**Guaranteed Housing**

**Loan Program**

**Of The**

**RURAL DEVELOPMENT**

**UNITED STATES DEPARTMENT OF AGRIGULTURE**

![](media/image1.png)

**FOR USE IN FLORIDA & VIRGIN ISLANDS**

**Revised November 8, 2005**

![](media/image2.wmf){width="1.2347222222222223in"
height="0.7458333333333333in"} **Your USDA lending partner**
![](media/image3.png)

**SIGNIFICANT CHANGES SINCE REVISION OF DEC 14, 2004**

-   **Changed the income limits, page 7**

-   **Noted that deferred student loans DO count in the ratios, page
    13.**

> **Typically borrowers are not full time students and are not qualified
> for a deferred status. In certain cases, lenders may ask for a waiver
> of the back ratio if compensating factor (s) offset the risk
> associated with including the student loan payment.**

-   **Revised methods to document compliance with the thermal
    (insulation) requirements.**

-   **Revised inspections to remove reference to the VC Sheet.**

**[Using/Printing the Forms]{.underline}**

-   **The forms in this guide are fillable.**

-   **You should control the proper printing sequence using the standard
    print functions. The forms are stacked back-to-back in this guide so
    that Agency personnel can easily print the entire guide.**

-   **Form RD 1980-86, "Request For Reservation of Funds" is a one page
    fillable form.**

-   **Form 1980-21, "Request For Single Family Housing Loan Guarantee"
    is a four (4) page form. Print guide pages 28-31, front to back.**

-   **Form AD-1048, "Certification Regarding Debarment..." is a double
    sided form. Print guide pages 32-33, front to back.**

-   **Individual forms are available on the FL/VI web site:
    [www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)**

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-   **INDEX-TABLE OF CONTENTS**

    **[SUBJECT]{.underline} [Page]{.underline}**

    **Accuracy of Loan Request 22**

    **Advantages, Why do the program? 4**

    **Alien requirements 16**

    **Appraisal 19**

    **Areas eligible 6**

    **Building Requirements 19**

    **Inspections 20**

    **Limitations 17**

    **Manufactured Homes 18**

    **Modular Homes 19**

    **Retaining the old home 17**

    **2/1 Buydown 15**

    **Changes in Commitment amount 22**

    **Compensating factors 13**

    **Construction-Permanent loans 15**

    **Closing costs 18**

    **Comparison Chart: RD, FHA, VA, Fannie Mae 5**

    **Credit requirements 11-12**

    **Eligibility criteria (other) 16**

    **Escrow 10**

    **Fee, Guarantee 10**

    **Fee, Lender 8**

    **Flood zones 21**

    **Getting started 21**

    **Guarantee explained 23**

    **Home Buyers Education 16**

    **Income limits 7**

    **Income documentation 7**

    **Lender approval 6,25**

    **Payment Shock 14**

    **Marketing 8**

    **Max & Min Loan amounts 9,10**

    **Processing Guide 26**

    **Purposes (loan on what?) 8**

    **Qualifying income 8**

    **Rate 10**

    **Ratios 13**

    **Refinancing 9**

    **Replacement forms 23**

    **Servicing the loan 23**

    **Terms 10**

    **Turn around time 21**

    **[FORMS]{.underline}**

    **Reservation of Funds 27**

    **Loan Origination Checklist 28**

    **Form 1980-21, "Request For...Guarantee" 29-32**

    **Form AD-1048, "Certification Regarding Debarment..." 33-34**

    The Agency's Commitment conditions list the items required in the
    post closing package.

    **WHY YOU SHOULD BE INTERESTED**

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-   **Loan up to appraised value plus the guarantee fee.**

-   **No limit on CLTV when soft second financing is used for closing
    costs.**

-   **No monthly mortgage insurance (MI).**

-   **No max loan amount.**

-   **Applicant can retain liquid assets of up to 20% of purchase
    price.**

-   **No cash contribution or cash reserves required from applicant.**

-   **Unrestricted gifts, no need to document source.**

-   **Non-traditional credit may substitute for lack of traditional
    credit history.**

-   **No credit explanations when credit score is 660 or above.**

-   **No minimum credit score.**

-   **Repayment ratios are 29/41.  Ratio waivers are allowed with
    documented compensating factors.**

-   **Not limited to first-time home buyers.**

-   **Competitive market based fixed interest rates with 30 year term.**

-   **Available secondary markets: wholesale lenders as well as Fannie
    Mae, Freddie Mac, and Ginnie Mae.**

-   **Qualifies for Community Reinvestment Act (CRA)**

-   **Agency approved lenders underwrite the loan.**

-   **Any lender can originate loans through an Agency approved
    lender.**

-   **Loan approvals are issued within 1-2 business days of receipt of
    the complete package.**

-   **Rural Development provides lender support for questions, training,
    and outreach assistance.**

+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            | **FLORIDA    |              |             |            |
|            | RURAL        |              |             |            |
|            | D            |              |             |            |
|            | EVELOPMENT** |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| **QUICK    |              |              |             |            |
| REFERENCE  |              |              |             |            |
| GUIDE      |              |              |             |            |
| FOR**      |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| **MORTGAGE |              |              |             |            |
| FINANCING  |              |              |             |            |
| IN RURAL   |              |              |             |            |
| AREAS**    |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            | RURAL        | FHA          | VA          | FANNIE MAE |
+------------+--------------+--------------+-------------+------------+
|            | DEVELOPMENT  |              |             | 100        |
+------------+--------------+--------------+-------------+------------+
| FRONT      | 29%          | 29%          | NA          | 28%        |
| RATIO      |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| BACK RATIO | 41%          | 41%/43%      | 41%         | 36%        |
|            |              | energy eff.  |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              | 97.7         |             |            |
|            |              | 5%\>\$50,000 |             |            |
+------------+--------------+--------------+-------------+------------+
| MAX. LTV   | 102%\*       | 98.75%       | 100%        | 97%        |
|            |              | \<\$50,000   |             |            |
+------------+--------------+--------------+-------------+------------+
| MAX LOAN   | limited only | \$121,296.00 | \           | \$         |
|            | by           | UNLESS       | $184,000.00 | 252,700.00 |
+------------+--------------+--------------+-------------+------------+
|            | repayment    | HIGH COST    | (higher     | ONE UNIT   |
|            | ability      | AREA\*       | with d.p.)  |            |
+------------+--------------+--------------+-------------+------------+
| LOAN TERMS | 30           | 15-30        | 15-30       | 15-30      |
+------------+--------------+--------------+-------------+------------+
| INTEREST   | MARKET-FIXED | MARKET-FIXED | M           | MA         |
| RATE       |              |              | ARKET-FIXED | RKET-FIXED |
+------------+--------------+--------------+-------------+------------+
|            |              | OR VARIABLE  |             |            |
+------------+--------------+--------------+-------------+------------+
| MTG        | NONE         | Varies by    | NONE        | 25%        |
| INSURANCE  |              | LTV          |             | coverage   |
+------------+--------------+--------------+-------------+------------+
| FUNDING    | 2.0% OF LOAN | and term     | 2%, 1st USE |            |
| FEE        |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| RESERVE    | NONE         | NONE         | Residual    | 2 MONTH    |
|            |              |              | income,     | PITI       |
+------------+--------------+--------------+-------------+------------+
|            |              |              | based on \# |            |
|            |              |              | persons     |            |
+------------+--------------+--------------+-------------+------------+
| SOURCE OF  | N/A          | NO           | N/A         | Applicants |
|            |              |              |             | must       |
+------------+--------------+--------------+-------------+------------+
| DOWN       |              | RESTRICTIONS |             | pay CC &   |
| PAYMENT    |              |              |             | Esc.       |
+------------+--------------+--------------+-------------+------------+
| SOURCE OF  | NO           | SELLER       | NO          | Borrower   |
|            | LIMITATION   | LIMITED      | LIMITATION  |            |
+------------+--------------+--------------+-------------+------------+
| CLOSING    |              | TO PAYING 6% |             | (no gifts) |
| COSTS      |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              | OF BUYER     |             |            |
|            |              | COST         |             |            |
+------------+--------------+--------------+-------------+------------+
| PREMIUM    |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| PRICING    | Yes          | Yes          | Yes         | Yes        |
+------------+--------------+--------------+-------------+------------+
| RURAL      |              |              |             |            |
| D          |              |              |             |            |
| EVELOPMENT |              |              |             |            |
| HAS        |              |              |             |            |
| HOUSEHOLD  |              |              |             |            |
| INCOME     |              |              |             |            |
| L          |              |              |             |            |
| IMITATIONS |              |              |             |            |
| BASED ON   |              |              |             |            |
| FAMILY     |              |              |             |            |
| SIZE.      |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| CERTAIN    |              |              |             |            |
| DEDUCTIONS |              |              |             |            |
| FROM       |              |              |             |            |
| HOUSEHOLD  |              |              |             |            |
| INCOME MAY |              |              |             |            |
| BE TAKEN   |              |              |             |            |
| TO HELP    |              |              |             |            |
| LOWER THE  |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| INCOME     |              |              |             |            |
| INTO THE   |              |              |             |            |
| ELIGIBLE   |              |              |             |            |
| LIMIT. SEE |              |              |             |            |
| RD FOR     |              |              |             |            |
| FURTHER    |              |              |             |            |
| I          |              |              |             |            |
| NFORMATION |              |              |             |            |
| ON LIMITS  |              |              |             |            |
|            |              |              |             |            |
| AND        |              |              |             |            |
| A          |              |              |             |            |
| DJUSTMENTS |              |              |             |            |
| TO         |              |              |             |            |
| HOUSEHOLD  |              |              |             |            |
| INCOME.    |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| \*LTV can  |              |              |             |            |
| exceed     |              |              |             |            |
| 100% by    |              |              |             |            |
| the actual |              |              |             |            |
| amount of  |              |              |             |            |
| guarantee  |              |              |             |            |
| fee        |              |              |             |            |
| financed.  |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| SEE THE    |              |              |             |            |
| FLORIDA RD |              |              |             |            |
| HOME PAGE  |              |              |             |            |
| FOR        |              |              |             |            |
| FURTHER    |              |              |             |            |
| IN         |              |              |             |            |
| FORMATION: |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
| h          |              |              |             |            |
| ttp://www. |              |              |             |            |
| rurdev.usd |              |              |             |            |
| a.gov/fl/g |              |              |             |            |
| uarrhs.htm |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+
|            |              |              |             |            |
+------------+--------------+--------------+-------------+------------+

**This chart demonstrates the savings in loan costs when you close a RD
guaranteed residential loan.**

**Chart information courtesy of Chase Manhattan Mortgage Corporation**

#  {#section .unnumbered}

**On a \$100,000.00 loan, the borrower saves \$4,290.00 in the first 10
years by opting for the RD loan rather than the FHA loan. Remember, it
is difficult to drop MI insurance. Plus, the MI premium has to be
calculated into the ratios. This is NOT an issue with the RD loan since
MI is not required.**

**ANY LENDER MAY PARTICIPATE**

-   **Any lender licensed in Florida may originate the loans and reserve
    funds without being formally approved by RD. However, the loan
    packages must be submitted to RD by the Agency approved underwriting
    lender.**

-   **Underwriting lenders must be approved by the Florida RD. See the
    lender approval checklist on page 26 (and on our Web site).**

    **A RURAL LENDING PROGRAM**

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-   **Property must be in rural area or community of fewer than 10,000
    persons [except]{.underline} that Lake and Collier Counties are
    totally eligible.**

-   **Broward, Monroe and Pinellas Counties are not eligible.**

-   **If the property is in one of the following counties, you can check
    an address or see a map at: <http://eligibility.sc.egov.usda.gov/>
    The site will give a "yes" or "no" upon entering an address.
    Alachua; Bay; Brevard; Charlotte; Clay; Dade; Duval; Escambia;
    Hillsborough; Indian River; Lee; Leon; Manatee; Marion; Orange; Palm
    Beach; Pasco; Polk; Santa Rosa; Sarasota, St. Johns; St. Lucie;
    Seminole; and Volusia.**

    INCOME LIMITS

+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| ### [AD              |    |     |    |     |     |     |     |     |
| JUSTED]{.underline}  |    |     |    |     |     |     |     |     |
| moderate income limi |    |     |    |     |     |     |     |     |
| ts for the guarantee |    |     |    |     |     |     |     |     |
| d residential loans, |    |     |    |     |     |     |     |     |
|  effective 3/03/05.  |    |     |    |     |     |     |     |     |
| {#adjusted-moderate- |    |     |    |     |     |     |     |     |
| income-limits-for-th |    |     |    |     |     |     |     |     |
| e-guaranteed-residen |    |     |    |     |     |     |     |     |
| tial-loans-effective |    |     |    |     |     |     |     |     |
| -30305. .unnumbered} |    |     |    |     |     |     |     |     |
|                      |    |     |    |     |     |     |     |     |
| **Loans should be    |    |     |    |     |     |     |     |     |
| marketed to          |    |     |    |     |     |     |     |     |
| moderate-income      |    |     |    |     |     |     |     |     |
| families. This chart |    |     |    |     |     |     |     |     |
| contains only the    |    |     |    |     |     |     |     |     |
| "mod.inc-guar.loan"  |    |     |    |     |     |     |     |     |
| limits.**            |    |     |    |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
|                      | ** | **2 | ** | **4 | **5 | **6 | **7 | **8 |
|                      | 1- | -pe | 3- | -pe | -pe | -pe | -pe | -pe |
|                      | pe | rso | pe | rso | rso | rso | rso | rso |
|                      | rs | n** | rs | n** | n** | n** | n** | n** |
|                      | on |     | on |     |     |     |     |     |
|                      | ** |     | ** |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| **All Florida &      | *  | **5 | *  | **6 | **7 | **7 | **8 | **8 |
| Virgin Islands       | *4 | 335 | *6 | 670 | 205 | 735 | 270 | 805 |
| counties EXCEPT      | 67 | 0** | 00 | 0** | 0** | 0** | 0** | 0** |
| those listed**       | 00 |     | 50 |     |     |     |     |     |
|                      | ** |     | ** |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| **[Other             |    |     |    |     |     |     |     |     |
| Cou                  |    |     |    |     |     |     |     |     |
| nties]{.underline}** |    |     |    |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| **Collier**          | *  | **6 | *  | **8 | **8 | **9 | **9 | *   |
|                      | *5 | 425 | *7 | 030 | 670 | 315 | 955 | *10 |
|                      | 62 | 0** | 22 | 0** | 0** | 0** | 0** | 600 |
|                      | 00 |     | 50 |     |     |     |     | 0** |
|                      | ** |     | ** |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| **Palm Beach**       | *  | **5 | *  | **7 | **7 | **8 | **8 | **9 |
|                      | *5 | 780 | *6 | 225 | 800 | 380 | 955 | 535 |
|                      | 05 | 0** | 50 | 0** | 0** | 0** | 0** | 0** |
|                      | 50 |     | 00 |     |     |     |     |     |
|                      | ** |     | ** |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+
| **Broward, Pinellas, | #  | ##  | #  | ##  | ##  | ##  | ##  | ##  |
| and Monroe Counties  | ## | #   | ## | #   | #   | #   | #   | #   |
| are not eligible.**  |    | {#s |    | {#s | {#s | {#s | {#s | {#s |
|                      | {# | ect | {# | ect | ect | ect | ect | ect |
|                      | se | ion | se | ion | ion | ion | ion | ion |
|                      | ct | -2  | ct | -4  | -5  | -6  | -7  | -8  |
|                      | io | .un | io | .un | .un | .un | .un | .un |
|                      | n- | num | n- | num | num | num | num | num |
|                      | 1  | ber | 3  | ber | ber | ber | ber | ber |
|                      | .u | ed} | .u | ed} | ed} | ed} | ed} | ed} |
|                      | nn |     | nn |     |     |     |     |     |
|                      | um |     | um |     |     |     |     |     |
|                      | be |     | be |     |     |     |     |     |
|                      | re |     | re |     |     |     |     |     |
|                      | d} |     | d} |     |     |     |     |     |
+----------------------+----+-----+----+-----+-----+-----+-----+-----+

**Adjusted household income limits for all states are posted at:**

**<http://eligibility.sc.egov.usda.gov/>**

**Just click on the state in the list on the site. You can access the
chart through the link on our FL/VI web site:**
http://www.rurdev.usda.gov/guarrhs.htm

-   Ignore the "low" income limit unless you want to finance discount
    points into the loan.

    **DOCUMENTATION OF TOTAL HOUSEHOLD INCOME**

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-   **Income of [all]{.underline} adults and certain other income must
    be verified. See RD Instruction 1980-D, pages 39-48 for detailed
    information for what income to count and the deductions available.
    The 1980-D is available at: <http://www.rurdev.usda.gov/regs> Once
    there, click on 'Instructions', then 'Part 1980-General'**

-   **Common adjustments to the gross income include: child care for
    children 12 and younger; \$480 annual deduction for children under
    18, 18 or older and handicapped, or full-time student, and who are
    not the applicant, spouse, or co-applicant; \$400 annual deduction
    for an elderly family (see definition in the 1980-D). Other
    deductions are described in the 1980-D, pages 43-44.**

-   **Provide a [detailed]{.underline} calculation of the adjusted TOTAL
    household income in your application package.**

-   **Acceptable alternative documentation for non-self-employed
    applicants:**

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-   **Paycheck stubs or payroll earnings statements covering the most
    recent 30-day period, [and]{.underline} W-2 tax forms for the
    previous 2 tax years, [and]{.underline} a telephone verification of
    the applicant's current employment.**

-   **OR**

-   **Form RD 1910-5, "Request for Verification of Employment" (or the
    equivalent HUD/FHA/VA or Fannie Mae form), and the most recent
    paycheck stub.**

-   **Several other limitations apply to the alternative documentation
    as found in an Administrative Notice (AN) on this subject. Access on
    FL/VI home page,
    [www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)**

-   **Alternative documentation is not appropriate for self-employment,
    disability, child support income, etc). See the FL/VI web site for
    the national directive on this subject.**

-   **Attach portions of any divorce decree pertaining to property
    settlements, child support, and alimony in your RD loan package.**

#  {#section-9 .unnumbered}

# REPAYMENT INCOME  {#repayment-income .unnumbered}

-   **This may require a separate calculation from adjusted gross family
    income.**

-   **Is based on the income of the person(s) signing the promissory
    note.**

-   **May be based on projected income (see our national regulation,
    referenced in "Income Limits"). However, most underwriters expect
    historical information.**

-   **Non-taxable income may be grossed up 20%.**

-   **No co-signors permitted. Related or non-related co-borrowers who
    reside in the household are permitted.**

-   **See the Administrative Notice (AN) titled "Underwriting
    Guidelines" on the FL/VI home page.**
    www.rurdev.usda.gov/fl/guarrhs.htm

    **MARKETING**

    **The ADJUSTED household income limits for most Florida counties
    range from \$46,700.00 for a 1-person household to \$88,050.00 for
    an 8-person household and is much higher in several MSA counties.
    Market to the higher end of the income range for larger loans and
    easier qualification. Only the appraisal and reasonable repayment
    ability limit the maximum loan. No limitations on amenities except
    in-ground swimming pools are not allowed (pools are OK in multi-unit
    complexes).**

    **LENDER FEES**

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-   **Limited to those charges allowed by FHA. Exception is the RD
    guarantee fee which may be wrapped into the loan.**

    **LOAN PURPOSES**

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-   **Purchase existing or new homes, including: modular housing;
    manufactured (only new units, see the section titled "Manufactured
    Housing"); townhouses; and condominiums. Townhouses and condominiums
    must be "property eligible" for Fannie Mae, Freddie Mac, FHA, or VA.
    The homeowners must control the HOA.**

-   **Take out/end loan and construction-permanent. Underwrite and
    obtain the RD Commitment prior to commencing the proposed
    construction. Obtain the appraisal prior to submitting the
    application package to Rural Development(RD).**

-   **Property repairs/improvements. Repairs must be completed before
    the final guarantee is issued.**

-   **All typical buyers closing costs, including the one time RD
    guarantee fee, can be included.**

-   **Discount points but the applicant must be [low income]{.underline}
    [only]{.underline} - see RD income chart at Web sites shown under
    "INCOME LIMITS."**

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-   **Refinancing RD guaranteed or RD direct loans.**

**REFINANCING**

**Limited to refinancing RD guaranteed and direct loans.**

-   **See Administrative Notices(AN) on this subject, found at:**

    **<http://www.rurdev.usda.gov/fl/guarrhs.htm>**

    **or <http://www.rurdev.usda.gov/regs/an_list.html>**

-   **RD direct loans may have subsidy recapture due. The recapture can
    be deferred (RD maintains a lien) or it can be included in the
    payoff. A 25% reduction of the recapture amount is offered for
    payoff rather than deferral.**

-   **Term must be 30 years.**

-   **Fixed interest rate at or below the current rate.**

-   **A .5% guarantee fee applies. NOTE: This is different than the fee
    required on purchase loans (2.0%).**

-   **Income limits and ratios are the same as for an initial loan.**

-   **No insulation certification; No flood certification; No property
    inspection.**

-   **CANNOT refinance debts other than the existing RD guaranteed loan
    or a RD "direct" loan.**

-   **Can add or delete borrowers.**

-   **Must be owner occupied.**

-   **Maximum loan cannot exceed the balance of the loan being
    refinanced, plus the guarantee fee financed, and reasonable and
    customary closing costs, including funds necessary to establish the
    new escrow for taxes and insurance.**

-   **An appraisal is not required when refinancing only the unpaid
    principal on a guaranteed loan. However, an appraisal is always
    required when refinancing a direct loan or when interest, closing
    costs, or the guarantee fee is included in the loan.**

-   **No cash back (except the nominal amount paid up front for the
    credit check and appraisal). The applicants may receive any escrow
    refund from the old loan.**

-   **It is permissible for the property to be in an ineligible
    (non-rural) area because of area delineation changes by RD.**

-   **See the Administrative Notices for more details.**

    **MINIMUM LOAN AMOUNT**

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-   **None, check with investor.**

    **MAXIMUM LOAN AMOUNT**

-   **(Value + fee) or amount applicant can repay, whichever is lesser.
    The first mortgage guaranteed loan can exceed the appraised value
    only by the amount of guarantee fee financed into the loan.**

-   **Note: The loan is NOT limited to the lesser of cost or value.**

-   **See 'Refinance' section for limit when refinancing RD loans.**

-   **The total debt can exceed the value if a loan for closing costs or
    down payment is made by a state or local agency and secured by a
    'soft second' lien to permit assistance such as SHIPP or HOME.
    Grants by the state or local agencies for closing costs or down
    payment are acceptable. Check with your secondary marketing
    department for any restrictions they may impose in regard to the
    second liens. County SHIPP coordinators are found at:**
    [**http://www.hud.gov/local/fl/homeownership/programs/countylist04.cfm**](http://www.hud.gov/local/fl/homeownership/programs/countylist04.cfm)

**TERM**

-   **30-year amortization, fixed rate, no exceptions. For
    construction-permanent loans, the term begins with the date of the
    loan modification to the permanent terms.**

    **INTEREST RATE**

-   **Schedule provided by investors. Limited to the Fannie Mae 90-day
    yield (actual-actual) for 30 year conventional fixed rate loans
    \[plus .6% (60 basis points)\] or the lender's posted VA rate with
    no discount, whichever is higher. Rate may float until locked. This
    is a maximum rate, not a minimum. The Fannie Mae site for obtaining
    this rate is:**

    **http://www.efanniemae.com/syndicated/documents/mbs/apeprices//public/30fraac.html**

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-   **When looking at the chart of the Fannie Mae 30 Fixed Rates, the
    rate you need to be concerned with is the 90 day posted yield at the
    top of the chart, right under the date and time of the posted
    update. The 60 basis points are added to the 90-day posted yield to
    determine the maximum rate.**

    **GUARANTEE FEE**

-   **Purchase loans. Fee is 2.0 percent (.02) of the [final loan
    amount]{.underline}. The fee may be included in the loan.**

-   **To calculate the final loan amount to include the total fee:
    divide the proposed loan before the fee by .98 Example: \$85,540.00
    loan without the fee. 85,540/.98=\$87,285.71 final loan amount. The
    fee is 2.0% of the new final loan amount or \$1,745.71.**

-   **Refinance (see "REFINANCING", page 9): Fee is .5 percent (.005) of
    the [final loan amount]{.underline}.**

    **ESCROW**

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-   **Mandatory.**

-   **CREDIT CRITERIA**

    **[CAUTION: See "DOCUMENT PAYMENT SHOCK" as stricter underwriting
    may be necessary.]{.underline}**

    **See Administrative Notices (AN) on credit and underwriting issues:
    www.rurdev.usda.gov/fl/guarrhs.htm**

-   **When three scores are obtained, use the middle score. If there are
    only two scores, use the lower of the two.**

-   **Applicants with 660 or above may take advantage of the streamlined
    documentation. A lender shall not be required to document adverse
    credit history waivers under RD Instruction 1980-D, 1980.345(d)(e),
    except those involving a delinquent Federal debt or previous Agency
    loan.**

-   **Credit scores between 659 and 620 call for a full assessment of
    the credit issues. This is still an acceptable range. However, [more
    than one additional layer of risk is NOT permitted]{.underline}.
    Underwriters must document their waiver of derogatory items in their
    package submitted to RD. The 1008 is an appropriate place to
    document the waiver, but be specific. Those derogatory criteria are
    listed under "WAIVERS TO CREDIT REQUIREMENTS", below. The RD does
    not have a special waiver form.**

-   **Applicants with a credit score of 619 or less would statistically
    have a high likelihood of default on their loan. Typically the loan
    should not be approved. The underwriter can consider the loan.
    However, layered risk associated with the application should be
    avoided. The file submitted to RD must contain the underwriter's
    narrative justification including the compensating factors. Consider
    that the typical applicant has no reserves and no down payment.**

-   **The credit of the primary applicant will carry the most weight in
    the underwriter's decision.**

-   **"No history/no credit score" is not acceptable. A history of
    credit adequate for the underwriter to make a reasonable
    determination of credit worthiness must be available. Documented
    non-traditional credit such as utilities and local accounts are
    acceptable. Underwriters should not allow additional risk
    layering.**

    **EXAMPLES OF RISK LAYERING**

-   **Payment shock.**

-   **Recent self-employment**

-   **Ratio exceeding the normal maximums of 29/41.**

    **CREDIT HISTORY VERIFICATION**

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-   **RMCRs, MMCRs and NTMCRs that meet the standards of Fannie Mae,
    Freddie Mac, Housing and Urban Development (HUD) and Veteran Affairs
    (VA) are acceptable for RD purposes. In the case of MMCRs,
    tri-merged reports are preferred.**

-   **Non-traditional credit history may be required as discussed in
    "Credit Criteria"**

    **WAIVERS TO CREDIT REQUIREMENTS (when the FICO score is 659 or
    less) [See the Admistrative Notices(AN) posted on our FL/VI web site
    for additional credit waiver information]{.underline}.**

    **NOTE: The specific credit waiver (reason for) must be documented
    in the lender's file. There is no specific form for the waiver.**

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-   **These items [must be waived]{.underline} when the credit score is
    less than 660:**

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-   **More than one 30 late pays in last 12 months.**

-   **Account converted to collection in past 12 months.**

-   **Judgments outstanding in past 12 months.**

-   **Outstanding collections, with no satisfactory arrangement for
    payments, no matter what their age, as long as they are currently
    delinquent and/or due and payable.**

-   **Any debt written off in the past 36 months.**

-   **Two or more late rent payments within past 24 months.**

-   **Bankruptcy discharged within 36 months.**

-   **Tax liens or delinquent government debts (including student
    loans).**

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-   **Underwriters may consider mitigating circumstances to establish
    the borrower's intent for good credit when:**

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-   **The circumstances were of a temporary nature, were beyond the
    applicant's control, and have been removed.**

-   **The adverse action or delinquency was the result of a justifiable
    dispute because of defective goods or services.**

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-   **Generally [waivers]{.underline} of credit or ratios [should not be
    approved]{.underline} [when]{.underline} the FICO [score is 620 or
    less]{.underline}. Very STRONG compensating factors would be
    required for such consideration. See the "ratio" section for a
    comprehensive list of common compensating factors.**

    **NOTE: RD will not accept loan packages where the credit score is
    620 or less unless the above criteria is clearly met AND the
    documentation for (reason for) the waiver is included in the file.**

    **OUTSTANDING COLLECTION ACCOUNTS (PAYMENT OF)**

    **See the Admistrative Notice(AN) on the FL/VI home page,**
    www.rurdev.usda.gov/fl/guarrhs.htm

    **The lender's underwriter determines whether the collection must be
    paid or not. The underwriter should document that the circumstances
    causing the collection have been removed and were beyond the control
    of the applicant. Requiring the payoff of such collection(s) as a
    loan condition would only place additional financial stress on an
    applicant who likely has little or no cash reserve. Collections with
    a repayment agreement will be accounted for in the repayment ratios.
    Lenders must assure that leaving any unpaid collection balances will
    not affect their ability to obtain a first lien and allow marketable
    title.**

# RATIOS {#ratios .unnumbered}

**[CAUTION: See "DOCUMENT PAYMENT SHOCK" as stricter underwriting is
necessary with payment shock of 100% or more.]{.underline}**

-   **29% front, 41% back. Flexibility is allowed, read on.**

-   **There is not a maximum amount the ratios may be exceeded.
    Depending on the strength of the compensating factors, front ratios
    in the mid to high 30s and back (total debt) ratios in the mid to
    high 40s are not uncommon.**

-   **Non-taxable income may be grossed up 20%.**

-   **Count all debts, [including deferred student loans]{.underline},
    with more than 6-months remaining payments. Other debts should be
    counted if they are reoccurring or otherwise have an impact on
    repayment ability.**

-   **Underwriter may request a waiver*.* Generally waivers will not be
    approved when the credit score is less than 620 or there is no
    traditional history of credit. [The underwriter's waiver
    documentation must be included in the loan package to RD, attached
    to the underwriter\'s analysis or 1008]{.underline}. See "Credit
    Waivers" when the FICO score is less than 620.**

-   **For compensating factors, including a high FICO score, See
    Administrative Notice(AN) on credit and underwriting at:
    [www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)**

-   **[Common compensating factors]{.underline} include:**

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-   **FICO score of 660 or higher. The 660 score may be used by itself
    or coupled with other common compensating factors, to justify the
    debt waiver.**

-   **When the credit score is 720 or higher, the other compensating
    factors still need to listed on the ratio waiver request but do not
    need to be documented.**

-   **Borrower has demonstrated a conservative attitude toward the use
    of credit and ability to accumulate savings.**

-   **Credit history shows that the borrower has devoted a similar
    percentage of income to housing expense to that of the proposed
    loan, or accumulated savings which, when added to the applicant's
    housing expense, shows a capacity to make payments on the proposed
    loan).**

-   **The borrower received compensation or income not reflected in
    effective income, but directly affecting the ability to pay the
    mortgage, including food stamps and other similar public benefits.**

-   **There is only a minimal increase in the borrower's housing
    expense.**

-   **The borrower has substantial cash reserves after closing.**

-   **The borrower has substantial non-taxable income not previously
    accounted for in the ratio computations.**

-   **The borrower has potential for increased earnings, as indicated by
    job training or education in the borrower's profession.**

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-   **The home is being purchased as the result of relocation of the
    primary wage-earner and the secondary wage-earner has an established
    history of employment, is expected to return to work, and there are
    reasonable prospects for securing employment in a similar occupation
    in the new area. The underwriter must address the availability of
    such possible employment.**

-   **A low back ratio. The low TD ratio, by itself, does not compensate
    for a high front ratio. However, when other strong compensating
    conditions are present, a low TD ratio should be viewed as a
    positive mitigating factor.**

-   **Underwriters may request the waiver prior to submitting the full
    RD package, instead of approving the loan subject to the RD waiver
    approval.**

    **DOCUMENT PAYMENT SHOCK**

-   **Payment shock must be documented on the underwriter\'s analysis
    or 1008. Do not allow additional risk layering without very strong
    documented compensating factors when the payment shock is 100% or
    over, or there is no history of housing expense.**

-   **Stricter underwriting standards apply in cases when the shock is
    100% or more or there is no previous housing expense.**

-   **No additional risk layering (i.e. adverse credit waivers, debt
    ratio waivers, or buy downs) should be allowed without
    [strong]{.underline} documented compensating factors. Acceptable
    compensating factors include, but are not limited to, the following
    examples:**

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-   **The borrower has an excellent credit history reflecting timely
    repayment of credit obligations;**

-   **The applicant has a Fair Issacs & Company (FICO) credit score of
    660 or greater.**

-   **The applicant has demonstrated a conservative attitude toward the
    use of credit and an ability to accumulate savings;**

-   **The applicant has a stable employment history over the past two
    years, demonstrating a dependable income stream;**

-   **The applicant has demonstrated an ability to pay similar housing
    costs similar to the projected payment, taxes, insurance, and
    maintenance.**

-   **The applicant has potential for increased earnings, as indicated
    by job training or education in the applicant's profession.**

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-   **See the Administrative Notice(AN) list at:
    <http://www.rurdev.usda.gov/regs/an_list.html>or
    http://www.rurdev.usda.gov/fl/guarrhs.htm**

    **SELLER ASSISTANCE**

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-   **No RD limit. Contact your investor as they may have a limit.**

**2/1 BUYDOWN REQUESTS**

-   **Must be pre-approved by the local RD office BEFORE processing the
    file.**

-   **Lenders must show that the applicant's income will increase at the
    end of the first and second year to offset the increased payments,
    NOT including normal cost of living raises.**

-   **Applicant must be in a position for increased income other than
    the annual cost of living raises.**

-   **Projected reduced debt to offset increased rate is justified only
    if it can be documented that the debt will not occur again. An
    example of what will NOT work: car loan is being paid off.**

## CONSTRUCTION-PERMANENT LOANS {#construction-permanent-loans .unnumbered}

-   The RD can guaranteed construction-permanent loans. The guarantee is
    not issued until the final inspection has been delivered with the
    closing package.

-   The normal underwriting package is delivered through the underwriter
    to RD prior to construction.

-   **[Additional forms]{.underline}: Forms 400-1, "Equal Opportunity
    Agreement" and 400-6, "Compliance Statement". Download from:
    <http://www.rurdev.usda.gov/regs/formtoc.html> Also, an "Equal
    Opportunity Clause" (EOC) must be part of each contract or
    subcontract. These forms are not required with an end loan where
    funds are not advanced until the dwelling is completed.**

-   **The longer the process, the more risk that the RD may not be able
    to guarantee due to adverse changes in applicant circumstances.**

-   **Lenders can reduce their risk during construction by requiring
    higher underwriting standards such as lower ratios, higher credit
    score, and more time on the job.**

    **SUBMIT APPLICATIONS PRIOR TO CONSTRUCTION (end loan or
    construction-perm)**

-   **Order the appraisal, to be done based on the plans and
    specifications, as soon as you obtain the credit approval from the
    underwriter.**

-   **DO NOT wait until the home is completed to order the appraisal.
    While there may be a small additional cost for a final inspection,
    the appraisal done "up front" will allow you to forward the
    processing package to RD.**

-   **Having the full package reviewed prior to construction with
    issuance of the RD Conditional Commitment for Guarantee gives
    everyone more assurance that the loan can close without a problem.**

-   **Applicants must be eligible at the time the application is sent to
    the RD. Constructing the home based on the underwriter's "credit
    approval subject to the appraisal approval" does not assure the
    package will meet all RD requirements. While saving some money on
    the appraisal by not doing an appraisal based on the plans but
    instead doing the final inspection/appraisal at the same time, the
    risk of the applicant being non-eligible at that time is too
    great.**

**HOME BUYER EDUCATION**

-   **Required [ONLY]{.underline} for first time homebuyers. A seminar
    type program is recommended, such as those provided by the SHIP
    program. Community Home Buyers Program is acceptable. RD accepts any
    program conducted by the Lender that is approved by Fannie Mae,
    Freddie Mac, FHA, or VA.**

    **A directory of county SHIP Coordinators can be found at:**

    **http://www.floridahousing.org/dpts/sfp.html**

    **A housing counselor's directory is available on the HUD Web**

    **site at:**

    **http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm**

###  {#section-10 .unnumbered}

**OTHER ELIGIBILITY CRITERIA**

**See RD Instruction 1980-D, paragraph 1980.346 at:
<http://www.rurdev.usda.gov/regs>**

-   **Does not own an adequate home. See "Retaining Another Home".**

-   **Unable to easily qualify for a "20% down" conventional loan.
    Applicants should be allowed to retain sufficient cash on hand to
    cover out of pocket expenses associated with the purchase (such as
    moving expenses, utility deposits, window coverings, appliances,
    lawn maintenance equipment, etc.) and leave some reserve. A loan
    with MI coverage is not considered "conventional" by this paragraph.
    (Applicants do have a choice of RD, FHA, or VA.)**

-   **Be willing to personally occupy the dwelling.**

-   **Be a U.S. citizen, a U.S. non-citizen national or a "qualified
    alien". A U.S. non-citizen national is a person born in American
    Samoa or Swains Island after the date the U.S. acquired the American
    Samoa or Swains Island. The RD requirements are different than HUD
    in regard to non-permanent resident aliens.**

    **[THE RD REQUIRED DOCUMENTATION MUST BE EXACTLY MATCHED TO
    DETERMINE THE ELIGIBILITY OF A "QUALIFIED ALIEN": See the
    Administrative Notice(AN) at the FL/VI home page.]{.underline}**

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-   **Lenders may use the INS automated system known as the Systematic
    Alien Verification For Entitlement (SAVE) to determine an alien's
    status. The SAVE system provides the following information: Alien
    Registration Number, Verification Number, First Name, Last Name, and
    Immigration Status messages. The print out from this search must be
    included in the loan package. Use of SAVE is not required (because a
    fee may be charged). Lenders wishing to enroll in SAVE should follow
    the directions in HUD Directive No. 7465.7G or go to
    http://uscis.gov**

-   **Other than SAVE, see the Administrative Notice(AN) posted at the
    FL/VI web site:
    [www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)
    or click on the link to Administrative Notices at:
    <http://www.rurdev.usda.gov/regs>**

-   **NOTE: RD requirements are different than FHA. The documentation
    must exactly match the criteria specified in RD regulations. No
    exceptions will be granted.**

**RETAINING THE OLD HOME AS RENTAL PROPERTY**

1.  **Generally borrowers must sell the old property, meaning at a
    minimum they have a sales contract with verified closing eminent.**

2.  **If it cannot be sold and it will be rented, a certified projected
    profit and loss statement must be obtained.**

3.  **The projected net income must be counted in the total household
    income.**

4.  **Calculate the net income in compliance with IRS and recognized
    accounting principals.**

5.  **Any present remaining mortgage payment must be counted in the
    ratios.**

6.  **Only the interest portion of the "old" mortgage payments may be
    deducted in calculating the net profit of the rental.**

7.  **New rental would generally not count for qualifying (repayment)
    income since there is no history to establish dependability.**

8.  **A new home cannot be constructed in close proximity to the old
    dwelling. Generally old dwellings must be removed.**

9.  **The value of any retained assets except essential vehicles,
    household furnishings, and the financed property, must be determined
    in order to calculate the income from "net family assets". See the
    RD 1980-D regulation.**

**LIMITATIONS**

-   **No co-signors permitted. Qualified related and non-related
    co-habitants of the dwelling may sign as co-borrowers. Non-occupant
    co-borrowers are not permitted.**

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-   **First mortgage guaranteed loan amount cannot exceed the appraisal
    by more than the amount of guarantee fee financed.**

-   **No in-ground swimming pool except when included in a
    townhouse/condo complex.**

-   **Refinance only RD guaranteed loan or RD direct-loan debts, no
    equity pay out. However, debts remaining from the previous purchase
    of the building site may be refinanced.**

-   **No existing manufactured homes. Existing modular homes are
    acceptable.**

-   **No duplexes unless considered townhouse or condominiums and part
    of a Fannie Mae or FHA complex having a homeowners association
    controlled by the members.**

-   **The site cost generally should not exceed 30% of the total package
    cost. Consult with RD before proceeding with a higher ratio of site
    cost.**

-   **Private roads must have a legally enforceable maintenance
    agreement meeting Fannie Mae requirements. They must be constructed
    similar to county roads and not appear to be a single lane
    unimproved extended driveway.**

-   **Flood zone restrictions. See the section "Flood Zones".**

    **REASONABLE COSTS AND FEES**

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-   **Lenders should be able to document that the charges or fees
    assessed against borrowers whose loans are guaranteed under the
    Guaranteed Residential Loan Program do not exceed charges or fees
    routinely made by the lender for similar transactions such as FHA or
    VA. Other high loan-to-value home mortgage products can also be used
    for comparison. This documentation is not routinely requested as
    part of the loan application process. The RD guarantee fee should
    not be included when making the comparison.**

    **MANUFACTURED HOMES**

-   **Existing manufactured homes are not permitted.**

-   **Determine whether the unit is a "manufactured" or a "modular".
    There are no restrictions on a modular home, even though they are
    built off-site. Modular homes must meet all the same requirements as
    "stick built" homes.**

-   **New manufactured homes must be purchased from an Agency approved
    "dealer-contractor". One of the requirements is that the
    dealer-contractor holds both a dealer's license and a residential
    contractor license. Dealers cannot subcontract with a contractor to
    meet this requirement. The list of currently approved
    dealer-contractors can be obtained from the local RD office. Dealers
    should contact the local RD for the application and requirements for
    becoming an approved dealer-contractor.**

-   **The set up requirements are different than those of FHA/HUD. The
    manufactured home must be financed as real estate along with the
    property and be permanently installed on the site. This entails the
    removal of all running gear and towing equipment and the
    installation and anchoring of the home to a permanent foundation
    system as approved by the Standard Building Code and RD.**

-   **Site and foundation plans must be submitted for review for each
    individual application. The homes must be set up on a perimeter
    reinforced concrete block or poured concrete stem wall supported by
    a standard footer, in addition to the manufacturer's requirements
    for the pier supports. Piers must be set on reinforced footers. The
    complete set up requirements can be ordered from the local RD
    office.**

    **MODULAR HOMES**

-   **Modular homes are designed and constructed to meet all
    requirements of the state adopted building codes, the same as
    site-built construction (Not the same as manufactured homes,
    previously known as mobile homes, which meet a national safety and
    construction standard). Modular homes are processed the same as
    stick-built homes.**

-   **RD in Florida [does not]{.underline} require a complete set of
    plans and description of materials certified by a qualified plan
    reviewer.**

-   **A site/foundation plan is required.**

    **APPRAISAL**

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-   **Appraisals for existing or new homes can be either conventional or
    FHA. The additional attachments normally required for structures
    other than detached single family dwellings must be included, as
    appropriate for the dwelling type (such as condominium). A list of
    FHA appraisers is available at:**

    **https://entp.hud.gov/idapp/html/apprlook.cfm**

-   **An appraisal is not required when refinancing the [principal
    only]{.underline} of an existing RD [guaranteed]{.underline} loan.
    It is required on all cases of refinancing a RD direct loan. See the
    section titled, "Refinancing".**

-   **Commonly used alternate appraisal forms are allowed. See**

    **http://www.rurdev.usda.gov/fl/guarrhs.htm**

    **SITE AND BUILDING REQUIREMENTS**

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-   **See the national regulation RD-1980-D, paragraphs
    1980.312-1980.314 at: <http://www.rurdev.usda.gov/regs>**

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-   **Meet RD thermal standards:**

-   **Properties built after January 1, 1980, already meet the
    requirements.**

-   **For properties built prior to January 1, 1980,**

-   **If located IN OR NORTH OF counties of Levy, Marion, Flagler, all
    living area must have ceiling insulation of R-26 or greater and
    floor insulation (if off grade) of R-11+.**

-   **If located SOUTH OF the counties of Levy, Marion, Flagler, all
    living area must have ceiling insulation of R-19 and floor
    insulation (if off-grade) of R-11, or greater.**

-   **FHA appraisers may document compliance on the URAR.**

-   **See FL/VI Administrative Notice for easy methods of compliance.**

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-   **Existing dwelling must meet HUD requirements (for existing
    dwellings). See "APPRAISAL" and "INSPECTIONS."**

    **See the subject Administrative Notice(AN) at**
    http://www.rurdev.usda.gov/fl/guarrhs.htm

-   **Check with RD [prior to approval]{.underline} of an old dwelling.
    An existing dwelling must be cost effective to the applicant
    including reasonable costs of utilities and maintenance for the
    area. Keep in mind that the applicants typically have no cash
    reserves and no previous home ownership experience. And they usually
    suffer some degree of payment shock.**

-   **Consult with the local Rural Development prior to underwriting a
    property with an existing or proposed raised elevation septic
    absorption field.**

-   **Consult with the local Rural Development prior to underwriting a
    dwelling located on a non-paved road.**

-   **New and existing construction: Private well and septic systems
    meet FHA requirements. See the Administrative Notice(AN) on
    inspections:
    [www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)**

    **INSPECTIONS**

    **[NEW HOMES]{.underline}**

-   **IN FLORIDA ONLY - New homes inspected by the county and having a
    Certificate of Occupancy do not need further inspections other than
    your final inspection.**

    **[EXISTING HOMES]{.underline} See the Administrative Notice(AN)
    at:** http://www.rurdev.usda.gov/fl/guarrhs.htm

-   **For all existing homes (completed for more than 1 year):**

-   **The property must meet the requirements of HUD for existing
    construction. The URAR completed by the FHA appraiser is a
    sufficient inspection to determine that the dwelling meets the HUD
    requirement for an existing home.**

-   **If the FHA appraiser calls for additional inspections, such as for
    a septic system or roof, that inspection must be ordered. Wells must
    be tested in accordance with FHA guidelines.**

-   **If a whole-house inspection is completed by other than a FHA
    appraiser, it must fully comply with the Administrative Notice. A
    separate septic inspection must be ordered if this option is
    utilized.**

-   **Any repairs called for on the inspection(s) must be completed and
    cleared by the appraiser before RD can issue a Loan Note Guarantee
    on the loan. However, the loan can be approved and a RD Conditional
    Commitment for Guarantee can be issued subject to the completion of
    the repairs.**

-   **The Lender, applicant, and seller must work out the plan for
    completing the repairs. RD will NOT make the repair decisions. Any
    amount to be paid from loan funds must be included in the loan
    request prior to underwriting and submission of a file to RD.**

-   **The appraiser should understand that only the major components of
    the home should be checked.**

# No inspection is required [when refinancing]{.underline} an existing home financed with a RD guaranteed or a RD "direct" loan. 

#  {#section-11 .unnumbered}

# FLOOD ZONES {#flood-zones .unnumbered}

-   **Flood insurance is required anytime the foundation of the
    improvements, existing or new, is located in a special flood hazard
    area, regardless of whether or not the first floor above the 100 yr.
    BFE level.**

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-   **New construction will not be permitted in a 100-year zone A unless
    FEMA has issued the Letter Of Map Revision (LOMR) or Letter Of Map
    Amendment (LOMA). Consult with the local RD office PRIOR to
    processing a loan on a property located or proposed to be located in
    a FEMA designated flood zone. More information about FEMA can be
    found at: http://www.fema.gov/mit/tsd**

-   **Existing homes may be financed regardless of the relationship of
    first floor elevation to the 100 year BFE if national flood
    insurance is available and is required and included in the repayment
    ratio.**

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```
-   **The appraisal should appropriately adjust for the effect of the
    flood zone on the property value.**

    **RURAL DEVELOPMENT PACKAGE TURN AROUND TIME**

    **RD will typically respond back within a couple of days. It mostly
    depends on the quality of the packages. While RD is not doing an
    underwriting process, it still must check for certain eligibility
    criteria, do an environmental review, and review the appraisal.
    Depending on the availability of staff and the quality of your
    package, [most lenders receive next day service]{.underline}.**

    **Do not encourage loan officers or Realtors or builders to call RD
    for processing status. The RD offices have limited staff and have
    other loan programs to administer. These calls slow the process.
    [Communication should be from loan officer to underwriter,
    underwriter to RD]{.underline}.**

    **GETTING STARTED**

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```
-   **Educate your loan officers, processors, underwriters, and closing
    department. The Florida/VI RD has 15 local offices located
    throughout Florida and in St. Croix (serving all of Virgin Islands).
    Request training from your nearest RD office.**

-   **Thoroughly review this material, the RD-Instruction 1980-D, and
    the Administrative Notices.**

-   **This handbook and the referenced ANs are available for view and
    downloading at our Florida homepage:
    http://www.rurdev.usda.gov/fl/guarrhs.htm**

-   **Review the processing checklist located at the front of the forms
    set (at the end of this processing guide).**

-   **NOTE: The Form 1980-21, "Request For Single Family Housing Loan
    Guarantee" must show the underwriting lender information, be signed
    by the underwriting lender and applicant(s), and the ORIGINAL must
    be delivered to RD in the package.**

-   **Review the "Processing Guide" furnished in this material.**

-   **Ask your local RD manager for the names of other lenders
    experienced in this loan program. Call them for some insight.**

    **RESERVATION OF FUNDS (consult local RD to determine availability
    of authority)**

    **[If Reservations are available, Originating lender/broker
    branch]{.underline} must request the reservation of the funds when
    it appears the loan will likely clear the underwriting process. This
    assures all parties that the Rural Development funding is available.
    It should be done before the loan is underwritten. Fax the RD Form
    1980-86,"Reservation of Funds" to the RD office serving the county
    where the property is located. The form is found in this handbook or
    at on the web site: [http://www,rurdev.usda.gov/regs]()**

    **LOAN CLOSING CAUTION:**

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```
-   **Do [NOT]{.underline} close the loan until both the lender
    underwriter AND RD conditions are met.**

-   **Make certain that the loan amount matches the amount shown on the
    RD Conditional Commitment for Guarantee.**

-   **Make sure the guarantee fee is 2.0% (or 0.5% for refinancing) of
    the FINAL loan amount.**

-   **Make sure the borrower(s) still have repayment ability for the
    loan. If the income has decreased, the underwriter must re-compute
    the underwriter\'s analysis or 1008 and RD must concur in allowing
    the loan to close.**

**ACCURACY OF THE LOAN REQUEST**

-   **It is very difficult and in some cases impossible for RD to change
    the loan amounts after the RD Commitment has been issued. Changing
    the RD Commitment would entail canceling the first package and
    essentially starting from scratch. The Lender would have to supply
    revised or updated forms such as the Request for Guarantee (Form RD
    1980-21), the Forms 1003, 1008 and certify the applicant is still
    income eligible.**

-   **Review the appraisal prior to completing the initial loan package
    to RD. The loan can be an amount up to the appraised value. This is
    another reason to have the appraisal very early in the loan
    process.**

-   **Break out the loan purposes on the RD Form 1980-21, "Request for
    Single Family Housing Loan Guarantee." This will help remind you of
    any closing costs, such as the guarantee fee, that you intended to
    include in the loan.**

    **REQUESTING CHANGES IN THE RD COMMITMENT AMOUNT AFTER THE LOAN IS
    CLOSED**

    **It is IMPERATIVE that your closing department makes sure that the
    loan amount does not exceed the amount shown on the RD Conditional
    Commitment for Guarantee. The RD will not be able to adjust the
    amount of Commitment. The Lender may have to adjust the principal on
    the loan in order to obtain the Guarantee from Rural Development.**

    **REPLACEMENT FORMS**

    **The forms RD 1980-21, "Request For Single Family Housing
    Guarantee", AD-1048, "Certification Regarding Debarment......", and
    the extra forms required for a construction-permanent loan which are
    Form 400-1 and 400-6 are available on the FL/VI home page or all be
    downloaded from the Web site:
    <http://www.rurdev.usda.gov/regs/formtoc.html>You may copy forms
    from this handbook or request them from your local RD office.**

    **THE GUARANTEE**

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-   **Lender retains ownership of REO and is responsible for marketing
    the property. See our Servicing Guide on the FL/VI web site.**

-   **Loss is calculated by:**

-   **Step 1: adding all unpaid accrued interest, principal, foreclosure
    costs, all REO costs, interest from foreclosure date to REO sale
    (maximum of 6 months), and all REO sales expense to determine gross
    investment. Subtract gross REO sale price from gross investment to
    determine the loss.**

-   **Step 2: Multiply the original loan by 35 percent.**

-   **Step 3: RD pays THE LESSOR OF all of the loss determined in Step 1
    or 35% of the original loan (Step 2)**

-   **Step 4: RD pays 85% of any loss remaining unpaid from Step 3.**

-   **Maximum paid is 90% of the principal borrowed.**

**SERVICING THE LOAN: See
[www.rurdev.usda.gov/fl/guarrhs.htm](http://www.rurdev.usda.gov/fl/guarrhs.htm)
or contact the FL/VI headquarters: 352-338-3435.**

## 

## REGULATONS ON THE WEB

This Handbook, forms set, servicing guide, and national ANs (referenced
throughout this handbook), are posted on the Florida home page at:
http://www.rurdev.usda.gov/fl/guarrhs.htm

The national regulation for the guaranteed housing program is RD
Instruction 1980-D. The 1980-D is particularly useful for answering
questions regarding income and the adjustments to income.

Other regulations that cover parts of the program are RD-Instruction
1924-A (construction issues), RD-1940-G (environmental), RD Instruction
426-2 (flood insurance, construction in flood zones).

**National regulations can be downloaded from the Web site:
<http://www.rurdev.usda.gov/regs>The ANs referenced in this handbook are
found posted with the 1980-D regulations or in the list of ANs at:**
<http://www.rurdev.usda.gov/regs/an_list.html>

## HOME PAGES {#home-pages .unnumbered}

**Each state home page can be accessed by using the national home page,
then add a slash (/) and the two letter abbreviation of the state. For
example, the Florida RD home page is: www.rurdev.usda.gov/fl**

# Remember, to directly access the FL Guaranteed Housing Loan information, go to: http://www.rurdev.usda.gov/fl/guarrhs.htm {#remember-to-directly-access-the-fl-guaranteed-housing-loan-information-go-to-httpwww.rurdev.usda.govflguarrhs.htm .unnumbered}

#  {#section-13 .unnumbered}

# The Rural Development National home page is located at: http://www.rurdev.usda.gov {#the-rural-development-national-home-page-is-located-at-httpwww.rurdev.usda.gov .unnumbered}

Look for the housing programs. There is a map where you can click on a
State to find more information about that states' programs. It is very
useful for finding the contacts in other states.

##### OTHER USEFUL SITES {#other-useful-sites .unnumbered}

##### Fannie Mae: www.fanniemae.com/ {#fannie-mae-www.fanniemae.com .unnumbered}

**Freddie Mac: www.freddiemac.com/**

**FHA/HUD: www.hud.gov/**

**VA: http://www.va.gov/**

**County SHIPP Coordinators:
http://www.floridahousing.org/dpts/sfp.html**

**FHA Appraisers: https://entp.hud.gov/idapp/html/apprlook.cfm**

**Federal Register:
http://www.access.gpo.gov/su_docs/aces/aces140.html**

**FINDING THE APPROPRIATE RD OFFICE**

-   **An office directory and other associated information is available
    on our FL web site: http://www.rurdev.usda.gov/fl**

    **THINK ABOUT IT**

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```
-   **Most applicants will be lower income, without cash reserves, no
    previous home ownership experience, marginal work history, marginal
    credit, high ratios, and suffering major housing payment shock.
    Don't put them in an old, high maintenance home where they will
    likely experience major expenses early in the loan.**

-   **RD local staff is available to answer your questions and provide
    training for your staff. Just don't ask them to review or underwrite
    the loan before it is shipped to the underwriter.**

    LENDER APPROVAL CHECKLIST

    FOR AUTHORITY TO SUBMIT LOANS DIRECTLY TO RD

    **Any lender is welcome to participate in the Rural Development (RD)
    loan program. Only lenders approved for underwriting Fannie Mae,
    Freddie Mac, FHA, or VA may apply to RD for approval to submit loans
    directly to the Agency. Mortgage brokers or other lenders acting in
    the capacity of a broker may participate by submitting the RD loan
    packages with their regular servicing file to the investor for
    underwriting. The underwriting lender will submit loans clearing
    their process. The RD allows loan closings in the name of the
    originating lender as long as the loans are assigned to the
    underwriting investor at closing.**

**Send the following: download the forms from:
<http://www.rurdev.usda.gov/regs/formtoc.html>**

-   **RD Form 1980-16, "Agreement For Participation In Single Family
    Housing Guaranteed/Insured Loan Programs Of the United States
    Government" (Original + 1 copy)**

-   **Form AD-1047, "Certification Regarding Debarment..." (Original + 1
    copy)**

-   **E-mail address and Web site address.**

-   **Copy of your approval from any [one]{.underline} of the following:
    Fannie Mae, Freddie Mac, FHA, VA.**

-   **Provide the names, telephone #, and resume of your underwriter(s)
    who will handle this loan.**

-   **Provide the name, title, and phone of your contact person for this
    program.**

-   **An outline of the Lender's internal loan criteria for issues of
    credit history and repayment ability.**

-   **Provide a copy of your quality control plan pertaining to the
    monitoring of production and servicing activities.**

-   **Provide a directory of all Florida branches, with contact
    information.**

-   **If you plan to service the loans, provide a directory of the
    servicing departments.**

-   **If you plan to service the loans, certify that FDIC insured escrow
    accounts can be set up for the escrowing of taxes and insurance.**

-   **Statement by the Lender agreeing to use forms that have been
    approved by the Federal Housing Administration (FHA), Fannie Mae, or
    Freddie Mac. The Lender must designate which forms they will be
    using. The forms need not be submitted.**

**FLORIDA ONLY APPROVAL MULTI-STATE OR NATIONAL APPROVAL**

**Rural Development, USDA USDA, Rural Development**

**P.O. Box 147010 Attn: GRH Team**

**Gainesville, FL 32614-7010 Stop 0783, Room 5334-S**

**1400 Independence Ave., SW**

**OR overnight to: Washington, DC 20250**

**4440 NW 25^th^ Place**

**Gainesville, FL 32606**

**[PROCESSING GUIDE]{.underline}**

**[Step 1]{.underline}: FIRST TIME HOMEBUYERS ONLY. Enroll applicant in
Homebuyers Education.**

**[Step 2]{.underline}: Fax the Reservation of Funds to the local RD
office. See "Reserving Funds". NOTE: The Reservation system may not be
available.**

**[Step 3]{.underline}: RD will return the confirmation of the reserved
amount. The funds are set aside for 60 days while you process the loan
through underwriting and then to RD. The loans do NOT have to close in
the 60 days. The application package must be delivered in 60 days. Then
RD will issue the Commitment with conditions which gives you additional
time as needed.**

**[Step 4]{.underline}: Compile two origination packages, one for the
underwriter and one for RD (using the processing checklist).**

**[Step 5]{.underline}: Send [BOTH]{.underline} packages to your
underwriter. If they approve the loan, they will update the RD package
and forward it to RD for the final review and Commitment.**

**[Step 6]{.underline}: RD will review the package and issue a
Conditional Commitment for Guarantee, with any conditions, directly back
to the underwriter. Typically a copy is faxed to the originator.**

**[Step 7]{.underline}: The underwriting lender will inform the
originating office and closing department of the loan conditions set by
both the underwriter and RD.**

**[Step 8]{.underline}: The closing lender proceeds to close the loan if
all underwriter and RD conditions have been met.**

**[Step 9]{.underline}: The underwriting/closing lender submits a
closing package for the guarantee. The RD approval (Conditional
Commitment) conditions provide a list of items necessary to obtain the
guarantee.**

**[Step 10]{.underline}. The RD issues the Loan Note Guarantee to the
closing department of the RD approved lender. The guarantee must be
attached to the original promissory note as proof of guarantee.**

> **NOTE: If the loan is sold, the original, signed, Loan Note Guarantee
> is to be sent to the acquiring Note holder. If your company retains
> the servicing, make sure the Loan Note Guarantee is shipped for
> storage in the servicing file.**

**USDA-RD FORM APPROVED**

**Form RD 1980-86 OMB NO. 0575-0078**

**(10-03)**

**UNITED STATES DEPARTMENT OF AGRICULTURE**

**RURAL DEVELOPMENT**

**RURAL DEVELOPMENT (RD)**

**GUARANTEED RURAL HOUSING (GRH)**

**REQUEST FOR RESERVATION OF FUNDS**

**[LENDER INFORMATION:]{.underline}**

***[Submitting Lender]{.underline}* Name**:       **Tax I.D. No.     **
**Branch No.     **

**Address:**      

     

**Lender Contact Person:**      

**Contact Phone No.** (     )      **Ext.      ** **Fax No.** (     )
      ***[Your Underwriting Lender]{.underline}*** *(Complete when
[Submitting Lender]{.underline} (listed above) is **not** underwriting
the loan **OR** the underwriter is not at your location):*

**Name:     ** **Tax I.D. No.**       **Branch No.     **

**Branch location**:      

**[APPLICANT/PROPERTY INFORMATION:]{.underline}**

**Reservation Amount Requested:** **\$     ** **Applicant and
Co-Applicant are both First Time Homebuyers**

**Is this a Refinance Loan?** **Yes If Yes, Loan being refinanced is a
RD** **Guaranteed Loan OR** **Direct Loan**

+-----------------------------------+-----------------------------------+
| ***Applicant Information***       | ***Co-Applicant Information***    |
+-----------------------------------+-----------------------------------+
| ***Name:***                       | ***Name:***                       |
+-----------------------------------+-----------------------------------+
| ***SSN:***                        | ***SSN:***                        |
+-----------------------------------+-----------------------------------+
| ***OPTIONAL:** (Please circle or  | ***OPTIONAL:** (Please circle or  |
| mark as appropriate)*             | mark as appropriate)*             |
+-----------------------------------+-----------------------------------+
| ***Veteran:*** Yes No             | ***Veteran:*** Yes No             |
| ***Disabled:*** Yes No            | ***Disabled:*** Yes No            |
| ***Gender:*** M F                 | ***Gender**:* M F                 |
+-----------------------------------+-----------------------------------+
| ***Ethnicity**:* *(Check only One | ***Ethnicity**:* *(Check only One |
| Box)* Hispanic or Latino          | Box)* Hispanic or Latino          |
|                                   |                                   |
| Not Hispanic or Latino            | Not Hispanic or Latino            |
+-----------------------------------+-----------------------------------+
| *(Check as many boxes as          | *(Check as many boxes as          |
| applicable)*                      | applicable)*                      |
|                                   |                                   |
| ***Race**:* American Indian or    | ***Race**:* American Indian or    |
| Alaska Native Asian               | Alaska Native Asian               |
|                                   |                                   |
| Black or African American         | Black or African American         |
|                                   |                                   |
| Native Hawaiian or Other Pacific  | Native Hawaiian or Other Pacific  |
| Islander White                    | Islander White                    |
+-----------------------------------+-----------------------------------+
| ***Marital Status**:* Married     | ***Marital Status**:* Married     |
| Separated Unmarried               | Separated Unmarried               |
+-----------------------------------+-----------------------------------+

**Property Address:**      

**City, State, Zip Code:          ** **County:**           

*We are processing an application from the above named person(s), and
expect to have a complete package to you within*

*60 days. Please reserve funds for this loan. We have reviewed the
applicant's income and credit history and have*

*tentatively determined the applicant(s) has sufficient qualifying
income and credit history to proceed with this application.*

      Date:      

*(Authorized Lender Representative/Official) recall ghword/1098-16.doc*

**RURAL DEVELOPMENT a.k.a. RURAL DEVELOPMENT**

**UNITED STATES DEPARTMENT OF AGRICULTURE**

**[UNIFORM ORIGINATION PACKAGE CHECKLIST]{.underline}**

**DATE:      **

**APPLICANTS:           **

**[ORIGINAL APPLICANT AND UNDERWRITING LENDER SIGNATURES
on]{.underline}**

**Form RD 1980-21, "Request For Single Family Housing Loan Guarantee",**

**form revision date of 1/03 or later (upper right corner) (Signed by RD
approved lender and applicant(s)**

**[HIGH QUALITY COPIES ARE ACCEPTABLE]{.underline}**

**Income verification.**

**Credit history verification.**

**Purchase agreement.**

**Appraisal with photos. Provide conventional or FHA appraisal on new or
proposed construction.**

**For existing properties, RD encourages the URAR by a FHA appraiser.**

**Form AD-1048, "Certification Regarding Debarment, Suspension..."**

**Signed ONLY by applicant(s)**

**Uniform Residential Loan Application.**

> **Must be fully completed and signed by the applicant(s). The CAIVRS
> number for each applicant must be listed above the signature line.**

**Lender's Loan Underwriting Analysis.**

> **Uniform Underwriting Analysis and Transmittal Summary or similar
> form signed by the underwriter.**
>
> **Comments and requirements of underwriter must be attached.**
>
> **Compensating factors are attached, if required by RD regulations or
> Administrative Notices.**

**FEMA Form 81-93, "Standard Flood Hazard Determination"**

**NA if refinancing a RD direct or guaranteed debt.**

**RD forms, Administrative Notices, and regulation 1980-D are available
at:** [http://www.rurdev.usda.gov](http://www.rurdev.usda.gov/)

Find Form AD-1048 on the site under "Series 1000" as "Form 1048"

**You may replicate RD forms for your supply.**

**This is not an official form of the United States Department of
Agriculture. It has been developed as a tool for voluntary use by
lenders in developing uniform loan packages for submission to the Rural
Development under the Guaranteed Housing Loan Program.**

Revised 7/26/04

Form RD 1980-21 **UNITED STATES DEPARTMENT OF AGRICULTURE** Form
Approved

(Rev. 1-03) **RURAL DEVELOPMENT** 0MB No. 0575-0078

**RURAL DEVELOPMENT**

**REQUEST FOR SINGLE FAMILY HOUSING LOAN GUARANTEE**

> 1\. The applicant has does not have a relationship with any current
> Rural Development employee.
>
> 2\. The applicant is a (check applicable): US citizen qualified alien
> U.S. Non-citizen National
>
> other (explain)\
> 3. The applicant is a (check applicable): veteran first time homebuyer
>
> 4\. Number of persons in the household: [     ]{.underline}\
> *5.* The applicant's credit report indicates (check one):\
> a. The applicant has no credit history
>
> b\. The applicant has no adverse credit history \
> c. The applicant has experienced adverse credit history but\
> we have determined that it is beyond the applicant's control \
> d. Other (explain): \
> 6. The current annual income for the household is: \$
>
> 7\. The current adjusted income for the household is: \$\
> 8. TOTAL DEBT ratio [     ]{.underline}PITT ratio [     ]{.underline}\
> 9. We propose to loan \$ [     ]{.underline} for 30 years at
> [     ]{.underline} % per annum with payments of \$[     ]{.underline}
> per month.\
> 10. The interest rate is based on the Fannie Mae VA rate on
> [     ]{.underline} /[     ]{.underline}/[     ]{.underline}.
>
> The interest rate is locked in until
> [     ]{.underline}/[     ]{.underline}/[     ]{.underline}
>
> The interest rate will float until loan closing.
>
> (If this option is checked and the interest rate increases at loan
> closing, the loan must be re-underwritten and this\
> certification must be updated).
>
> 11\. The applicant is unable to secure the necessary conventional
> credit without a Rural Development guarantee upon terms and
>
> conditions which the applicant could reasonably be expected to
> fulfill.
>
> 12\. The applicant understands that Rural Development approval of the
> guarantee is required and is subject to the availability of funds.
>
> 13\. Housing and Urban Development's Credit Alert Interactive Voice
> Response System (CAIVRS) was checked for outstanding
>
> delinquent Federal debts and confirmation No       was obtained.\
> 14. Loan funds will be used for the following purpose(s):

**Purpose Amount**

      \$

      \$      

Total Loan =      

**Certifications**

**Certifications**

In order to induce the Agency to issue the requested guarantee, we
certify that we have originated and underwritten the loan in compli-

ance with all Agency loan requirements. This form contains or is
supplemented with all information required by 7 C.F.R.

§ 1980.353(c).

     

Date "RD APPROVED" Lender's Authorized Representative Signature

**Applicant(s) Acknowledgments and Certifications**

I (We) certify and acknowledge that if the Agency pays a loss claim on
the requested loan to the lender, I (We) will reimburse the Agency for
that amount. If I (We) do not, the Agency will use all remedies
available to it, including those under the Debt Collection Improvement
Act, to recover on the Federal debt directly from me (us). The Agency\'s
right to collect is independent of the lender\'s right to collect under
the guaranteed note and will not be affected by any release by the
lender of my (our) obligation to repay the loan. Any Agency collection
under this paragraph will not be shared with the lender.

I AM (WE ARE) unable to provide the housing I (we) need on my (our) own
account, and I am (we are) unable to secure the credit necessary for
this purpose from other sources upon terms and conditions which I (we)
can reasonably fulfill. I (we) certify that the statements made by me
(us) in this application are true, complete and correct to the best of
my (our) knowledge and belief and are made in good faith to obtain a
loan.

Warning: Section 1001 of Title 18, United States Code provides:
"Whoever, in any matter within the jurisdiction of any department

or Agency of the United States knowingly and willfully falsifies,
conceals or covers up by any trick, scheme, or device a

material fact, or makes any false, fictitious or fraudulent statements
or representations, or makes or uses any false writing

or document knowing the same to contain any false, fictitious or
fraudulent statement or entry, shall be fined under this

title or imprisoned not more than five years, or both."

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

> Borrower Co-Borrower Date

FOR AGENCY ONLY

Check one: The applicant is eligible The applicant is not eligible

**NOTICE TO APPLICANT REGARDING PRIVACY ACT INFORMATION** Form 1980-21

The information requested on this form is authorized to be collected by
the Rural Development (RD), Rural Business Cooperative Services

(RBS), or Rural Utilities Service (RUS) ("the agency") by title V of the
Housing Act of 1949, as amended (42 U.S.C. 1471 et seq.) or by the

Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.), or
by other laws administered by RD, RBS or RUS.

Disclosure of information requested is voluntary. However, failure to
disclose certain items of information requested, including your Social
Security

Number or Federal Identification Number, may result in a delay in the
processing of an application or its rejection. Information provided may
be used

outside of the agency for the following purposes:

1\. When a record on its face, or in conjunction with other records,
indicates a violation or potential violation of law, whether civil,
criminal or

regulatory in nature, and whether arising by general statute or
particular program statute, or by regulation, rule, or order issued
pursuant thereto,

disclosure may be made to the appropriate agency, whether Federal,
foreign, state, local, or tribal, or other public authority responsible
for enforcing,

investigating or prosecuting such violation or charged with enforcing or
implementing the statute, or rule, regulation, or order issued pursuant

thereto, if the information disclosed is relevant to any enforcement,
regulatory, investigative, or prosecute responsibility of the receiving
entity.

2\. A record from this system of records may be disclosed to a Member of
Congress or to a Congressional staff member in response to an inquiry of

the Congressional office made at the written request of the constituent
about whom the record is maintained.

3\. Rural Development will provide information from this system to the
U.S. Department of Treasury and to other Federal agencies maintaining

debt servicing centers, in connection with overdue debts, in order to
participate in the Treasury Offset Program as required by the Debt
Collection

Improvement Act, Pub. L. 104-134, Section 31001.

4\. Disclosure of the name, home address, and information concerning
default on loan repayment when the default involves a security interest
in

tribal allotted or trust land. Pursuant to the Cranston-Gonzales
National Affordable Housing Act of 1990 (42 U.S.C. 12701 et seq.),
liquidation may

be pursued only after offering to transfer the account to an eligible
tribal member, the tribe, or the Indian Housing Authority serving the
tribe(s).

5\. Referral of names, home addresses, social security numbers, and
financial information to a collection or servicing contractor, financial
institu-

tion, or a local, State, or Federal agency, when Rural Development
determines such referral is appropriate for servicing or collecting the
borrower's

account or has provided for in contracts with servicing or collection
agencies.

6\. It shall be a routine use of the records in this system of records
to disclose them in a proceeding before a court or adjudicative body,
when: (a)

the agency or any component thereof; or (b) any employee of Rural
Development in his or her official capacity, or (c) any employee of the
agency in

his or her individual capacity where the agency has agreed to represent
the employee; or (d) the United States is a party to litigation or has
an interest

in such litigation, and by careful review, the agency determines that
the records are both relevant and necessary to the litigation, provided;
however,

that in each case, the agency determines that disclosure of the records
is a use of the information contained in the records that is compatible
with the

purpose for which the agency collected the records.

7\. Referral of name, home address, and financial information for
selected borrowers to financial consultants, advisors, lending
institutions,

packagers, agents, and private or commercial credit sources, when Rural
Development determines such referral is appropriate to encourage the

borrower to refinance their RD indebtedness as required by title V of
the Housing Act of 1949, as amended (42 U.S.C. 1471) or to assist the

borrower on the sale of the property.

8\. Referral of legally enforceable debts to the Department of the
Treasury, Internal Revenue Service (IRS), to be offset against any tax
refund that

may become due the debtor for the tax year in which the referral is
made, in accordance with the IRS regulations and under the authority
contained in

31 U.S.C. 3720A.

9\. Referral of information regarding indebtedness to the Defense
Manpower Data Center, Department of Defense, and the United States
Postal

Service for the purpose of conducting computer matching programs to
identify and locate individuals receiving Federal salary or benefit
payments

and who are delinquent in their repayment of debts owed to the U.S.
Government under certain programs administered by the agency in order to

collect debt under the provisions of the Debt Collection Act of 1982 (5
U.S.C. 5514) by voluntary repayment, administrative or salary offset

procedures, or by collection agencies.

10\. Referral of names, home addresses, and financial information to
lending institutions when Rural Development determines the individual
may be

financially capable of qualifying for credit with or without a
guarantee.

11\. Disclosure of names, home addresses, social security numbers, and
financial information to lending institutions that have a lien against
the same

property as the agency for the purpose of the collection of the debt by
Rural Development or the other lender. These loans can be under the
direct and

guaranteed loan programs.

12\. Referral to private attorneys under contract with either Rural
Development or with the Department of Justice for the purpose of
foreclosure and

possession actions and collection of past due accounts in connection
with Rural Development.

13\. It shall be a routine use of the records in this system of records
to disclose them to the Department of Justice when: (a) The agency or
any

component thereof; or (b) any employee of the agency in his or her
official capacity where the Department of Justice has agreed to
represent the

employee; or (c) the United States Government, is a party to litigation
or has an interest in such litigation, and by careful review, the agency
deter-

mines that the records are both relevant and necessary to the litigation
and the use of such records by the Department of Justice is therefore
deemed

by the agency to be for a purpose that is compatible with the purpose
for which the agency collected the records.

14\. Referral of names, home addresses, social security numbers, and
financial information to the Department of Housing and Urban Development

(HUD) as a record of location utilized by Federal agencies for an
automatic credit prescreening system.

15\. Referral of names, home addresses, social security numbers, and
financial information to the Department of Labor, state wage information

collection agencies, and other Federal, state, and local agencies, as
well as those responsible for verifying information furnished to qualify
for Federal

benefits, to conduct wage and benefit matching through manual or
automated means, for the purpose of determining compliance with Federal

regulations and appropriate servicing actions against those not entitled
to program benefits, including possible recovery of improper benefits.

Form 1980-21

16\. Referral of names, home addresses, and financial information to
financial consultants, advisors, or underwriters, when Rural Development

determines such referral is appropriate for developing packaging and
marketing strategies involving the sale of Rural Development loan
assets.

17\. Rural Development, in accordance with 31 U.S.C. 3711(e)(5), will
provide to consumer reporting agencies or commercial reporting agencies
information from this system indicating that an individual is
responsible for a claim that is current.

18\. Referral of names, home and work addresses, home telephone numbers,
social security numbers, and financial information to escrow agents

(which also could include attorneys and title companies) selected by the
applicant or borrower for the purpose of closing the loan.

**U.S. DEPARTMENT OF AGRICULTURE**

**Certification Regarding Debarment, Suspension, Ineligibility**

**and Voluntary Exclusion - Lower Tier Covered Transactions**

**This certification is required by the regulations implementing
Executive Order 12549, Debarment and**

**Suspension, 7 CFR Part 3017, Section 3017.510, Participants'
responsibilities. The regulations were published as Part IV of the
January 30, 1989, Federal Register (pages 4722-4733). Copies of the
regulations may be obtained by contacting the Department of Agriculture
agency with which this transaction originated.**

**(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE)**

**(1) The prospective lower tier participant certifies, by submission of
this proposal, that neither it nor its principals is presently debarred,
suspended, proposed for debarment, declared ineligible, or voluntarily
excluded from participation in this transaction by any Federal
department or agency.**

**(2) Where the prospective lower tier participant is unable to certify
to any of the statements in this certification, such prospective
participant shall attach an explanation to this proposal.**

**SIGNATURE (Applicant)**

**SIGNATURE (Co-applicant)**

**Form AD-1048 (1/92)**

### Page 2 of Form AD-1048

**[Instructions for Certification]{.underline}**

**1. By signing and submitting this form, the prospective lower tier
participant is providing the certification set out on the reverse side
in accordance with these instructions.**

**2. The certification in this clause is a material representation of
fact upon which reliance was placed when this transaction was entered
into. If it is later determined that the prospective lower tier
participant knowingly rendered an erroneous certification, in addition
to other remedies available to the Federal Government, the department or
agency with which this transaction originated may pursue available
remedies, including suspension and/or debarment.**

**3. The prospective lower tier participant shall provide immediate
written notice to the person to which this proposal is submitted if at
any time the prospective lower tier participant learns that its
certification was erroneous when submitted or has become erroneous by
reason of changed circumstances.**

**4. The terms "covered transaction," "debarred,\" \"suspended,"
"ineligible," "lower tier covered transaction," "participant," "person,"
"primary covered transaction," "principal,\" "proposal," and
"voluntarily excluded," as used in this clause, have the meanings set
out in the Definitions and Coverage sections of rules implementing
Executive Order 12549. You may contact the person to which this proposal
is submitted for assistance in obtaining a copy of those regulations.**

**5. The prospective lower tier participant agrees by submitting this
form that, should the proposed covered transaction be entered into, it
shall not knowingly enter into any lower tier covered transaction with a
person who is debarred, suspended, declared ineligible, or voluntarily
excluded from participation in this covered transaction, unless
authorized by the department or agency with which this transaction
originated.**

**6. The prospective lower tier participant further agrees by submitting
this form that it will include this clause titled "Certification
Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion -
Lower Tier Covered Transactions," without modification, in all lower
tier covered transactions and in all solicitations for lower tier
covered transactions.**

**7. A participant in a covered transaction may rely upon a
certification of a prospective participant in a lower tier covered
transaction that it is not debarred, suspended, ineligible, or
voluntarily excluded from the covered transaction, unless it knows that
the certification is erroneous. A participant may decide the method and
frequency by which it determines the eligibility of its principals. Each
participant may, but is not required to, check the Nonprocurement
List.**

**8. Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith
the certification required by this clause. The knowledge and information
of a participant is not required to exceed that which is normally
possessed by a prudent person in the ordinary course of business
dealings.**

**9. Except for transactions authorized under paragraph 5 of these
instructions, if a participant in a covered transaction knowingly enters
into a lower tier covered transaction with a person who is suspended,
debarred, ineligible, or voluntarily excluded from participation in this
transaction, in addition to other remedies available to the Federal
Government, the department or agency with which this transaction
originated may pursue available remedies, including suspension and/or
debarment.**

**2**

**Form AD-1048 (1/92)**

l U. S.GPO: 1996-757-776/201 07