7 CFR §3550.211 — Liquidation (RHS Direct Single Family Housing)

usda-7cfr-3550-211

7 CFR §3550.211 establishes the RHS Direct Section 502 SFH liquidation framework: borrower responsibility for liquidation / acquisition expenses; tribal-trust-land safeguards (offer to transfer to tribe / tribal member / Indian Housing Authority); acceleration-with-notice; voluntary-liquidation paths (refinance/ sale, DIL, third-party offer at NRV); bankruptcy interplay; junior-lienholder-foreclosure handling; payment-subsidy treatment; eligibility-for-special-servicing cutoff; and IRS / CRA reporting.

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source:
  type: regulation
  id: usda-7cfr-3550.211
  authority: 7 CFR §3550.211 — Liquidation (RHS Direct Single Family Housing)
  description: |
    7 CFR §3550.211 establishes the RHS Direct Section 502 SFH
    liquidation framework: borrower responsibility for liquidation /
    acquisition expenses; tribal-trust-land safeguards (offer to
    transfer to tribe / tribal member / Indian Housing Authority);
    acceleration-with-notice; voluntary-liquidation paths (refinance/
    sale, DIL, third-party offer at NRV); bankruptcy interplay;
    junior-lienholder-foreclosure handling; payment-subsidy treatment;
    eligibility-for-special-servicing cutoff; and IRS / CRA reporting.
obligations:
  - id: usda-7cfr-3550.211-b-tribal-trust-land-safeguards
    canonical_id: usda-7cfr-3550.211-b-tribal-trust-land-safeguards
    section: '7 CFR §3550.211(b) — Tribal allotted or trust land: liquidation safeguards'
    description: |
      Liquidations involving a security interest in tribal allotted or
      trust land shall only be pursued after offering to transfer the
      account to an eligible tribal member, the tribe, or the Indian
      Housing Authority. Forced liquidation of RHS security interests in
      Indian trust lands or on tribal allotted land will be recommended
      only after the State Director has determined it is in the best
      interest of the Government.
    type: do
    audit_question: For every RHS Direct Section 502 SFH liquidation involving a security interest in tribal allotted or trust land, can [LENDER] (in its servicing role on behalf of RHS) evidence (a) the offer to transfer the account to an eligible tribal member, the tribe, or the Indian Housing Authority before liquidation, and (b) where forced liquidation is recommended, the State Director's best-interest-of-the-Government determination?
    program_review: Does the servicing program account for the tribal-allotted/trust-land carve-out — flagging those security interests so that, before any liquidation, the offer to transfer the account to an eligible tribal member, the tribe, or the Indian Housing Authority is made, and forced liquidation is recommended only on a State Director best-interest determination?
    file_review: Spot-check liquidation files involving tribal allotted or trust land; confirm the pre-liquidation transfer offer and, where forced, the State Director's best-interest-of-the-Government determination. The officer judges whether the transfer offer was genuine.
    judgment: true
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-tribal-trust-land-liquidation
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs
      - tribal-trust-land
      - liquidation-safeguards
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3550.211(b)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3550.211
      snapshot_id: 23e775c48999aadb
      fetched_at: '2026-05-24T19:34:37Z'
      content_hash: sha256:096116c07c4bda9ba23440b0afd65faee1ed2fbdd9507000c8d35298c5f86105
      paragraph_quote: (b) Tribal allotted or trust land. Liquidations involving a security interest in tribal allotted or trust land shall only be pursued after offering to transfer the account to an eligible tribal member, the tribe, or the Indian Housing Authority. Forced liquidation of RHS security interests in Indian trust lands or on tribal allotted land will be recommended only after the State Director has determined it is in the best interest of the Government.
      drafter_attestation: |
        Copied verbatim from snapshot 23e775c48999aadb (content.txt) at
        2026-05-24T20:05Z. Substring is the full §3550.211(b) operative
        paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3550.211-roundc-v1.yaml
  - id: usda-7cfr-3550.211-c-acceleration-notice
    canonical_id: usda-7cfr-3550.211-c-acceleration-notice
    section: 7 CFR §3550.211(c) — Acceleration notice to each borrower and cosigner
    description: |
      If RHS determines that foreclosure is in the best interest of the
      Government, RHS will send an acceleration notice to each borrower
      and any cosigner.
    type: do
    audit_question: For every RHS Direct Section 502 SFH loan accelerated to foreclosure, can the record evidence (i) the best-interest-of-the-Government determination, and (ii) that an acceleration notice was sent to each borrower and any cosigner?
    program_review: Does the program ensure that, once foreclosure is determined to be in the Government's best interest, an acceleration notice issues to each borrower AND any cosigner?
    file_review: Pull accelerated-loan files; confirm (i) the best-interest determination is documented and (ii) the acceleration notice reached each borrower and every cosigner.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-acceleration
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs
      - acceleration-notice
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3550.211(c)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3550.211
      snapshot_id: 23e775c48999aadb
      fetched_at: '2026-05-24T19:34:37Z'
      content_hash: sha256:096116c07c4bda9ba23440b0afd65faee1ed2fbdd9507000c8d35298c5f86105
      paragraph_quote: (c) Acceleration and foreclosure. If RHS determines that foreclosure is in the best interest of the Government, RHS will send an acceleration notice to each borrower and any cosigner .
      drafter_attestation: |
        Copied verbatim from snapshot 23e775c48999aadb (content.txt) at
        2026-05-24T20:05Z. Substring is the full §3550.211(c) operative
        paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3550.211-roundc-v1.yaml
  - id: usda-7cfr-3550.211-d2-deed-in-lieu-acceptance-conditions
    canonical_id: usda-7cfr-3550.211-d2-deed-in-lieu-acceptance-conditions
    section: '7 CFR §3550.211(d)(2) — DIL acceptance: post-acceleration + best-interest required'
    description: |
      RHS may accept a deed in lieu of foreclosure to convey title to the
      security property only after the debt has been accelerated and when
      it is in the Government's best interest.
    type: do
    audit_question: For every RHS Direct Section 502 SFH deed-in-lieu acceptance, can the record evidence (i) that the debt had been accelerated prior to DIL acceptance, and (ii) that DIL acceptance was determined to be in the Government's best interest?
    program_review: Does the program account for the two preconditions on accepting a deed in lieu — the debt must already be accelerated AND acceptance must be in the Government's best interest?
    file_review: Spot-check deed-in-lieu acceptances; confirm the debt was accelerated before DIL acceptance and the best-interest determination is documented.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-deed-in-lieu
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs
      - deed-in-lieu
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3550.211(d)(2)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3550.211
      snapshot_id: 23e775c48999aadb
      fetched_at: '2026-05-24T19:34:37Z'
      content_hash: sha256:096116c07c4bda9ba23440b0afd65faee1ed2fbdd9507000c8d35298c5f86105
      paragraph_quote: (2) Deed in lieu of foreclosure. RHS may accept a deed in lieu of foreclosure to convey title to the security property only after the debt has been accelerated and when it is in the Government's best interest.
      drafter_attestation: |
        Copied verbatim from snapshot 23e775c48999aadb (content.txt) at
        2026-05-24T20:05Z. Substring is the full §3550.211(d)(2) operative
        paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3550.211-roundc-v1.yaml
  - id: usda-7cfr-3550.211-h-special-servicing-eligibility-cutoff
    canonical_id: usda-7cfr-3550.211-h-special-servicing-eligibility-cutoff
    section: 7 CFR §3550.211(h) — No special servicing after acceleration
    description: |
      A borrower is not eligible for special servicing actions once the
      account has been accelerated.
    type: dont
    audit_question: For every RHS Direct Section 502 SFH borrower whose account has been accelerated, can [LENDER] (in its servicing role) evidence that no further special-servicing actions were offered or granted after the acceleration date?
    program_review: Does the program account for the post-acceleration cutoff — placing a flag at acceleration so no special-servicing action is offered or granted afterward?
    file_review: Spot-check accelerated accounts; confirm no special-servicing action was offered or granted after the acceleration date.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-acceleration
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs
      - special-servicing-cutoff
      - servicing
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3550.211(h)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3550.211
      snapshot_id: 23e775c48999aadb
      fetched_at: '2026-05-24T19:34:37Z'
      content_hash: sha256:096116c07c4bda9ba23440b0afd65faee1ed2fbdd9507000c8d35298c5f86105
      paragraph_quote: (h) Eligibility for special servicing actions. A borrower is not eligible for special servicing actions once the account has been accelerated.
      drafter_attestation: |
        Copied verbatim from snapshot 23e775c48999aadb (content.txt) at
        2026-05-24T20:05Z. Substring is the full §3550.211(h) operative
        paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3550.211-roundc-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-24T20:12:25+00:00'
    candidate_path: obligations\_remediation\round-c-type-a\usda-7cfr-3550.211-roundc-v1.yaml
    candidates_promoted: 4
    candidates_skipped_existing: 0

Verbatim regulatory text (4)

Verbatim provisions from 7 CFR §3550.211 — Liquidation (RHS Direct Single Family Housing) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

7 CFR §3550.211(b) — Tribal allotted or trust land: liquidation safeguards

(b) Tribal allotted or trust land. Liquidations involving a security interest in tribal allotted or trust land shall only be pursued after offering to transfer the account to an eligible tribal member, the tribe, or the Indian Housing Authority. Forced liquidation of RHS security interests in Indian trust lands or on tribal allotted land will be recommended only after the State Director has determined it is in the best interest of the Government.

Source: 7 CFR §3550.211(b) · source URL · snapshot 23e775c48999aadb

7 CFR §3550.211(c) — Acceleration notice to each borrower and cosigner

(c) Acceleration and foreclosure. If RHS determines that foreclosure is in the best interest of the Government, RHS will send an acceleration notice to each borrower and any cosigner .

Source: 7 CFR §3550.211(c) · source URL · snapshot 23e775c48999aadb

7 CFR §3550.211(d)(2) — DIL acceptance: post-acceleration + best-interest required

(2) Deed in lieu of foreclosure. RHS may accept a deed in lieu of foreclosure to convey title to the security property only after the debt has been accelerated and when it is in the Government's best interest.

Source: 7 CFR §3550.211(d)(2) · source URL · snapshot 23e775c48999aadb

7 CFR §3550.211(h) — No special servicing after acceleration

(h) Eligibility for special servicing actions. A borrower is not eligible for special servicing actions once the account has been accelerated.

Source: 7 CFR §3550.211(h) · source URL · snapshot 23e775c48999aadb