. Preservation of Affordable Housing ............................................................... 7-20
SECTION 4: SPECIAL SERVICING .............................................................................. 7-20
7.16 Overview................................................................................................................ 7-20
7.17 Roles and Responsibilities of the Servicing Lender .............................................. 7-21
A. Development of a Workout Plan..................................................................... 7-21
B. Bankruptcy of Borrower ................................................................................. 7-22
C. Loss Claims During Bankruptcy... ..................................................................7-22
7.18 Roles and Responsibilities of the Borrower........................................................... 7-22
A. Submission of Information to the Lender......................................................... 7-22
B. Development and Execution of the Workout Plan........................................... 7-23
C. Compliance with the Workout Plan ................................................................. 7-23
7.19 Special Servicing Options...................................................................................... 7-23
A. Loan Modifications .......................................................................................... 7-23
B. Partial Payment of Claim ................................................................................. 7-23
C. Transfer of Physical Assets .............................................................................. 7-24
D. Agency Approval of Reserve Releases ............................................................ 7-24
E. Lender Recommendation of Enforcement Action............................................ 7-24
Attachment 7-A: GRRHP Lender Servicing Compliance Checklist
CHAPTER 8: PROPERTY MANAGEMENT
8.1 Introduction.............................................................................................................. 8-1
SECTION 1: ROLE OF LENDER IN PROPERTY MANAGEMENT........................... 8-1
8.2 Responsibilities of the Lender ................................................................................. 8-1
A. Management Plan.............................................................................................. 8-1
B. Property Manager Qualifications...................................................................... 8-2
C. Management Agreement................................................................................... 8-2
D. Site Visits.......................................................................................................... 8-2
E. Occupancy and Rent ......................................................................................... 8-2
F. Affirmative Fair Housing Marketing Plan........................................................ 8-2
G. Reporting .......................................................................................................... 8-2
H. Relationship Reporting ..................................................................................... 8-3
I. Pre-Rent Up Instructions………………………………………………………8-3
SECTION 2: MANAGEMENT PLAN................................................................................ 8-4
8.3 Overview.................................................................................................................. 8-4
8.4 Management Plan Requirements ............................................................................. 8-4
A. Management Plan Contents .............................................................................. 8-4
B. Agency Review................................................................................................. 8-6
SECTION 3: PROPERTY MANAGER.............................................................................. 8-6
8.5 Overview.................................................................................................................. 8-6
8.6 Key Property Manager Issues .................................................................................. 8-7
8.7 Property Manager Experience ................................................................................. 8-7
8.8 Previous Participation and other Federal Requirements.......................................... 8-8
SECTION 4: MANAGEMENT AGREEMENT................................................................. 8-8
8.9 Overview.................................................................................................................. 8-8
8.10 Terms and Conditions .............................................................................................. 8-8
8.11 Management Fee...................................................................................................... 8-9
SECTION 5: OCCUPANCY REQUIREMENTS.............................................................. 8-9
8.12 Occupancy Requirements and Lender Review........................................................ 8-9
A. Income of Residents.......................................................................................... 8-9
B. Tenant Income Certifications............................................................................ 8-9
C. GRRHP Definition of Income ........................................................................ 8-10
D. Reporting of Income ....................................................................................... 8-10
E. Restrictions on Rent........................................................................................ 8-10
F. Use Restrictions .............................................................................................. 8-11
SECTION 6: TENANT PROTECTION AND GRIEVANCE PROCEDURES........... 8-11
8.13 Overview................................................................................................................ 8-11
8.14 Tenant Protection................................................................................................... 8-12
8.15 Grievance Procedures ............................................................................................ 8-12
8.16 Civil Rights ............................................................................................................ 8-14
A. Lender Obligations ........................................................................................... 8-14
B. Penalties............................................................................................................ 8-15
8.17 Housing Discrimination........................................................................................ 8-15
CHAPTER 9: INSURANCE REQUIREMENTS
9.1 Introduction .............................................................................................................. 9-1
SECTION 1: OVERVIEW OF INSURANCE REQUIREMENTS .................................. 9-1
9.2 Overview.................................................................................................................. 9-1
SECTION 2: TYPES OF INSURANCE............................................................................. 9-1
9.3 Property Insurance ................................................................................................... 9-1
9.4 Fidelity Insurance .................................................................................................... 9-2
9.5 Mortgage’s Errors and Omissions (E&O) Insurance............................................... 9-2
9.6 Liability Insurance ................................................................................................... 9-2
9.7 Worker’s Compensation .......................................................................................... 9-3
9.8 Evidence of Insurance, Terms, and Coverage………………………………… 9-3
SECTION 3: AUTHORIZED INSURANCE PROVIDERS............................................. 9-3
9.9 Overview.................................................................................................................. 9-3
9.10 Acceptable Ratings for Insurance Providers............................................................ 9-3
CHAPTER 10: CLAIMS
10.1 Purpose and Overview ........................................................................................... 10-1
SECTION 1: PRE-LIQUIDATION REQUIREMENTS ................................................. 10-2
10.2 Overview................................................................................................................ 10-2
SECTION 2: DECISION TO LIQUIDATE...................................................................... 10-2
10.3 Overview................................................................................................................ 10-2
10.4 Notice of Liquidation and Potential Claim ............................................................ 10-3
10.5 Submission of a Liquidation Plan.......................................................................... 10-3
10.6 Approval of Liquidation Plan ................................................................................ 10-5
10.7 Filing an Estimated Loss Claim............................................................................. 10-5
10.8 Withdrawal of a Claim........................................................................................... 10-5
SECTION 3: PROPERTY LIQUIDATION .................................................................... 10-5
10.9 Property Acquisition .............................................................................................. 10-5
10.10 Lender Liquidation .............................................................................................. 10-6
10.11 Failure to Comply with the Liquidation Plan ...................................................... 10-7
SECTION 4: AGENCY ELECTION OF ASSIGNMENT OR CONVEYANCE.......... 10-7
10.12 Overview.............................................................................................................. 10-7
10.13 Assignment of the Loan ....................................................................................... 10-8
10.14 Conveyance of Title to the Agency ..................................................................... 10-8
SECTION 5: DETERMINATION OF THE CLAIM AMOUNT................................... 10-9
10.15 Introduction.......................................................................................................... 10-9
10.16 Determination of the Date of Loss..................................................................... 10-10
A. Lender Liquidation ...................................................................................... 10-10
B. Assignment or Conveyance of Title to the Agency .................................... 10-10
10.17 Calculation of Loss ............................................................................................ 10-10
A. Request for Estimated Loss Claim .............................................................. 10-10
B. Final Report of Loss .................................................................................... 10-11
10.18 Protective Advances .......................................................................................... 10-11
10.19 Liquidation Expenses......................................................................................... 10-11
10.20 Legal Expenses During Bankruptcy Proceedings.............................................. 10-11
10.21 Maximum Guarantee Payment .......................................................................... 10-12
SECTION 6: PAYMENT OF THE FINAL CLAIM...................................................... 10-12
10.22 Overview............................................................................................................ 10-12
10.23 Submission of a Report of Final Loss................................................................ 10-12
10.24 The Approved Claim Amount ........................................................................... 10-13
CHAPTER 11: ENVIRONMENTAL REQUIREMENTS
11.1 Purpose and Overview ........................................................................................... 11-1
11.2 General Environmental Requirements................................................................... 11-1
11.3 Environmental Risk Management.......................................................................... 11-2
11.4 Responsibility for Environmental Reviews ........................................................... 11-3
11.5 Environmental Reviews During Loan Origination................................................ 11-4
A. The NOFA Submission Stage .......................................................................... 11-4
B. The Application Submission Stage .................................................................. 11-4
11.6 Environmental Reviews During the Servicing Period........................................... 11-5
11.7 Other Environmental Requirements ...................................................................... 11-6
A. Flood Hazard Determination ............................................................................ 11-6
B. Clean Air Act and Water Pollution Control Act .............................................. 11-7
CHAPTER 12: SECONDARY MARKET
12.1 Purpose and Overview ........................................................................................... 12-1
SECTION 1: TRANSFER TO SECONDARY MARKETS ............................................ 12-1
12.2 Holder Versus Participant...................................................................................... 12-1
12.3 Transfer to the Secondary Market ......................................................................... 12-2
A. Loan Requirements for Sale on the Secondary Market ................................... 12-2
B. Agency Execution of Form RD 3565-5, Assignment Guarantee Agreement .. 12-3
C. Loans Involving Ginnie Mae, Freddie Mac and Fannie Mae .......................... 12-4
SECTION 2: REPURCHASE FROM A SECONDARY MARKET HOLDER............ 12-4
12.4 Holder Demand Repurchase .................................................................................. 12-4
12.5 Lender Initiated Repurchase .................................................................................. 12-5
12.6 Demand Repurchase of Loans Contained in a Ginnie Mae Pool .......................... 12-5
12.7 Purchase of the Loan or Note by the Agency ........................................................ 12-5
A. Agency Purchase from the Holder .................................................................. 12-5
B. Agency Purchase of Loans Contained in Ginnie Mae Pools ........................... 12-7
12.8 Repurchase Price of the Loan or Note ................................................................... 12-7
| USDA Home Loans |
not enough to qualify for a home loan at a commercial
lending institution, such as a bank, savings
and loan or mortgage company.
More rural families and individuals may be eligible
to become homeowners with the help of a
USDA guaranteed home loan. When the federal
government agrees to guarantee a loan, lending
institutions can help buyers while incurring less
risk. Through USDA’s Guaranteed Rural Housing
Loan Program, low- and moderate-income people
can qualify for mortgages even without a down
payment.
Guaranteed Rural Housing Loans
To be eligible, applicants must:
Have an adequate and dependable income;
Be a U.S. Citizen, qualified alien, or be legally
admitted to the United States for permanent
residence;
Have an adjusted annual household income
that does not exceed the moderate income
limit established for the area. A family’s
income includes the total gross income of the
applicant, co-applicant and any other adults in
the household. Applicants may be eligible to
make certain adjustments to gross income—
such as annual child care expenses and $480
for each minor child—in order to qualify.
USDA Rural Development field offices can provide
information on the moderate income limits
for the areas that fall within their jurisdiction,
and can provide further guidance on calculating
household income.
Have a credit history that indicates a reasonable
willingness to meet obligations as they
become due;
Have repayment ability based on the following
ratios: Principle, Interest, Taxes, and Insurance
(PITI) divided by gross monthly income must
be equal to or less than 29 percent. Total debt
divided by gross monthly income must be
equal to, or less than, 41 percent.
lending institution, such as a bank, savings
and loan or mortgage company.
More rural families and individuals may be eligible
to become homeowners with the help of a
USDA guaranteed home loan. When the federal
government agrees to guarantee a loan, lending
institutions can help buyers while incurring less
risk. Through USDA’s Guaranteed Rural Housing
Loan Program, low- and moderate-income people
can qualify for mortgages even without a down
payment.
Guaranteed Rural Housing Loans
To be eligible, applicants must:
Have an adequate and dependable income;
Be a U.S. Citizen, qualified alien, or be legally
admitted to the United States for permanent
residence;
Have an adjusted annual household income
that does not exceed the moderate income
limit established for the area. A family’s
income includes the total gross income of the
applicant, co-applicant and any other adults in
the household. Applicants may be eligible to
make certain adjustments to gross income—
such as annual child care expenses and $480
for each minor child—in order to qualify.
USDA Rural Development field offices can provide
information on the moderate income limits
for the areas that fall within their jurisdiction,
and can provide further guidance on calculating
household income.
Have a credit history that indicates a reasonable
willingness to meet obligations as they
become due;
Have repayment ability based on the following
ratios: Principle, Interest, Taxes, and Insurance
(PITI) divided by gross monthly income must
be equal to or less than 29 percent. Total debt
divided by gross monthly income must be
equal to, or less than, 41 percent.