FR Doc. 2026-05394 — Section 502 SFHGLP Lender Interactive Test Environment (LITE) Delegated Authority Pilot Program (Notice)
FR Doc. 2026-05394 (91 FR 13277, March 19, 2026) — USDA Rural Housing Service Notice implementing the Section 502 SFHGLP Lender Interactive Test Environment (LITE) Delegated Authority Pilot Program, a two-year controlled test of delegated loan approval and Loan Note Guarantee issuance. Effective September 1, 2026, ending September 28, 2028. Verbatim, snapshot-verified.
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Verbatim regulatory text
Verbatim provisions from FR Doc. 2026-05394 — Section 502 SFHGLP Lender Interactive Test Environment (LITE) Delegated Authority Pilot Program (Notice) — 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.
Agency and Action
AGENCY: Rural Housing Service, USDA. ACTION: Notice.
Summary
The Rural Housing Service (RHS), a division of the Rural Development Agency within the United States Department of Agriculture (USDA), is implementing the Lender Interactive Test Environment (LITE) Delegated Authority Pilot Program for the Section 502 Single Family Housing Guaranteed Loan Program (SFHGLP). The purpose of this pilot program is to test a change in the SFHGLP loan approval process by replacing the Agency's pre-closing loan approval requirement with the delegation of loan approval authority to eligible lenders, consistent with the Delegated Authority final rule (Federal Register Docket Number RHS-21-SFH-0017). This pilot program is authorized under 42 U.S.C. 1476(b).
Dates — Effective date and pilot duration
The effective date of the pilot program is September 1, 2026. The pilot program will continue for two years, ending September 28, 2028.
Authority
Title V, Section 502 of the Housing Act of 1949, as amended; 42 U.S.C. 1472; 42 U.S.C. 1476(b).
Eligibility Requirements
To qualify for the pilot program, lenders must demonstrate above-average loan performance based on delinquencies, loss claims, and default rates over the past two years when compared to the SFHGLP portfolio; have originated at least 10 SFHGLP loans in the last 12 months; and be current on all lender certifications, fees, and loan requirements. Lenders must have a satisfactory compliance record, with no failed Corrective Action Reviews or Reduced Sample Reviews for the past 24 months.
Operational Procedures — automated systems
Approved lenders and their agents operating under the LITE Delegated program must continue to utilize the Agency's automated loan underwriting and closing systems for all supported loan submissions.
Operational Procedures — delegated approval and processing times
For LITE Delegated Lenders, the organization will perform the pre-closing loan approval process and manage post-closing issuance of the Loan Note Guarantee with minimal Agency oversight. These lenders have the delegated authority to approve loans either through the Agency's automated underwriting system, or by manually underwriting a file not supported by GUS. Processing times vary by submission type. GUS submissions will be completed within 2 business hours, while manual submissions will follow standard processing timeframes.
Operational Procedures — streamlined closing and Loan Note Guarantee issuance
After closing, LITE Delegated Authority submissions qualify for a streamlined closing process. LITE Delegated Lenders will use the Lender Loan Closing system to enter basic loan closing information and authorize electronic payment of the upfront Guarantee Fee and USDA Technology Fee via the Pay.gov system. Documentation uploads are only required if specifically requested by the Agency. The Agency will issue the Loan Note Guarantee within two business days of receipt, retrievable from the Agency's Lender Loan Closing system.
Variance From Procedures — Appraisal Reviews
Appraisal Reviews: Agency administrative appraisal reviews under Sec. 3555.107(d)(4) are inapplicable to loans approved via LITE delegated authority. LITE Delegated Lenders are responsible for ensuring that appraisal reports meet all requirements under Sec. 3555.107(d).
Variance From Procedures — Conflict of Interest
Conflict of Interest: When a conflict of interest is disclosed by either the borrower or a Rural Development employee, as described in Sec. 3555.8, the LITE Delegated Lender is required to document the disclosure in the permanent loan file.
Pilot Program Evaluation and Oversight — file reviews and corrective timeframe
The program's effectiveness will be evaluated through comprehensive file reviews. Participating lenders will be required to submit fully documented, post-closing, loan submissions for evaluation. Initially, the Agency will review the first 5 to 15 loan files submitted by participating lenders, depending on loan volume. Additionally, 2% of files originated each month, per lender, will be reviewed utilizing the existing compliance review process. Should any concerns regarding regulatory or statutory non- compliance be identified during these reviews, participating lenders will be given 90 days from the date of notification by the Agency to make the necessary corrections. Failure to address these issues within the stipulated timeframe will result in the lender's removal from the pilot program.
Pilot Program Evaluation and Oversight — LITE Delegated Lender status requirements
The requirements for LITE Delegated Lender status include meeting the general eligibility criteria in Sec. 3555.51, having participated in the SFHGLP for at least two years, and maintaining above-average performance standards in delinquency, default, and loss claim rates. Eligibility is reassessed every two years, requiring lenders to be registered in SAM, complete mandatory recertification training, and respond within the timeframe specified in the agency notification provided to the Lender.