USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶16.5 — Annual Fee

USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶16.5 — Annual Fee

16.5 ANNUAL FEE The servicer will electronically pay the Agency the annual fee on all purchase and refinance transactions, which may be passed on to the borrower. The servicer responsible for payment is required to enter into a User Agreement to electronically receive billing notifications and submit payments. The annual guarantee fee amount published in Exhibit K of RD Instruction 440.1, available in any Rural Development office or by selecting “Part 1800: General” on the Rural Development Instructions website located at https://www.rd.usda.gov/resources/directives/instructions. The fee is subject to change to maintain a subsidy neutral program required by Public Law 111-212. Information for gaining access to the Agency’s Guaranteed Annual Fee (GAF) system can be found at https://www.rd.usda.gov/resources/usda-linc-training-resource- library. A. Amount of Annual Fee The servicer will pay an annual fee to the Agency which is calculated on the average scheduled unpaid principal balance of the mortgage. B. 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 does not include delinquent payments, prepayments, agreements to postpone payments, or loan modifications to the original mortgage. C. Due Date of Annual Fee The annual fee is due and payable to the Agency on the 1st day of the billing month with a grace period for 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 be credited 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. HB 1-3555 (03-09-16) SPECIAL PN 16-9 Revised (08-05-25) PN 649 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. D. Payment of Annual Fee The servicer is responsible for the payment of the annual fee to the Agency. E. Advance Notice, Billing, and Reconciliation of the Annual Fee Servicers will receive advance notice, two months prior to the current annual fee due date, documenting the annual fee amount due in the subsequent year to allow 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 1st day 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 servicer’s portfolio that are subject to an annual fee. F. Late Charge on Unpaid Annual Fee Payments received by the Agency after the payment dates prescribed in this section and supported by §3555.107(h) 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. Annual fee late charges cannot be passed on to the borrower. G. 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. HB 1-3555 (03-09-16) SPECIAL PN 16-10 Revised (08-05-25) PN 649 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. H. Duration of Annual Fee The servicer shall pay the annual fee to the Agency until termination of the Loan Note Guarantee. Termination may be any of the following: x When the mortgage reaches maturity; x At prepayment. The borrower paid the mortgage in full prior to the maturity date or by an approved short payoff; x Foreclosure. The property was acquired by a lender or third party at a foreclosure sale; or x Voluntary conveyance. The property was conveyed to the lender through an approved deed-in-lieu of foreclosure agreement. A termination event must be reported to the Agency within 15 days of occurrence. I. 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 servicer shall pay a prorated portion of the fee. The annual fee is prorated monthly beginning with the month proceeding the settlement date. The servicer 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 servicer 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. HB 1-3555 (03-09-16) SPECIAL PN 16-11 Revised (08-05-25) PN 649 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. J. 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, located at https://usdalinc.sc.egov.usda.gov/RHShome.do. K. Nonpayment of the Annual Fee If for any reason the servicer 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 to the Agency. Servicers 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.

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