17.1 INTRODUCTION (01/27/17)

Owned by Kacey Olson
Nov 24, 2018
2 min read

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

Servicers are responsible for servicing SFHGLP loans and protecting security interests and servicing account in a reasonable and prudent manner. This chapter provides additional guidance about the ways in which servicers are expected to service loans that are either current, or less than 20 days past due. Servicing non-performing loans is described in Chapter 18 of this Handbook.

Section 1 defines the requirements associated with servicing current accounts, such as collecting payments, escrowing funds, processing interest assistance agreements, and loan reporting functions. Section 2 defines how the servicer should consider borrower requests for partial releases of security, and transfers and assumptions.

The holding lender is responsible for ensuring that the loan is properly serviced, even if servicing functions are contracted out to a sub-servicer. The phrase “the lender” applies to any organization associated with the origination and servicing of a loan. It is up to the holding lender and the servicer jointly to determine how each responsibility will be fulfilled.

  1. Selling SFHGLP Loans – 7 CFR 3555.54Lenders may sell SFHGLP loans to any USDA approved lender. While the guarantee is transferred with the loan, the originating lender will be held to the responsibilities in accordance with Section 4.9, Indemnification, of Chapter 4 regarding omissions, unresolved review findings stemming from problems at loan origination when a loss claim is requested. Requirements for loan sales are described in Chapter 4 of this Handbook.
  2. Contracting for Servicing of SFHGLP Loans The lender that holds the loan may choose to contract with a third party to service its loans. The lender remains responsible for the quality of the servicing and for monitoring the third party provider.
  3. Notifying the Agency of Loans Sales or Servicing Transfers Whenever lenders sell SFHGLP loans or contract servicing responsibilities to a third party, the transferring lender must inform the Agency within 15 days of the occurrence. The Lender must send Form RD 3555-11to the National Financial and Accounting Operations Center (NFAOC). See Appendix 4 for this mailing address.