Becoming an Approved Lender

November 2020

Single Family Housing Guaranteed Loan Program 

(SFHGLP)

Welcome to the Becoming An Approved Lender training module presented by USDA’s 

Single Family Housing Guaranteed Loan Program. 

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Participation in the SFHGLP provides for lending opportunities that can expand your 

business to a multitude of borrowers that without a guarantee, you would not be able to 

assist. This module will highlight the key requirements and steps for approval into this 

100% lending program.

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• HB-1-3555, Chapter 3 defines a lender as an entity that originates, services, or holds a 

loan guarantee by the Agency. 

• Once the Agency has approved the lender, it may participate in the program as long as it 

maintains the standards and continues to follow all program requirements.
Lender Participation

7 CFR 3555.51 and HB-1-3555, Chapter 3

Demonstrate that it has expertise to 

make and/or service single family 

housing mortgage loans.

Comply with all Agency requirements.

• 7 CFR 3555.51 and HB-1-3555, Chapter 3 require lenders to have the expertise to make 

and/or service single family housing mortgage loans and that they comply with all 

Agency requirements set forth in the regulation and handbook.

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 A State Housing Finance Agency

 U.S. Department of Housing and Urban 

Development-Federal Housing Administration

 Government National Mortgage Association

 U.S. Department of Veterans Affairs

 Fannie Mae

 Freddie Mac

Approval from Another 

Recognized Source

Lender Approval Criteria

HB-1-3555, Chapter 3.2A

• Lenders that have been approved through another recognized source as noted in HB-1-

3555 Chapter 3.2A are considered to have demonstrated the ability to originate, 

underwrite and service SFHGLP loans. 

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Lender Approval Criteria

HB-1-3555, Chapter 3.2B

 A summary of residential mortgage lending 

activity.

 Written criteria that outline policies and 

procedures the lender follows when originating, 

underwriting, and closing residential mortgage 

loans.

 Evidence that the lender has an experienced loan 

underwriter on staff.

Approval by Demonstrated Ability: 

Demonstrated Ability

• In all other cases, the Agency determines whether a lender is qualified by reviewing the 

lender’s history along with other documentation that is noted in HB 3.2B such as their 

residential mortgage lending activity, policies and procedures for origination, 

underwriting, and closing residential mortgage loans, and evidence that the lender have 

an experienced underwriter on staff.

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Lender Approval Criteria

HB-1-3555, Chapter 3.2B

 Must certify that it will contract with an Agencyapproved lender that agrees to follow all Agency 

servicing requirements.

 Originating lender should be prepared to 

escrow funds for taxes and insurance when 

required to repurchase loans.

Approval by Demonstrated Ability: 

Additional Requirements for Originating 

Lenders that do not service loans.

• If the lender does not intend to service the SFHGLP loans, then the lender will agree to 

contract with an Agency approved lender who will follow all Agency servicing 

requirements. 

• Originating lenders should be prepared to escrow funds for taxes and insurance when 

required to repurchase loans. 

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Lender Approval Criteria

HB-1-3555, Chapter 3.2B

 Provide written criteria concerning the policies 

and procedures for servicing residential 

mortgage loans.

 Provide evidence of a written plan if the lender 

contracts for escrow services.

 Provides evidence that the lender has serviced 

single-family residential mortgage loans in the 

year before applying for Agency approval.

Approval by Demonstrated Ability: 

Additional Requirements for Originating 

Lenders that do service loans.

• If the lender intends to service the SFHGLP loans, the lender will be required to provide 

additional documentation to show ability to do so. This includes policies and 

procedures for servicing residential mortgage loans, contracts related to escrow 

services, and evidence that the lender has serviced single family residential mortgage 

loans for at least the past year.

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Lender Approval Criteria

HB-1-3555, Chapter 3.2B

 Provide documentation that Federal oversight is 

being provided by one of the following:

o Federal Reserve System

o Office if the Comptroller of Currency

o Federal Deposit Insurance Corporation

o National Credit Union Administration

o Federal Housing Finance Board regulating lenders 

within the Federal Home Loan Bank system

Approval by Demonstrated Ability: 

Federal Oversight

• A lender that is a federally regulated depository institution may be considered for 

participation in the SFHGLP. 

• The lender must provide the official letter or other verifiable communications from the 

oversight authority that indicates the lender’s ability to process, underwrite and service 

single-family residential mortgage loans. 

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Lender Approval Criteria

HB-1-3555, Chapter 3.2B

 Lenders meeting these criteria include:

o An FCS lender with direct lending authority.

o A lender participating in other Rural Housing 

Service, Rural Business-Cooperative 

Development Service, Rural Utilities Service, or 

Farm Service Agency guaranteed loan programs 

with an active lender agreement on file.

Approval by Demonstrated Ability: 

Experience with USDA Program or Farm 

Credit System

• A Farm Credit System institution or lender participating in certain other USDA programs 

is eligible to participate in the SFHGLP if it can also demonstrate experience in 

underwriting and servicing single-family residential mortgage lending. 

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Lender Approval Criteria

HB-1-3555, Chapter 3.2C

 Lenders that do not meet requirements for Agency 

lender approval may participate as an agent of an 

approved lender.

 Approved lender must designate the agent in writing.

 Agent is authorized to originate and close the loan in 

their name if the loan was reviewed and approved by 

the approved lender.

 Loan must be transferred to approved lender 

immediately after closing.

Participation as an Agent of an 

Approved Lender:

• If a lender does not meet the requirements for Agency approval as a lender, they may 

participate in the program as an agent of a lender that has approval by Rural 

Development. 

• The approved lender must designate the agent in writing and state the functions that 

the agent will perform on their behalf. 

• The agent is authorized to originate and close the loan in their name as long as the loan 

was reviewed and approved by the lender and is transferred to the lender immediately 

upon closing and prior to issuance of the Loan Note Guarantee. 

• The lender approved by Rural Development will be responsible for ensuring that its 

agent’s origination, underwriting and closing activities are in accordance with Agency 

standards. 

• The Conditional Commitment and the Loan Note Guarantee will be issued to the 

approved lender.

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Form RD 3555-16 Attachment 3-A, “Lender Approval Checklist”

https://forms.sc.egov.usda.gov/eForms/welcomeAction.do?Home https://www.rd.usda.gov/files/3555-1chapter03.pdf 

• Lenders wishing to become an approved lender for the Single Family Housing Guaranteed Loan 

Program will submit the completed and executed “Agreement for Participation in Single-Family 

Housing Guaranteed/Insured Loan Programs of the United States Government”, Form RD 3555-

16 along with the documentation listed on the Lender Approval Checklist found in Chapter 3 of 

HB-1-3555.

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Supporting Documents

Agency Certifications

Form RD 3555-16

Resume

Retail Lender - Spreadsheet

Wholesale Lender or Servicing 

Lender - Spreadsheet

Underwriting Outline

Quality Control Plan

Training Certification

Utilize Attachment 3-A, 

“Lender Approval 

Checklist”

Submit complete 

application to: 

sfhgld.compliance@usda.gov 

Assemble documents in 

order listed

• This slide highlights the key components of a complete application to become an 

approved lender for the SFHGLP.

• When assembling your application, follow Attachment 3-A, Lender Approval Checklist 

and assemble the documents in the order listed.

• Make sure your application is complete and that the documentation is accurate.

• Once your application is complete, submit it to the Quality Assurance and Lender 

Oversight team at sfhgld.compliance@usda.

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Written procedures for document 

reverification, sampling methodology, 

consistent and timely review process.

Written procedures to report violations of laws or 

regulations, false statements, and program abuses to 

appropriate authorities in timely manner.

Ensure adequate quality control and data integrity checks 

are included for loans processed through automated 

underwriting systems on regular and timely basis.

Quality control team that operates 

independently from loan 

origination/underwriting and 

servicing functions.

Provides standard operating 

procedures for all employees who 

will be involved with or affected by 

quality control process.

Ensure adequate monitoring of all vendors, contractors, 

and third-party providers involved in the origination 

process.

Identify training opportunities for lender staff.

Lender’s Quality Control Plan

HB-1-3555, Chapter 3.3

• Reliable and effective quality control programs are essential to a lender’s success in the 

mortgage industry. 

• Quality begins prior to the application intake and continues through the mortgage 

process. 

• Quality Control should monitor and evaluate the integrity of the origination and 

servicing processes and should be customized to the lender’s organization and 

operations. 

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The Agency’s Review of a lender’s application will include:

• Confirmation that all required documents have been submitted and completed 

correctly. Form RD 3555-16 has been properly executed by a person authorized 

to bind the lender to the terms of the agreement.

• Evidence that the lender demonstrates consistent ability with the requirements of 

the Agency.

• Confirmation that neither the lender or any of lender’s principal officers have been 

suspended or debarred from participating in Federal programs.

• Evidence that the lender’s approval status with Fannie Mae, Freddie Mac, HUD, 

VA and other government agencies is active at the time of application to the 

Agency.
• After the Agency completes their review of the lender’s application, a pre-approval or a 

denial with appeal rights will be issued to the lender.

• If the lender meets the criteria for an approved lender and provides the supporting 

documentation as outlined in Attachment 3-A of HB-1-3555, the Agency will issue an 

approval notice to the lender. 

• Final approval is dependent upon the lender and all origination and underwriting staff 

involved with the SFHGLP completing mandatory training.

• The purpose of the training is to provide an overview of the guaranteed program 

objectives, lender responsibilities, required loan documentation, and how to obtain a 

Loan Note Guarantee.

• Lenders may utilize live training provided by agency staff or utilize the recorded training 

modules available on the USDA LINC.

• Upon receipt of an executed training certification provided in Attachment 3-C, the 

Agency will forward the lender a copy of the executed Form RD 3555-16 notifying the 

lender of their approval to participate in the SFHGLP.

• Lastly, lender approval files will be maintained and retained in accordance with Chapter 

2 HB-1-3555.
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Form RD 3555-11

HB-1-3555, Chapter 

3.5, “Lender Sale of 

Guaranteed Loans”

The selling lender must 

provide the original 

LNG to the purchasing 

lender.

The selling lender must 

report the sale of the 

loan within 30 days of 

the sale.

https://formsadmin.sc.egov.usda.gov/eFormsAdmin/searchAction.do

• Lenders may sell their guaranteed loans to lenders who meet the Agency requirements as noted 

in Paragraph 3.2 of HB-1-3555, Chapter 3. 

• The purchasing lender must execute or have an approved Form RD 3555-16 on file. 

• The selling lender is responsible for providing the original Loan Note Guarantee to the 

purchasing lender and must report the sale of the guarantee on From RD 3555-11 within 30 days 

of the sale.

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Processing

 Lender must abide by restrictions on loan 

purposes, loan limitations, interest rates and 

terms as referenced in 7 CFR 3555.

 Lender will underwrite the loan and submit the 

necessary items in order to receive a 

Conditional Commitment.

 The agent may close the loan in its name 

provided the loan is immediately transferred to 

the approved lender to whom the guarantee 

will be issued.

Servicing

 Lenders are fully responsible for regular and 

default servicing and maintaining interest 

for all guaranteed loans.

 Regular and default servicing requirements 

are outlined in Chapters 17 through 20 of 

SFHGLP Handbook.

 When servicing is performed by a third 

party, the lender will inform Rural 

Development of the name and address of 

the servicer through the completion of Form 

RD 3555-11.

Lender Responsibility

HB-1-3555, Chapter 3.6

• The lender is responsible for processing and servicing the loan and may use third party 

originators such as agents or correspondents in carrying out these responsibilities. 

• Lenders are fully responsible for their own actions and the actions of those acting on 

their behalf. 

• Lenders must follow the SFHGLP guidelines as outlined in Chapter 4 of HB-1-3555.

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Lenders

 Lenders may meet education and training requirements 

via in-person training or on-line.

 Rural Development has developed a series of modules for 

the SFHGLP and are located at 

https://www.rd.usda.gov/page/usda-linc-training-resourcelibrary. 

 Lenders are responsible to ensure all staff have reviewed 

the modules before participating in the SFHGLP.

 Additional resources are available on the Agency’s 

SFGHLP web page located at: 

https://www.rd.usda.gov/programs-services/single-familyhousing-guaranteed-loan-program

Agency

 National Office staff will conduct outreach and lender 

education activities to encourage eligible lending 

institutions to apply for approved lender status.

 The Agency will reach out to local and national 

educators for information on any organization that can 

assist in meeting this objective.

 Eligible rural homebuyers benefit when their choice of 

lending institutions includes mortgage bankers, 

mortgage brokers, credit unions, Federal Home Loan 

Banks, etc.

 Lenders are encouraged to reach out to National Office 

staff for training and outreach opportunities at: 

sfhgld.lenderpartner@usda.gov

Education and Outreach

HB-1-3555, Chapter 3.7

• Lenders are responsible to ensure that all staff who will be involved in the SFHGLP have 

reviewed all training modules before participating in the program.

• Agency staff will conduct outreach and lender education activities to continue to 

promote and educate the public on the Single Family Housing Guaranteed Loan 

Program. 

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New Lender 

Compliance 

Review

Compliance 

Review Guide

Other 

Reviews 

Review loans originated by a newly 

eligible lender to ensure understanding 

of Agency regulations.

A Compliance Review outlines the 

risk, frequency, and the process the 

Agency will undertake to conduct 

compliance reviews.

Conduct more frequent reviews 

when major trends or weaknesses 

such as delinquencies, losses, 

failure to submit data reports and 

other influencing factors.

Review Circumstances and Factors

HB-1-3555, Chapter 3.8A

• As part of the monitoring of a lender’s origination and servicing of loans, Rural 

Development may review new loans originated by a newly eligible lender to ensure 

understanding of Agency regulations.

• Rural Development may also elect to conduct more frequent compliance reviews when 

major trends or weaknesses are present.

• Form RD 3555-16 outlines the responsibilities and terms to maintain approval for the 

SFHGLP. 

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Loan 

Servicing 

Review

Expanded 

Review

Applicable to lenders who 

perform all or a portion of 

underwriting, processing 

and closing.

Applicable to a servicer which is 

performing all or a portion of 

reporting, loss mitigation, loss 

claims, and property disposition.

Performed for lenders and 

servicers that are both 

originating and servicing loans.

Conducting Compliance Reviews

HB-1-3555, Chapter 3.8B

Loan 

Origination 

Review

• Routine compliance reviews will be conducted on a periodic basis and assist in Agency 

risk management and validate that lenders are complying with SFHGLP regulations. 

• Reviews will include the examination of lender policies and procedures, cash 

management practices, and individual borrower case files. 

• Case files consist of loan origination, servicing records, liquidation and claim files.

• Compliance review findings will be communicated to the lender and/or servicer verbally 

and in writing. 

• The reviewers will work with the lender and/or servicer to correct findings identified. 

• Upon closure of the review or expiration of any follow up period, a report will be 

prepared summarizing the review performed. 

• All supporting documentation relating to the review will be maintained in the 

operational file.

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Lender Recertification and Revoking Lender Eligibility

HB-1-3555, Chapter 3.9

 Lender remains eligible as long as the lender 

meets the criteria outlined in HB-1-3555, 3.2 

unless revoked by the Agency or by another 

Federal agency.

 The Agency will require the lender to recertify 

eligibility every 2 years.

 Non-compliance with any eligibility 

requirements will result in termination of the 

lender’s approval.

 Extreme circumstances may result in 

debarment and/or indemnification.

2-Year Recertification

• The lender remains eligible as long as they continue to meet the criteria as outlined by the 

Agency unless the lender’s status is revoked by Rural Development or by another Federal 

Agency. 

• Every 2 years, the Agency will require the lender to recertify their status by submitting an 

updated Lender Approval Checklist with current supporting documentation.

• Rural Development may terminate the lender’s approval due to noncompliance with any of the 

eligibility requirements. 

• In some cases, the lender may also be debarred by Rural Development or may be required to 

indemnify Rural Development for any losses paid.

• If Rural Development terminates a lender’s approval, the lender will have 30 days from the date 

of receipt of the Agency’s notification to appeal the decision. 

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Voluntary Withdraw

 The lender may voluntarily withdraw from 

participation in the SFHGLP.

 Pending, unclosed Conditional Commitments, 

loans services or held must be transferred to 

another approved lender prior to withdraw.

 Lenders must notify Rural Development of 

their intent to withdraw from participation.

Voluntary Withdraw

HB-1-3555, Chapter 3.10

• If at anytime a lender would like to voluntarily withdraw from participating in the 

SFHGLP, they may do so by notifying Rural Development of their intent to withdraw.

• Pending, unclosed Conditional Commitments, loans serviced or held must be transferred 

to another approved lender actively participating in the SFHGLP prior to withdrawal.

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sfhgld.compliance@usda.gov 

SOLD

Take the next step to growing your business and building homeownership in rural America, 

contact our Quality Assurance and Lender Oversight team about becoming an approved 

lender!

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Lender Toolkit

Rural Development has developed numerous tools and resources to assist lenders with 

originating, processing, and servicing guaranteed loans.

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• This training module has provided you with an overview of the key requirements of 

Becoming An Approved Lender. 

• Complete program requirements and guidance can be found in 7 CFR Part 3555, Subpart 

B, Sections 3555.51 through 3555.54 and Chapter 3 of HB-1-3555. 

• Be sure to bookmark these references, save yourself valuable time by using Cntrl-F to 

quickly search and find answers, and always ensure you are referencing the most current 

publications.

• The “Program Overview Training” module will assist you in learning how to navigate 

through all the resources and tools Rural Development has created to assist you.
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Have a question on 

POLICY?

Contact the PAC team!

Need TRAINING?

Contact the LPA team!

Have a question on a 

SPECIFIC FILE?

Contact the OPD!

• Users should first look for answers to their questions in the regulation and handbook, 

but if you still have a question after reviewing your resources, we’re here to help.

• All policy and regulation questions regarding the topic we just covered should be sent to 

our Policy, Analysis, and Communications Branch and

• If you would like to request additional program training, contact our Lender and Partner 

Activities Branch. 

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The Single Family Housing Guaranteed Lender webpage was specifically designed for our 

lending partners and includes information such as:

• Current turn times on new loan applications

• Contact information, and

• Links to program resources such as our 3555 Handbook and the USDA LINC website. 

• Also, don’t forget to sign up for our GovDelivery email notifications. Rural Development 

sends out origination, GUS, and servicing messages to alert lenders of new publications, 

clarifications, and additional program updates. 
Thank you for supporting the USDA Single Family Housing Guaranteed Loan Program and 

America’s rural homebuyers! 
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www.rd.usda.gov

1 (800) 800-670-6553

USDA is an equal opportunity provider, employer, and lender.

This will conclude the training module. Thank you and have a great day! 

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