16.5 ANNUAL FEE (01/27/17)

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

The servicer will electronically pay the Agency the annual fee, which may be passed to the borrower. The servicer responsible for payment is required to enter into a User Agreement to electronically receive billing notifications and submit payment. Non-payment of the annual fee will be subject to a late charge if not paid by the due date. Information regarding the amount of annual fee and late charge due if not paid can be found in Exhibit K of RD Instruction 440.1, available on the Rural Development website: http://www.rd.usda.gov/publications/regulations-guidelines/instructions

Both purchase and refinance transactions are subject to an annual fee.

Information for gaining access to the Agency’s Guaranteed Annual Fee system can be found at https://www.rd.usda.gov/programs-services/lenders/usda-linc-trainingresource- library

1. Amount of Annual Fee The servicer will pay the Agency the annual fee which is calculated on the average scheduled unpaid principal balance of the mortgage. The applicable annual fee is determined each fiscal year.
2. Calculation of Annual Fee The amount of the annual fee is calculated from the original amortization schedule of the mortgage at loan closing. The annual fee is not calculated upon the addition of delinquent payments, prepayments, agreements to postpone payments, or loan modifications (reamortization) of the original mortgage.
3. Due Date of Annual Fee The annual fee is due and payable to the Agency on the 1stday of the billing month. A grace period applies to payments credited through the 15th day of the billing month. Electronic payments submitted on a business day prior to 7:00 p.m. central time will credit the next business day. Electronic payments after 7:00 p.m. central time, or on a non-business day, will credit two business days later.
4. Payment of Annual Fee The servicer is responsible for the payment of the annual fee to the Agency.
5. Advance Notice, Billing, and Reconciliation of the Annual Fee Servicers will receive an advance notice two months prior to the current annual fee due date, which will document the annual fee amount to be collected in the subsequent year. An advance notice allows the servicer to adjust a borrower’s escrow collection to accommodate the next scheduled billing period. Advance notices are generated on the first business day of the month. The annual fee billing file will be available to the servicer on the anniversary closing month of the loan each year. Payment of any annual fee billed is due to the Agency on the 1stday of the month following the anniversary date of loan settlement. The billing file will outline the current annual fee amount due, all past due annual fee amounts, and all late charge amounts due for each individual loan in the lender’s portfolio subject to an annual fee. A late fee will be assessed, if the annual fee, due on the 1st day of the month remains unpaid by the 15th day of the month. A secondary late fee may be assessed if the annual fee billed remains unpaid on the last day of the month.
6. Late Charge on Unpaid Annual Fee Payments received by the Agency after the payment dates prescribed in this section and supported by §3555.107(i) of 7 CFR 3555 shall include a late charge of four percent of the unpaid fee amount. In addition to the initial late charge provided, the lender may be assessed an additional late charge on any annual fee remaining unpaid after the last day of the month in which payment was due. This additional late charge will be one percent of the unpaid annual fee amount. Late charges cannot be passed on to the borrower.
7. Period Covered by Annual Fee The initial annual fee shall cover the period effective with the first day of the calendar month following the settlement date and ending on the last day of the settlement anniversary month. Subsequent annual fee payments shall cover the twelve-month period preceding each subsequent anniversary date.
8. Duration of Annual Fee The lender shall pay the annual fee to the Agency until termination. Termination of a loan must be reported to the Agency within 15 days of the actual event. Termination may be any of the following:

• When the mortgage reaches maturity;
• At prepayment. The borrower paid the mortgage in full prior to the maturity date or by an approved short payoff;
• The property was acquired by a lender or third party at a foreclosure sale;
• Voluntary conveyance. The property was conveyed to the lender through an approved deed-in-lieu of foreclosure agreement.

1. Pro rata payment of the annual fee If the loan note guarantee is terminated prior to the due date of the annual fee due, the lender shall pay a prorated portion of the fee. The annual fee is prorated monthly beginning with the month proceeding the settlement date. The lender must determine how many months of the scheduled annual fee period have elapsed at the time of termination. Regardless of what day of the month the loan is terminated, the entire month in which termination occurs will be included in the prorated calculation. If the loan note guarantee is terminated after the due date of the annual fee payment, the lender shall pay a prorated portion of the annual fee. The calculation will be prorated from the due date of the last annual fee to the date of termination. A pro rata annual fee will also be due and payable after a foreclosure is complete. The lender shall pay a portion of the annual fee prorated from the due date of the last annual fee to the date of settlement.
2. Method of Payment of the Annual Fee Payment of the annual fee will be remitted electronically. Implementation and technical guides to explain electronic payment of the annual fee may be found on the USDA LINC website at the Training and Resource Library link:

• https://usdalinc.sc.egov.usda.gov/RHShome.do

1. Nonpayment of the Annual Fee If for any reason the lender fails to pay the scheduled annual fee payment, submitted loss claims may be reduced by the cumulative amount of unpaid annual fees, late fees and/or additional late charges due the Agency. Lenders are subject to termination of their eligibility to participate in the SFHGLP due to nonpayment of the annual fee in accordance with §3555.52(c)(1) of 7 CFR 3555 and Chapter 3 of this Handbook.