USDA Technical Handbook HB-1-3555 §19.5 — Agency Review
USDA HB-1-3555 §19.5 (Agency Review). Gap-fill (verbatim).
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Verbatim provisions from USDA Technical Handbook HB-1-3555 §19.5 — Agency Review — 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.
USDA HB-1-3555 19.5 — Agency Review
ENCY REVIEW The Agency will review the loss claim package from the servicer. Loss claim checks or electronic funds transfer (EFT) payments will be issued to the servicer by the Agency within 60 days of the servicer’s properly filed loss claim. Agency staff will notify the servicer of any additional documentation required and will note it in the loss claim file. Once all required information is submitted, the Agency must take the following actions: x Determine whether the servicer has fulfilled all SFHGLP obligations and if not, whether reduction or denial of the loss claim is warranted. x Review and approve the loss claim with an Agency designee with appropriate approval authority. x Advise the servicer of the PSVC (if applicable) used to calculate the loss claim.
USDA HB-1-3555 19.5 — Agency Review
04-14-25) PN 637 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 Provide appropriate appeal rights for any adjustments, reductions, or denials with specific reasons and clear explanation for the decision in accordance with Appendix 3 of this Handbook. x Issue payment. Payment of the loss claim simultaneously fulfills and terminates the loan note guarantee. A termination notice will be mailed to the designated payee at the time of payment. A. Reduction or Denial of a Loss Claim The Agency will review each loss claim for adherence to program regulation and make any reductions and/or denial of loss claim as noted below. The Agency staff will use information provided by the servicer to determine if the loss claim should be adjusted or denied. The Agency must show that any reduction to the servicer’s loss claim corresponds with the servicer’s action or failure to act. This section provides guidance regarding reduction or denial of a loss claim, and when applicable, the specific penalties attached to those factors. Additional information regarding penalties may be found in Appendix 8 of this Handbook. B. Calculation and Approval of Loss Payment Agency staff will review the loss claim and supporting documentation submitted by the servicer. Agency staff will document and create a loss claim payment to the servicer. The Agency’s reviewer should contact the servicer if there are questions about the information submitted by the servicer. C. Loss Claim Payment Process The Agency will use the following procedures for loss claim processing and disbursement of any loss claim payment. 1. Notification of Loss Payment Amount The Agency should notify the servicer in writing of the amount to be paid within 60 days of receipt of a properly completed loss claim package. If the loss claim has been reduced or denied, the Agency will provide a clear explanation of its decision, including an analysis of how the amount of any reduction was determined and
USDA HB-1-3555 19.5 — Agency Review
04-14-25) PN 637 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. provide notification of appeal rights in accordance with Appendix 3 of this Handbook. 2. Payment and Post Payment Activities Payments for approved loss claims should be distributed within 60 days of receipt of a properly completed loss claim package. Servicers who participate in electronic funds transfer (EFT) should receive payment within 3 working days of loss claim processing. For all other servicers, a check should be generated and distributed within 3 working days of receipt of a properly completed and submitted loss claim. 3. Review and Appeal Rights. If a loss claim is reduced or denied, the Agency will notify the servicer of review and appeal rights as described in Appendix 3 of this Handbook. If the servicer seeks to request a review or appeal a loss claim decision, the Agency will pay the approved portion of the loss claim within the time frames described above. Interest will not accrue on any disputed loss amount during the review or appeals process regardless of the outcome of the review or appeal. 4. Supplemental Loss Claims The agency may allow the servicer to submit one supplemental loss claim in addition to the original loss claim submitted. The supplemental loss claim must be received by the agency within six months from payment date of the initial loss claim. The agency reserves the right to limit the payment of additional interest and expenses. The six-month expiration period may be exceeded if unusual circumstances exist such as a domestic incident as defined by the department of homeland security or when a geographic location in which the property is located has a presidential disaster declaration.
USDA HB-1-3555 19.5 — Agency Review
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. APPENDIX 1 For the complete 7 CFR Part 3555, refer to the National Archives and Records Administration Electronic Code of Federal Regulations (eCFR) found at https://www.ecfr.gov/current/title7/subtitle-B/chapter- XXXV/part-3555 The eCFR is a web version of the Code of Federal Regulations (CFR) that is updated simultaneously with any published revisions. Please use the link above for the most up to date version of the 7 CFR 3555.
USDA HB-1-3555 19.5 — Agency Review
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. APPENDIX 2 FORMS AND INSTRUCTIONS List of Forms and Instructions The following are forms noted within the handbook. Forms are separated by action. Some forms are Agency only specific and require only Agency action (as noted in the “Agency Use Only” column). Some forms are optional and should be used at the discretion of the lender (as noted in the “Optional Use by Lender” column). All forms are in-fillable format and can be accessed from the Rural Development Instructions website at: https://forms.sc.egov.usda.gov/eForms/, unless otherwise noted with a link to the form. Select “Browse Forms” from the home page and then enter the form number in the applicable field. Lender Participation Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter Form RD 3555-16 Agreement for Participation in Single Family Housing Guaranteed/Insured Loan Programs of the United States Government 3, 4, App. 7 Origination and Processing Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter Form RD 3555-21 Request for Single Family Housing Loan Guarantee 2, 5, 8, 9, 10, 15 Form RD 1910-5 Request for Verification of Employment √ 9, 11, 15 Form RD 1944-62 Request for Verification of Deposit √ 9, 11, 15 FEMA Flood Certification Standard Flood Hazard Determination Form https://www.fema.gov/flood- insurance/find-form/underwriting 12, 15, 16 Form RD 1922-15 Administrative Appraisal Review for Single Family Housing √ 2, 12
USDA HB-1-3555 19.5 — Agency Review
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. Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter RD Instruction 1970 F, Exhibit B, Attachment B 2, (Form) Template Private Party Notice to Applicant/Lender for Floodplain √ N/A RD Instruction 1970-B, Exhibit D (Form) Environmental Checklist for Categorical Exclusions √ 2 RD Instruction 1970 B, Exhibit C (Form) Guide to Applicants for Preparing Environmental Reports for Categorical Exclusions √ N/A Commitment Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter Form RD 3555-18 Conditional Commitment for Single Family Housing Loan Guarantee √ 2, 7, 9,12, 14,15,16 Form RD 3555-18E Conditional Commitment for Single Family Housing Loan Guarantee (Electronic) √ 2, 12,15, 16 Loan Closing Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter Form RD 451-2 Schedule of Remittances √ App. 6 Form RD 3555-11 Lender Record Change 3, 4,17, App. 4 Form RD 3555-17 Loan Note Guarantee √ 2, 10,16 Form RD 3555-17E Loan Note Guarantee (Electronic) √ 2, 10,16
USDA HB-1-3555 19.5 — Agency Review
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. Interest Assistance Form Number Form Name Optional Use by Lender Agency Use Only See HB Chapter Form RD 3555-87 Shared Equity Payment √ App. 6 Form RD 3555-12 Master Interest Assistance and Shared Equity Agreement with Promissory Note App. 6 Form RD 3555-13 Annual Interest Assistance Agreement App. 6 Form RD 3555-14 Interest Assistance Shared Equity Determination √ App. 6 Instructions Referenced RD Instruction 1901-E Civil Rights Compliance Requirements RD Instruction 1970 Environmental
USDA HB-1-3555 19.5 — Agency Review
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. APPENDIX 3 REVIEW AND APPEALS A. Review and Appeal Options Adverse Agency decisions against a program participant (lender, applicant, or borrower) may be reviewed or appealed by the National Appeals Division (NAD). Adverse decisions include administrative actions taken by Agency staff and the Agency’s failure to take required actions within time frames specified in statutes or regulations, or within a reasonable time if no deadline is specified. 7 CFR Part 11 provides procedures that both Agency officials and program participants must follow during the review or appeal process. Applicable portions of 7 CFR Part 11 to the Single-Family Housing Guaranteed Loan Program (SFHGLP) can be found later in this appendix. Handbook Letters 1 through 7 are provided to inform program participants of their rights. Adverse decisions are subject to the following review and appeal procedures: x Informal Administrative Review by Agency Decision-Maker. Program participants (participants) have the right to request that any adverse decision be reviewed by the Agency staff member who made the adverse decision. x Appeal Request to NAD. Qualifying adverse decisions may be appealed to NAD. x Mediation as a Form of Alternative Dispute Resolution (ADR). Adverse decisions which are appealable to NAD require the participant be given the opportunity to seek ADR prior to a hearing with NAD. B. Informing Program Participants of Their Rights Agency decisions that adversely affect a participant require written notification that an informal administrative review with the person who made the decision may be requested. Letters notifying participants of adverse decisions must contain the information needed for the participant to make decisions regarding involvement in the review and appeals process. Specific civil rights language also must be included in these letters. Handbook Letters 1 through 7 following this appendix are available for guidance and are titled to assist in selecting the correct language for the decision made. Notification of adverse decisions by the Agency will include notification to the lender and the applicant/borrower when declining a request for loan commitment. Adverse decisions regarding loss payments will be directed to the servicer. (03-09-16)
USDA HB-1-3555 19.5 — Agency Review
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. If the decision is appealable, the participant will be informed of their opportunity to seek mediation and/or to request a hearing with NAD using Handbook Letter 1. If the decision is not appealable, the participant will be informed of their rights to have NAD review the accuracy of the Agency’s finding that the decision cannot be appealed using Handbook Letter 2. When a participant is denied assistance for both appealable and non- appealable decisions, the Agency will send both Handbook Letters 1 and 2. The lender will be responsible for notifying the applicant or borrower if the lender declines an applicant or borrower’s request. Denial of loan requests or servicing actions by the lender are not subject to review or appeal rights. C. Adverse Decisions That Cannot Be Appealed Certain decisions made by the Agency are not appealable and participants can request an informal administrative review. The participant will be informed through Handbook Letter 2 that they may request an informal administrative review for a review of the accuracy of the Agency’s determination that the case cannot be appealed. Decisions that cannot be appealed can include: x Decisions made by parties not employed by the Agency; x Refusal to request an administrative waiver; x Decisions made in accordance with statute (such as rural area designations); and x Denial of loan commitment due to lack of program funds. D. Informal Administrative Review The purpose of the informal administrative review is to reiterate the Agency’s reasons for the adverse decision, provide a forum for the participant response, and obtain any additional information to support the participant request. x The written request for an informal administrative review must be provided to NAD within 15 days of the date of the Agency’s letter notifying the participant of the adverse decision. x The informal administrative review can be conducted by telephone, webinar, or a face-to-face meeting with the decision maker or their representative. The Agency will determine the meeting format. x The review of the decision must be completed within 45 days of the request. The Director of Origination and Processing Division (OPD) may require that
USDA HB-1-3555 19.5 — Agency Review
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. the decision be reviewed by the next-level supervisor or other designated Rural Development staff before the participant is notified of the decision. x Handbook Letter 3 of this appendix is used if the adverse decision is not reversed as a result of the informal administrative review. If the decision is reversed, a letter will be sent to the participant notifying them of the decision and next steps. x All documentation will be retained in the electronic customer file (ECF). The participant may skip an informal administrative review and, if applicable, request mediation and/or an appeal. In doing so, the participant automatically waives their rights to an informal administrative review. E. Mediation Adverse decisions which are appealable to NAD also require that the participant have the opportunity to seek mediation prior to having a hearing with NAD. The purpose of mediation is to resolve disputes using a neutral mediator. A mediator’s role is to summarize each party’s perception of the issues and offer procedural suggestions on a resolution which may lead to a mutual resolution of the adverse decision. The Agency will not use the services of an arbitrator. An arbitrator resolves disputes through hearing both parties and renders a binding decision. Participants may skip mediation and request an appeal to NAD. Requests for Mediation After receiving Handbook Letters 1 or 3 of this appendix, a participant may request mediation services. Upon receipt of the participant’s request for mediation, Handbook Letter 4 of this appendix is sent to the participant to begin the process. Cost of Mediation Costs associated with mediation should be shared equally between the Agency and the participant. The selection of a mediator will be based on the most economically viable alternative to both the Agency and participant. If Agency administrative funds are exhausted, the Agency will notify the participant that mediation can proceed but the cost of mediation will be absorbed fully by the participant. The Agency should ensure that all participants requesting mediation are treated consistently and pay the same percentage of the cost toward this service. The Agency may also consent to pay a larger percentage (up to 100 percent) of the cost of mediation for participants with incomes below the poverty level. The Agency will notify the mediation source of how the cost of such service will