USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶1.11 — Unauthorized Assistance

USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶1.11 — Unauthorized Assistance

1.11 UNAUTHORIZED ASSISTANCE Unauthorized assistance occurs when a borrower is not eligible for all or part of the financial assistance received in the form of a loan guarantee. Loans made to unqualified borrowers or made for an ineligible purpose are considered unauthorized assistance. The form of unauthorized assistance can differ based upon false information or inaccurate information. Unauthorized assistance may be identified through audits, reviews by the Agency or its agents, or as reported by lenders. Chapter 16, Attachment 16-B provides guidance for submitting lender self-reports. The significance of the unauthorized assistance will determine the Agency’s response in accordance with Section 3555.257 of 7 CFR Part 3555. When the Agency becomes aware of unauthorized assistance due to false information provided by the applicant, the lender may be required to accelerate the loan request. HB-1-3555 (03-09-16) SPECIAL PN 1-10 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. Failure of the lender to accelerate the loan may result in reduction of a loss claim and/or voiding the guarantee. Based upon the severity, the Agency may pursue criminal and civil false claim actions, suspension and/or debarment, or other appropriate actions. The Agency will document the findings surrounding the unauthorized assistance in detail and provide a solution on disposition of the case. 1.12 AGENCY LOAN APPROVAL AUTHORITY GUIDELINES FOR THE SFHGLP All new loan specialists working in the SFHGLP are expected to receive loan approval authority prior to officially issuing decisions on program applications. The process consists of initial training, proficiency-based tests, mentoring support, file reviews, and a formal recommendation by the new specialist’s supervisor. The guidelines detail the expectations to be followed by Agency employees delivering the SFHGLP. A. Training x New specialists will complete all approved Single Family Housing (SFH) University guaranteed training modules in the order required by the SFH University curriculum. x The SFH University curriculum will be supplemented with on-the-job training, provided by an experienced loan specialist/mentor. B. Proficiency Testing x The proficiency-based tests are a key component of the loan approval authority process. All new specialists are required to pass the test after each training module is completed. This will indicate to the supervisor and mentor that the new specialist has an acceptable level of knowledge in that program area and can proceed to the next training module. The proficiency-based tests and scoring system are administered in accordance with the SFH University curriculum requirements. x After the final module is completed, the supervisor shall schedule a time for the specialist to take the final exam, which consists of questions generated from information presented in all the completed modules and will be used to assess the overall level of knowledge of the specialist. x The minimum passing score for the proficiency test is 70. If a new specialist fails the first attempt, the first line supervisor will review the results of the test with the HB-1-3555 (03-09-16) SPECIAL PN 1-11 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. specialist, address weaknesses, advise the new specialist on the area(s) they need to focus, provide a solution to rectify the deficiencies, and allow the specialist to retake the test when the supervisor determines the specialist’s readiness. C. Mentoring x At the time of enrollment in SFH University, the supervisor will assign a mentor to assist the new specialist in learning the requirements associated with the underwriting and review of SFHGLP applications. x The assigned mentor shall prepare written quarterly reports to the new specialist’s supervisor, outlining the progress and recommendations on areas needed for continued development. x Mentoring is expected to last at least 12 months, but may be extended (in six- month increments) in the event the progress the specialist is making is not up to par with his/her SFH University curriculum and the proficiency-based tests. x The assigned mentor shall not be the new specialist’s supervisor. The mentor’s role is to help facilitate continued learning and to serve as a resource for technical questions and procedural guidance. D. File Review x After a new specialist attains a passing score on the final test, the supervisor or mentor will assign SFHGLP files to the new specialist to review independently. Prior to obligation, the supervisor or mentor will complete a file review of each application to evaluate and attest that the new specialist is working at a standard worthy of independent loan approval authority. x Once an acceptable level of review has been attained, the first line supervisor will submit a minimum of four (4) GUS ACCEPT and six (6) GUS REFER or REFER WITH CAUTION loan files for review by a Director of the OPD, or assignee, in order to determine the loan approval authority recommendation. E. Supervisor Recommendation for Approval x Upon successful completion of the SFH University curriculum, proficiency tests, final exam, mentoring period, and file reviews, a letter will be prepared by the new specialist’s supervisor to a Director of the OPD recommending the delegation of loan approval authority. HB-1-3555 (03-09-16) SPECIAL PN 1-12 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. x A Director of the OPD, or assignee, will review the recommendation and any supporting documentation to grant or deny the delegation of loan approval authority to the new specialist. The designation will be documented in writing. If approval is granted, a certificate will be awarded to the specialist noting his/her approval status with USDA Rural Development. Attachment 1-C, Delegation of Loan Approval Authority, may be used. x The expected amount of time to complete this process may vary between 12 and 18 months. If more than 24 months have elapsed, a Director of the OPD, or assignee, will examine the reason(s) for the delay and will develop a plan of action. x In the event the supervisor is unable to recommend loan approval authority within 24 months due to recurring deficiencies in the specialist’s file reviews, a revised training plan will be developed by the supervisor to assist the new specialist in overcoming and resolving the identified deficiencies. F. Continued Training Process Supervisors should continue to evaluate the quality of loan reviews by new specialists after loan approval authority has been granted. Close monitoring by an established quality assurance process is recommended to determine if specific training might be required based on unusual application submissions. G. Reinstatement of Approval Authority If a specialist’s loan approval authority is revoked, RD Instruction 1901-A authorizes the Administrator to provide written restrictions or revocations of the authority given to any loan approval official. The Administrator may take action upon the recommendation of a Director of the OPD, or assignee. Supervisors are granted the authority to determine what actions, training, and conditions are required to reinstate loan approval authority to a specialist. HB-1-3555 (03-09-16) SPECIAL PN 1-13 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. ATTACHMENT 1-A NOTICE OF RELATIONSHIP/ASSOCIATION BETWEEN SFHGLP APPLICANT AND RURAL DEVELOPMENT EMPLOYEE TO: Origination And Processing Division SUBJECT: Notice of relationship or association between applicant and Rural Development employee This is to notify you that the following applicant is requesting a Single Family Housing Guaranteed loan and is related or is associated with a Rural Development employee: Applicant Name: _______________________________________________ Borrower Id Number: ____________________________________________ Property Address: _______________________________________________ _______________________________________________ County Name: ________________________________ Status Of Application: _____Pre-Eligibility _____Ready To Submit _____In Process Rural Development Employee Name: _________________________________ Duty Station: _____________________________________________________ Details of relationship/association: _______________________________________ ___________________________________________________________________ ___________________________________________________________________ Submitted By: _____________________________ Date: ____________ Employee Or Lender Title/Organization Email: _______________________________ HB-1-3555 (03-09-16) SPECIAL PN 1-14 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. ATTACHMENT 1-B REQUIREMENTS FOR HANDLING SFHGLP APPLICATION OF EMPLOYEE, RELATIVE OR ASSOCIATE TO: (Lender Name) SUBJECT: Requirements for handling SFHGLP applications of employee, relative or associate for (Applicant Name, Borrower ID Number) The following application processing procedures have been established by a Director of the Origination and Processing Division: Review Of Application, Approval And Issuance Of Conditional Commitment: _________________________________ Review Of Closing Documents, Issuance Of Loan Note Guarantee: _____________________________________ Post Closing Review: ____________________________________ Access to the applicant’s electronic case file in the Agency’s automated systems will be restricted to the aforementioned employees. All servicing actions will be in accordance with 7 CFR 3555. [Date] ________________________________ [Name] Director, Origination And Processing Branch cc: [Employee First-Line Supervisor] Employee eOPF HB-1-3555 (03-09-16) SPECIAL PN 1-15 Revised (06-24-22) PN 563 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. ATTACHMENT 1-C DELEGATION OF LOAN APPROVAL AUTHORITY TO: [Name] [Title] USDA Rural Development [Location] By my authority as Director of Origination and Processing Division for USDA Rural Development, in accordance with Rural Development Instruction 1901-A, I hereby make a delegation to the aforementioned employee: x Loan approval authority for Single Family Housing Section 502 Guaranteed Loans described in 7 CFR Part 3555. This delegation is effective immediately and will continue until the delegate leaves his/her position or until revocation or other change is made in writing. [Date] __________________________ [Name] Director, Origination and Processing Division cc: [first-line supervisor] eOPF HB-1-3555 (03-09-16) SPECIAL PN 2-1 Revised (05-05-25) PN 640 Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts. CHAPTER 2: RECORD RETENTION 7 CFR 3555.51

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