15.2 LENDER RESPONSIBILITY (03/09/16)

Owned by Kacey Olson (Unlicensed)
Last updated: Nov 17, 2018
3 min read

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

The originating lender remains responsible for the quality and accuracy of all information used in obtaining a Rural Development guarantee in accordance with all parts of 7 CFR 3555 and this Handbook.  The loan application package must contain all information that supports the eligibility of the household for the SFHGLP and the lender’s decision to approve the loan request.  An underwriter’s certification of their underwriting analysis (applicable to traditional manually underwritten application packages) and/or the final submission of the electronic application through the Agency’s automated underwriting system represents the underwriter of the approved lender has personally reviewed the appraisal report and credit application and the proposed mortgage complies with Rural Development eligibility and underwriting requirements.

Documenting Eligibility of the Household:  Income from all household members, not just parties to the note, must be considered when computing income to determine eligibility for the SFHGLP.  It remains the lender’s responsibility to document the applicants qualifying income and support their calculation.  Chapter 9 of this Handbook provides guidance.

Documenting Eligibility of the Applicants and Parties Eligible to Participate in Rural Development Loan Guarantee:  As part of the eligibility determination for the SFHGLP, lenders must document their permanent file confirming the applicant(s) are not on the:

  • U.S. General Services Administration (GSA) System for Award Management (SAM) and  HUD’s Credit Alert Verification Reporting System (CAIVRS).

To determine whether an applicant is eligible to participate in an SFHGLP mortgage loan transaction, the lender must examine the GSA List and CAIVRS and document their permanent case file with results.  An applicant is ineligible if he/she is presently delinquent on any Federal debt or is suspended or debarred, or otherwise excluded from participating in Rural Development programs.  The GSA list may be found at:  https://www.sam.gov/portal/public/SAM/.   Lenders who utilize an automated method that creates a report, similar to a watch list, which performs a check of the SAM website, will meet the criteria of this check.   Lenders will certify on Form RD 3555-21 the applicant(s) and all parties to the mortgage transactions are not on the GSA list.  This check is applicable to each financial transaction submitted to the Agency.  All other parties to the mortgage transaction can be:

  • Applicant(s)
  • Seller
  • Listing or selling real estate agent
  • Loan officer
  • Loan processor
  • Underwriter
  • Appraiser, or
  • Builder

Documentation:  Lenders will retain evidence they followed the appropriate procedures and confirmed eligibility for all participants involved in the transaction.  The lender will check the “Yes” box on Form RD 3555-21 at  “GSA/SAM Exclusion” and “System for Award Management (SAM) indicates a party to the transaction is debarred from business with the Federal government” on GUS transactions.  Include the date SAM was checked.

See Appendix 7 of this Handbook for access to CAIVRS.  Refer to Chapter 10 of this Handbook for additional guidance on CAIVRS.  

Eligibility of Applicants for Traditional Credit:  Applicants must demonstrate they are unable to secure conventional credit without a SFHGLP guarantee.   Lenders must document their permanent file with their consideration of the criteria, as outlined in Chapters 5 and 8 of this Handbook.  Lenders may confirm their consideration of the criteria by recording their review on their underwriting analysis.

Additional Program Requirements:  The lender’s file must thoroughly document all relevant information used to make the determination of stable and dependable income, in accordance with Chapter 9 of this Handbook, utilized to qualify the applicants for the mortgage loan.  The lender must ensure all other eligibility requirements are met and documented.  

Social Security Number Evidence:  For all applicants, the lender must document a valid Social Security Number (SSN) on the mortgage.  Each applicant must provide the lender with evidence of his or her own valid SSN as issued by the Social Security Administration (SSA).  This applies to purchase and all refinance transactions.  The actual social security card is not required; the lender is required to validate the SSN.  Lenders may use various means for validating the SSN including examining the applicant’s pay stubs, passport, valid tax returns, and may use service providers including those with direct access to the SSA.  The lender must resolve any inconsistencies or multiple SSNs for individual applicants that become known during the loan processing and underwriting.  Lenders must ensure the Uniform Residential Loan Application is reflective of true and accurate information.