HB-1-3550

Appendix 12, Page 1 of 16

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

APPENDIX 12

SINGLE FAMILY HOUSING DIRECT PROGRAMS 

AMERICAN RESCUE PLAN ACT (ARPA) GUIDELINES

These guidelines, which have been granted in the past through an Unnumbered Letter dated May

12, 2021, provide updated processing guidance for applications from existing Section 502 and 

Section 504 direct loan borrowers, to refinance outstanding loans which are, or have been, in 

an approved COVID-19 moratorium. These guidelines are also expanded to accept 

applications from Section 502 self-help borrowers to refinance outstanding self-help loans 

which were closed in Fiscal Year (FY) 2020 or later; and to make the Deferred Mortgage 

Payments (DMP) program (7 CFR 3550.69) available to Section 502 very low-income selfhelp borrowers who closed in FYs 2020 or later.

These guidelines are needed in response to the American Rescue Plan Act (ARPA) of 2021 to 

ensure mortgage payments are more affordable for eligible Section 502 and Section 504 

borrowers. Updates include a fast-track processing option, guidance on determining market 

value, guidance on Deferred Mortgage Payments and other self-help guidance, and other 

clarifications throughout.

The American Rescue Plan Act (ARPA) of 2021 (H.R. 1319, Section 3207) appropriated an 

additional $39 million of Budget Authority (BA) for section 502 and 504 direct loans, to remain 

available until September 30, 2023. IMPORTANT: However, this BA was rescinded as part of 

the Fiscal Responsibility Act which was signed into law by the President on June 3, 2023. In 

order to provide a wind-down period following the expiration of the ARPA BA under the Fiscal 

Responsibility Act, the Agency continued acceptance of these refinance applications (in 

accordance with 7 CFR 3550.201) through June 30, 2023. The Agency will continue to prioritize 

the refinance applications received by this deadline until all are fully processed.

IMPLEMENTATION RESPONSIBILITIES:

Unless the guidance in this Appendix is supplemented or revoked, the Agency will temporarily 

accept applications through June 30, 2023, from existing Section 502 and Section 504 direct loan 

borrowers, to refinance outstanding loans, which have been in an approved COVID-19 

moratorium or have built a home utilizing the Self-Help Housing Program and closed in FYs 

2020 or later, as follows:

 COVID-19 Moratorium Status, Net Tangible Benefit, and Borrower Outreach. To 

be eligible for refinance, borrowers must be (or have been) on a COVID-19 moratorium 

(CUST/USER in LoanServ Field 56 will reflect: “C”). Any borrower meeting this 

criterion may apply at any time.
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Appendix 12, Page 2 of 16

The Agency must determine that there is a net tangible benefit (NTB) to the borrower as 

the result of the refinance. A NTB includes, but is not limited to, a reduced note rate or a 

change in term that results in a more affordable payment for the borrower. This must be 

documented in the ARPA Worksheet. 

However, in an effort to reach borrowers who may have the most immediate need for 

assistance and to provide them every opportunity for success post-moratorium, the 

Agency will continue to provide outreach under which borrowers who have been on a 

COVID-19 moratorium, will be sent an outreach letter from the Servicing and Asset 

Management Office (Servicing Office) about the availability of this option and how to 

apply. This is an informational letter only, and not a requirement for eligibility. The 

Servicing Office will upload a copy of the letter in the borrower’s existing case record in 

Electronic Customer File (ECF) under the Forbearance (Special Assistance) 

classification > ARPA Notifications document type. In addition, the Servicing Office 

will continue to provide additional outreach through the 30, 60, and 90-day delinquency 

notices. The Customer Engagement Division has and will continue to promote the 

ARPA refinance program with borrowers when discussing their servicing options. 

Borrowers may also visit https://www.rd.usda.gov/programs-services/single-familyhousing-programs/single-family-arpa for more information.

 Self-Help Borrowers. Regardless of moratorium status, very low- and low-income selfhelp borrowers with permanent loans that closed in FYs 2020 or later are eligible to

apply for refinancing under this guidance. In general, these refinance requests will

follow the same process for General ARPA or Fast Track options, unless noted otherwise

in the guidance. The Agency must determine that there is a NTB to the borrower as the

result of the refinance. A NTB includes, but is not limited to, a reduced note rate or a

change in term that results in a more affordable payment for the borrower.

Additionally, very low-income self-help borrowers with loans closed in FYs 2020 or

later, may be eligible for the Deferred Mortgage Payment program available through

ARPA refinance funding. For qualified borrowers, this program allows for up to 25% of

a borrower's monthly principal and interest payment at 1 percent to be deferred for up to

15 years.

 ARPA Processing Resources.

All internal processing tools and letters referenced throughout this Appendix are posted in

the Direct SharePoint > General Info > American Rescue Plan Act folder (“SharePoint”).

 ARPA Application Package.

1. Impacted borrowers must use the “ARPA Checklist of Items to Accompany the

Uniform Residential Loan Application” when submitting a complete application,

instead of HB-1-3550, Chapter 3, Attachment 3-J or Chapter 12, Attachement 12-E.
HB-1-3550

Appendix 12, Page 3 of 16

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

2. A standardized, ARPA specific application packet, which includes the above

mentioned ARPA Checklist of Items, is available to borrowers at

https://pubmai.sc.egov.usda.gov/ and https://www.rd.usda.gov/programsservices/single-family-housing-programs/single-family-arpa, and is also posted on

SharePoint.

3. Loan application packagers must use the “Phase I Application Submittal Cover Letter

for ARPA” and the “Packaging Required Disclosure Letter for ARPA” on the Direct

Loan Application Packagers page, in lieu of the Phase 1 and required disclosure letter

in HB-1-3550, Attachment 3-A.

 Processing Options.

o Fast-Track processing is available for borrowers who meet all of the following

criteria:

• There are no capital improvements to be considered in a market value

determination, as indicated by the borrower’s selection on the ‘Calculating

Recapture – Capital Improvements Credit’ form submitted as part of a

complete application.

• There are no repairs for major health and safety hazards included in the

refinance loan.

• The most current property tax valuation available from the applicable tax

assessment authority (see Exhibit 1) shows adequate security to support an

outstanding eligible junior lien(s) which will be included in the refinance

loan or subordinated.

o General ARPA processing will be followed when Fast Track does not apply.

o Deferred Mortgage Payments (7 CFR 3550.69) is a temporarily authorized use of

ARPA refinance funding for self-help borrowers with loans closed in FYs 2020 or

later. In order to qualify for deferred mortgage payments (for up to 15 years), the

self-help household’s adjusted income at the time of initial approval for the refinance

loan, must not exceed very-low income. The loan term is 38 years. Deferred

payment agreements are effective for twelve months, and once a borrower becomes

ineligible for deferred mortgage assistance, it cannot be received again. Deferred

mortgage payments are subject to recapture when the borrower transfers title or

ceases to occupy the property.

A Deferred Mortgage tab has been added to the Worksheet for Computing Income &

Max Loan Calculator (Attachment 4-A), which includes specific calculations for the

eligibility requirements in §3550.69.
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Appendix 12, Page 4 of 16

Exhibits 1 and 2 provide an overview of the Fast Track and General processing options: 

Application

Letter 3 – Loan Estimate (LE) and 

max recapture 

Letter 4 - Eligibility

Letter 6 (Borrower 

decides whether to 

include recapture)

Order Title Work 

Payoff 

(Task 504 & 505) to calculate final 

recapture

Closing Disclosure

*Market Value Determination

Capital Improvements and/or health & safety repairs included?

Yes

Go to General 

Processing 

Eligible junior liens for 

affordable housing products to 

be included in the refinance are 

supported by **PTV?

Amended Final Payoff (Task 506 & 

507) to calculate final recapture

Subsidy not included

Subsidy 

included

Closing 

Disclosure 

(CD)

Update file, 

reissue CD

if needed

Obligation/Approval

Closing

Exhibit 1 - ARPA Fast Track Process Overview

For DMP/Self-Help borrowers - use appraisal in the original file, 

provided it is less than 2 years old. If over 2 years old, use 

**PTV if supported, or go to General Processing and order

appraisal for market value determination.

Fast Track is to be followed when all the following apply:

 No Capital Improvements

 No Repairs

 Eligible junior liens for affordable housing

products to be included in the refinance are

supported by **PTV

No

No

Fast Track – use **PTV 

information for market 

value determination, no 

appraisal required 

Yes

**Property Tax Valuation (PTV)

 Use the market value obtained from local, county, or state

tax assessment authority, as applicable.

 Assessment authorities will generally assess properties at

market value, or as a percentage of the property’s market

value. Often, the market and assessed values will both be

displayed on the tax/assessor record; staff must use the

market value.

 If only the assessed value is displayed, staff must confirm

if the property is assessed at market value, or as a

percentage of the market value.

- If the property is assessed as a percentage of the

market value, staff must include documentation of 

taxing authority’s percentage when calculating the

market value for Agency purposes.
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Appendix 12, Page 5 of 16

(01-23-03) SPECIAL PN 

Revised (10-19-23) PN 595

Application

Letter 3 – Loan Estimate 

(LE) and max recapture 

Letter 4 - Eligibility

Letter 6 (Borrower 

decides whether to 

include recapture)

Order Title Work 

Payoff 

(Task 504 & 

505) to 

calculate final 

recapture

Closing Disclosure

*Market Value

Determination

**Use 

Property Tax 

Valuation 

information

Appraisal

Appraisal 

Tasks 

502 & 503 

(45 days)

Capital 

Improvements?

Must order 

appraisal 

for market 

value 

determination 

Eligible junior liens for 

affordable housing products to 

be included in the refinance, 

supported by **Property Tax 

Valuation (PTV)? No

Eligible junior lien must 

be subordinated 

OR

Order appraisal for market 

value determination

Yes or N/A

Use **PTV information 

for market value 

determination, no 

appraisal required

Amended Final Payoff 

(Task 506 & 507) to 

calculate final recapture

Subsidy not included

Subsidy 

included

Closing 

Disclosure 

(CD)

Obligation/Approval

Closing

Exhibit 2 - ARPA General Process Overview

For DMP/Self-Help borrowers - use appraisal in the original file, 

provided it is less than 2 years old. If over 2 years old, use **PTV 

or order appraisal or market value determination.

Cat-Ex, if repairs included

General ARPA Processing is to be followed when Fast Track does not apply (e.g., capital improvements and/or repairs included)

If repairs included, construction 

monitoring as applicable

**Property Tax Valuation (PTV)

 Use the market value obtained from local, county, or state tax

assessment authority, as applicable. 

 Assessment authorities will generally assess properties at market

value, or as a percentage of the property’s market value. Often,

the market and assessed values will both be displayed on the tax/

assessor record; staff must use the market value.

 If only the assessed value is displayed, staff must confirm if the

property is assessed at market value, or as a percentage of the

market value.

- If the property is assessed as a percentage of the market

value, staff must include documentation of taxing 

authority’s percentage when calculating the market value

for Agency purposes.

Yes No

Update file, 

reissue CD 

If needed
HB-1-3550

Appendix 12, Page 6 of 16

 ARPA Application Review. All applications (including those which are incomplete)

must be entered into UniFi as soon as possible after receipt; and all application material

must be stored in ECF as soon as the new account number is available; ECF must be

utilized as the official case record beginning with application receipt. It is very

important staff use the correct ECF classification instructions found in the ARPA

Processing Checklist to avoid processing delays. (NOTE: While the majority of ARPA

application material must be stored under the new account number, market value and

payoff documents must be loaded to the existing primary account number’s ECF.)

 The Agency will process applications in accordance with 7 CFR 3550 and HB-1-

3550, except for the following:

1. Application Processing Stage:

a) Processing Checklist – staff must use the “ARPA Application Processing

Checklist” in lieu of HB-1-3550, Attachment 3-G or 12-C. A fillable

version is available on SharePoint. Note: the ARPA Processing Checklist

includes Attachment 1 to be used for Fast Track, and Attachment 2 for

General ARPA Processing.

ARPA Worksheet - for General ARPA and Fast Track, staff and loan

application packagers must use the ARPA Worksheet in lieu of

Attachment 4-A, Worksheet for Computing Income.

• For Deferred Mortgage Payments, a Deferred Mortgage tab has

been added to Attachment 4-A (do not use the ARPA

Worksheet for Deferred Mortgage applications as the ARPA

Worksheet does not include repayment calculations which are

needed for Deferred Mortgage purposes.)

The applicable worksheets include a section for the Loan Narrative. 

These are posted on SharePoint, and on the Direct Loan Application 

Packagers page.

b) Processing priority (HB-1-3550, 3.13 B.). ARPA refinance applications

and Deferred Mortgage loans will receive third priority for processing

(due to hardship).

c) Eligible use of funds. The loan may exceed the market value of the

property and/or the area loan limit (unless otherwise noted), only as

necessary to cover the following:

i. Refinance of borrower’s outstanding Agency direct loan indebtedness.
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(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

ii. Subsidy Recapture (502 only). Subsidy recapture may be included in

the amount to be refinanced if requested by the borrower but should

be considered carefully. The analysis must include what the

borrower’s total outlay will be on the recapture amount being

refinanced (by amortizing the amount as applicable) and comparing to

the potential discount the borrower may be eligible for by refinancing

the recapture amount (see HB-2-3550, Par. 2.25). The ARPA

Worksheet includes additional information to assist with this analysis.

For example, if a borrower owes $20,000 in recapture, they may

receive a 25% discount for paying that off by borrowing new loan

funds as part of the refinance; in which case they would need to

borrow $15,000 to pay off the discounted recapture amount. Because

the $15,000 then becomes principal which will be amortized under the

new loan, it must be determined whether the amount of interest paid is

likely to exceed the amount the borrower saved through the discount.

The analysis should be documented carefully in the ARPA Worksheet

and discussed with the borrower, who will decide if they want to

include the recapture in the refinance.

iii. Closing costs associated with the new loan, and allowable excess costs

over the market value and area loan limit (including the tax service fee

and initial deposit to fund the escrow account).

iv. Permissible packaging fees:

 502 - not to exceed $1,300 for certified packaging bodies with an

intermediary (split per agreement with intermediary), $1,100 for

certified packaging body without an intermediary (packaged by an

intermediary, opt-out, or when a state isn’t served by an

intermediary), or $575 for an approved non-certified packager.

 504 - $575 for eligible 504 loan packaging types.

v. 502 only - outstanding debt to prior lien holders (as identified on Form

RD 1927-8, Agreement with Prior Lienholder), if rates and/or terms

are less favorable than the Agency’s new loan. However, even if the

Agency offers a more favorable rate or term, lower payment, etc., the

borrower may still choose to remain with the prior lienholder if they

determine it is in their best interest to do so (e.g. – if the Agency rate

is lower, but borrower only has a few years remaining on the term,

they may prefer to continue as-is to pay off the debt in fewer years.)

vi. In limited circumstances, amounts needed to correct major

deficiencies, such as structural or issues impacting the health and

safety of the occupants or members of the community, or to protect

the Government’s interest in the property. There must be a net
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Appendix 12, Page 8 of 16

tangible benefit (NTB) to the borrower when including funds to 

correct major deficiencies. If the borrower has indicated major 

deficiencies requiring repair on the ARPA Checklist of Items to 

Accompany the URLA, field staff must determine the requested 

repairs are a major deficiency before advising borrower to obtain bids. 

It is recommended the borrower obtain two bids for each repair; 

however, one bid can be accepted when determined reasonable and 

borrower has stated that only one bid can be obtained. 

vii. 502 only (if there is adequate security value) - junior liens for eligible

affordable housing products (e.g., secondary financing for down

payment assistance loans, forgivable loans, deferred payment loans,

etc.) or Uniform Commercial Code (UCC) liens for permanent fixtures

to the home (e.g., solar panels, HVAC systems, etc.) may be included

in the Agency refinance if there is a NTB to the borrower (i.e., the

borrower has a lower total payment when refinanced). If there isn’t

adequate security value, the junior lien must be subordinated to the

new loan. If security value is not adequate to include the amount(s) in

the refinance, or a subordination cannot be obtained, the loan cannot be

closed.

viii. Involuntary liens (e.g., child support liens, judgment liens from

unsecured creditors, state tax liens, etc.) are not eligible to be included

in the Agency refinance loan. An involuntary lien must be paid or

subordinated, otherwise the loan cannot be closed.

d) ARPA Program Type Codes:

Used through June 3, 2023:

502 Loan – ARP Multi-Year 1079

502 Loan – ARP Packaged with Intermediary * 1080

502 Loan – ARP Non-Certified Packaged 1081

502 Loan – ARP Certified Packaging Body with Approved Opt-Out 1082

502 Loan – ARP Self-Help 1083

502 Loan - ARP Deferred Mortgage Payments Very-Low Self-Help 

ONLY 1084

504 Loan – ARP Multi-Year 2079

504 Loan – ARP Packaged 2080

504 Loan – ARP Self-Help 2083

Used after June 3, 2023:

Non-ARPA Loan (Very-Low) 1087

Non-ARPA Loan (Low (or moderate)) 1088

∗ The intermediary code will not be entered into UniFi for ARPA loans due to 

system constraints.
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(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

e) TRID: The Loan Estimate (LE) and Closing Disclosure (CD) ‘Non-Purchase’

forms will be used for all refinanced loans secured by a deed of trust or mortgage.

f) Terms:

i. 502:

o If the estimated loan amount is less than $24,000 with a remaining term of

less than ten years, the LE will be issued using a new 10-year term.

However, if a longer term is necessary to demonstrate a NTB, or if the

applicant prefers, a 25-year or 33-year term may be used (30-year for

manufactured homes).

o If the estimated loan amount is over $24,000, the LE will be issued using a

33-year term (30-year for manufactured homes). However, if the applicant

prefers a shorter term (and a NTB is still demonstrated) they may select a

25-, or a 10-year term (10-year terms are not eligible to receive payment

assistance and this must be acknowledged by the borrower on the TRID

cover letter). If the applicant does not demonstrate a NTB on a 33-year

term, and adjusted income does not exceed 60 percent of the applicable

area median income, a 38-year term may be used (unless it is a

manufactured home).

o If the Deferred Mortgage Payments application, a 38-year term must be

used.

ii. 504 – 20 years.

g) Income:

i. Adjusted household income must be calculated to determine if the applicant is

income-eligible to receive a new program loan. Evaluation of borrower

repayment income is not required for General ARPA or Fast Track options.

ii. 502 –

 General ARPA and Fast Track - the adjusted income must not exceed

the applicable moderate-income limit at the time of loan approval and

closing. As a reminder, the ARPA Worksheet must be used in lieu of

Chapter 4, Attachment 4-A of HB-1-3550, Worksheet for Computing

Income.

 For Deferred Mortgage applications - the self-help household’s

adjusted income must not exceed very-low income at the time of initial

loan approval for the refinance loan. As a reminder, use the Deferred

Mortgage tab in the Worksheet for Computing Income & Max Loan

Calculator (Chapter 4, Attachment 4-A of HB-1-3550) – not the ARPA

Worksheet.

iii.504 – The adjusted income must not exceed the very low-income limit at the

time of loan approval and closing. If the household exceeds the very lowincome limit, 502 loan funds may be used to refinance the 504 debt.

Note - Borrowers with Multiple Loans:

a. An initial and subsequent 502 loans will be combined into one ARPA
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Appendix 12, Page 10 of 16

502 refinanced loan. 

b. An initial and subsequent 504 loans may be combined into one ARPA

504 refinanced loan, provided the borrower still meets the very-low

adjusted household income requirements. If adjusted household

income is low or moderate, loans can be combined into a 502 loan,

however, the field should explain this will result a higher note rate

interest and the borrower could have recapture of subsidy.

c. Initial 502 and subsequent 504 loan(s) may be refinanced separately, or

all loans could be refinanced into one 502 ARPA loan. If the borrower

is very-low income, staff must first review the 502 and 504 loans as

separate refinances. If there is no NTB or the borrower exceeds the

very-low income category, the 504 debt may be refinanced into the 502

ARPA refinance loan. The field should explain this will result in a

higher note rate interest and the borrower could have recapture of

subsidy. The ARPA worksheet must be used when considering a NTB

and determining which is the best option for the applicant.

h) Assets:

The borrower and/or net family assets will not be evaluated for down payment

requirements or repayment income calculations, as applicable. However, net

family assets must still be evaluated for annual and adjusted income calculations.

i) Credit:

i. The borrower’s credit history will not be evaluated using a tri-merge credit

report (TMCR) or infile; therefore, no credit report fee is to be collected and

these reports must not be ordered. Attachment 3-H is not required.

ii. Nontraditional/alternative credit sources are not required.

iii. The Agency must check the Department of Treasury’s Do Not Pay (DNP)

portal.

NOTE: All Agency accounts in moratorium or whose moratoriums have 

expired and have become delinquent are reported to the Credit Alert 

System and the Department of Treasury (DBCK), which is checked 

through the DNP portal, regardless of the reason the moratorium was 

granted. Therefore, it is important that field staff clearly document that 

the DNP hit is related to an approved COVID-19 moratorium. If the 

account number reflected on the DNP matches the account that has 

received a COVID-19 moratorium (CUST/USER in LoanServ Field 56 

will reflect: “C”), processing may continue. All other DNP hits are 

subject to the guidance in HB-1-3550, Chapter 4.

iv. Bankruptcy - if a borrower is in Chapter 7 or 13 bankruptcy at the time of

application to refinance, the borrower’s attorney must be notified of the

proposed terms of the refinance. The Agency must receive written concurrence

from the attorney or court (e.g., order granting the motion) before approving
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(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

the loan; however, additional items such as letters of explanation regarding 

circumstances of the bankruptcy are not required from the applicant. If a 

borrower had a previous bankruptcy and the debt is not reaffirmed, it does not 

prohibit the applicant from applying or being eligible for ARPA refinance; 

however, since the refinance loan is new debt, the borrower would personally 

be liable for the new debt and should be informed that the bankruptcy 

protection would not apply to the new loan.

j) Adding/Removing Borrowers:

i. Adding borrowers – it is acceptable to add a new borrower; provided the

household continues to meet applicable income limit (502 - moderate; DMP –

very low; 504 - very low). The added borrower’s credit history will not be

evaluated, except for DNP check as noted above. Systematic Alien

Verification for Entitlements (SAVE) must be checked for new borrowers.

Homeownership Education and Form 3550-23, Applicant Orientation Guide

will not be required from new borrowers.

ii. All borrowers on the existing RHS debt must remain on the refinance (except

for deceased individuals). If a borrower who does not live in the home has

executed a quit claim deed conveying their interest in the security property to

the remaining borrower, staff may proceed without including the departing

borrower on the refinance loan. The ‘ARPA Letter 7 - ARPA Notification to

Departing Borrower’ must be sent to the departing borrower, after ARPA

Letter 3 is issued to inform them of the remaining borrower’s intent to

refinance the loan. As a reminder, conveying the security interest does not

release the departing borrower from liability for the initial loan or any

recapture owed on that loan; the Agency must issue ‘ARPA Letter 8 –

Notification of Release of Liability’ to the departing borrower upon loan

closing and expiration of recission rights. A copy of this letter must be stored

in ECF for the original loan, and the ARPA loan; and add a note to both

accounts (existing and ARPA refinance accounts) in LoanServ to read “See

[insert date of ARPA Letter 8] notification to departing borrower regarding

liability following ARPA refinance.”

k) Applicants who exceed the applicable income limit, or are determined ineligible

for other reasons (e.g., there is no net tangible benefit to the proposed transaction,

or an applicant is not eligible due to an outstanding judgment obtained by the

United States in a Federal court, other than the United States Tax Court. This

requirement is statutory and cannot be waived), must be sent the ARPA specific

Standardized Adverse Decision Letter posted in SharePoint, in lieu of HB Letter

15. In addition, the letter should include HB-1-3550 Attachment 1-B or 1-C, as

appropriate (see HB-1-3550, Par. 1.10 for guidance on which Attachment to use).
HB-1-3550

Appendix 12, Page 12 of 16

2. Other (502) eligibility processing items:

a) Social Security Number CROSS REFERENCE check is not required (except for

new borrowers being added).

b) SAVE check is not required (except for new borrowers being added).

c) Form RD 3550-23, Applicant Orientation Guide is not required.

d) The Eligibility Summary from UniFi is required to document the Annual and

Adjusted Income only; these figures should match those in the ARPA Worksheet.

The Eligibility Summary must be signed by the Loan Originator with a note on

Page 2 to see ARPA Worksheet for correct refinanced loan amount.

e) Notify the borrower of eligibility using the “ARPA Letter 4 - Eligibility Letter”

posted on SharePoint, instead of Form RD 1944-59, Certificate of Eligibility.

f) Once “ARPA Letter 4 – Eligibility Letter” issued, staff should request title using

Form RD 1927-4, Transmittal of Title Information (HB-1-3550, Chapter 8,

paragraph 8.4) for loans $7,500 or greater. Request for title should reflect

estimated maximum payoff amount minus subsidy recapture.

3. Property Eligibility Stage:

a) Whole house inspections are not required.

b) Determining Market Value. See the Exhibits 1 and 2 (as applicable) of this

Appendix for guidance on determining market value. If an appraisal should be

ordered, it is very important ARPA appraisals are ordered through the Servicing

Office, as described in Attachment 2 of the ARPA Processing Checklist. The

Servicing Office will be responsible for all communication with the appraisal

vendor. ARPA appraisals must not be ordered through the nationwide appraisal

contract used for originations.

c) A new Flood Hazard Determination will be required.

d) If repairs are included, a new Lead Based Paint (LBP) risk assessment is required

for houses built prior to 1978.

e) If repairs are included, RD Instruction 1970-B, Exhibit D “Categorical

Exclusion” is required.

f) Eligibility of the subject property does NOT need to be re-verified. (Note: loans

may be approved even if an area’s designation has changed from rural to nonrural, HB-1-3550, Chapter 5, paragraph 5.3 C. 6.).

4. Underwriting/Approval Stage:

a) Loan Narrative updated in the ARPA Worksheet (or Deferred Mortgage tab in the

Worksheet for Computing Income & Max Loan Calculator (HB-1-3550, Chapter 4,

Attachment 4-A), if applicable) to include underwriting details by Loan Approval

Official.

b) Follow applicable guidance for submitting payoff request(s) carefully, as found in

the ARPA Processing Checklist (Att.1 – Fast Track, or Att. 2 - General ARPA) once

the property’s market value has been determined.

c) Once the payoff quote is received from the Servicing Office, field staff will issue

ARPA Letter 6 – Subsidy Recapture Borrower Notification within the prescribed
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Appendix 12, Page 13 of 16

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

timeframes in the ARPA Processing Checklist. This letter is to provide the 

applicant an opportunity to review the recapture amount and determine if they 

will include the amount in the refinance or defer repayment of the subsidy 

recapture (see HB-2-3550, Chapter 2 for more information on deferral of subsidy 

recapture). Borrower must return ARPA Letter 6 within 10 business days of 

issuance.

d) Once ARPA Letter 6 is returned by the borrower, see applicable ARPA

Processing Checklist Attachment for next steps to obligate and issue Form RD

3550-7, Funding Commitment and Notification of Loan Closing.

e) Staff should carefully issue a ‘Non-Purchase’ Closing Disclosure.

f) Once the Servicing Office sends the payoff in ECF, field staff will follow the

guidance in the ARPA Processing Checklist for updating ARPA Worksheet &

UniFi, obligating in LoanServ and issuance of Form 3550-7, Funding Commitment

and Notification of Loan Closing.

• An Amended payoff request is only needed if the borrower chooses to include the

subsidy or the payoff calculation is more than 30-day old, staff should follow the

applicable ARPA Processing Checklist (Att.1 – Fast Track, or Att. 2 - General

ARPA).

5. Closing Stage:

a) If debt to a prior lien holder (as identified on Form RD 1927-8, Agreement with

Prior Lienholder) will not be refinanced and the lien stays in place, a new Form RD

1927-8 must be obtained to correspond to the Agency’s new loan.

b) Field staff will establish an escrow account in the origination of the new ARPA

refinance loan. Field staff will use the current tax and insurance information

available in ECF, LoanServ and current tax records. The Servicing Office will

complete an escrow analysis on the escrow account on the existing account when

completing the payoff. If there is an escrow surplus on the existing escrow

account, the Servicing Office will issue the borrower a refund approximately 20

days after the account is paid in full. If there is an escrow shortage on the

existing escrow account, the shortage will be included in the payoff provided by

the Servicing Office. NOTE: there are specific instructions in the Registration

Section of the UniFi Quick References Guide if there are taxes or insurance

payments due after the payoff is completed.

c) 502 borrowers (with a term 25-years or greater) must sign a new Form RD 3550-

12, Subsidy Repayment Agreement, for the new loan; the original Form RD

3550-12 remains valid for the deferred subsidy recapture. NOTE: the market

value listed on the form should be the lesser of the refinance loan amount (P&I,

closing costs, repairs, prior liens, etc.), or the property’s market value (see

Exhibit 1 or 2).

d) Form RD 1940-43, Notice of Right to Cancel must be given at loan closing to

any applicant who already holds title to the dwelling being mortgaged.

o If a loan is made for less than $7,500 and no mortgage will be taken, this

form does not need to be sent out.

o The payoff calculation will be effective the date of closing; however,
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Appendix 12, Page 14 of 16

funds cannot be disbursed due to rescission rights until 3 business days 

have passed because these applicants have a legal right to cancel (rescind) 

the loan within 3 business days from whichever of the following activities 

occurs last (HB-1-3550, Chapter 8, paragraph 8.6 F. 2): 

o execution of the mortgage or deed of trust,

o receipt of Loan Estimate,

o receipt of Form RD 1940-43, Notice of Right to Cancel.

o If the loan has rescission rights, it must be activated within 4 business

days. Do NOT activate until after the rescission period has expired.

o Send closing documents to Servicing Office within 6 business days. In the

top right corner of Form RD 3550-19, Transmittal - Closing Documents

mark “RESCISSION LOAN”.

o Note: See Chapters 5 & 10 of the DLOS Manual for additional guidance

on rescission rights.

e) While the original Promissory Note will be paid in full, the Agency will leave the

original real estate mortgage or deed of trust in place to secure the deferred

recapture receivable account. A new 502 loan of less than $7,500 that is

scheduled for repayment within 10 years from the date of the loan may be

secured by a Promissory Note only; otherwise, the new Promissory Note must be

secured by a new real estate mortgage or deed of trust, which the closing

agent/attorney must record upon loan closing. This means the Agency may have

multiple mortgages/deeds of trust, one to secure any deferred recapture owed,

and another to secure the new debt. It is not necessary to subordinate the

Agency’s original mortgage/deed of trust, to the Agency’s new mortgage/deed of

trust.

Summary of Key ARPA Processing Tasks 

(submit under existing, primary account)

Task 502 Field Staff sends to Servicing Office to request appraisal

Task 503 Servicing Office sends to notify Field Office appraisal is completed

Task 504 Field Office sends request to Servicing Office to complete payoff

Task 505 Servicing Office sends to notify Field Office payoff completed

Task 506 Field Office sends to Servicing Office to complete an amended 

payoff (if borrower includes subsidy or greater than 30-days old)

Task 507 Servicing Office sends to notify Field Office amended payoff 

completed

6. Applications in process at time of Appendix 12 issuance - for applications already in

process prior to the date of this Appendix, please note the following guidance:

• Determining Market Value –

o If an appraisal has not been ordered (Task 502), refer to Exhibit 1 or 2 of this
HB-1-3550

Appendix 12, Page 15 of 16

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

Appendix, as applicable for determining the market value. 

• Note: Under the guidance in this Appendix, Form RD 1927-4, Transmittal

of Title Information now occurs immediately after determining eligibility.

ARPA Letter 4 (Eligibility) has been revised to include a disclosure that title

work will be ordered. If ARPA Letter 4 has previously been issued, Field

Staff should re-issue ARPA Letter 4 using the revised version dated

February 14, 2023.

o If an appraisal has been ordered (Task 502), the application must continue to be

processed using the existing ARPA Processing Checklist (dated prior to this

Appendix), including the appraisal process.

• Use of revised checklist and letters – unless noted above (e.g., an appraisal has been

ordered (Task 502)) any applications in process prior to or after the date of this

Appendix must follow the guidance in this Appendix.

7. Close-out procedures:

a) Applications addressed under this Appendix, including packaged applications,

must be post-marked, hand delivered, or electronically submitted to a USDARural Development Office by June 30, 2023, to be accepted for refinance

processing.

- Applications must be date stamped upon receipt (using the post-marked

date if received by mail) in the “Date Application Received” field on page

8 of the Form RD 410-4, Uniform Residential Application, and input into

Unifi within 3 business days of receipt.

b) Applications will continue to receive Priority 3 processing due to hardship.

c) Applications that are not post-marked, hand delivered, or electronically

submitted by this deadline will be issued Handbook Letter 15, Standardized

Adverse Decision Letter, with Attachment 1-C, An Adverse Decision That

Cannot Be Appealed, citing the expiration of the American Rescue Plan Act

budget authority per the Fiscal Responsibility Act dated June 3, 2023, and 7 CFR

3550.201, under which the Agency has prioritized the acceptance of these

refinance applications through June 30, 2023. Applications that are received

after June 30, 2023 and subsequently denied, must still be input into Unifi and

ECF for tracking purposes.

d) Borrowers who inquire about ARPA after June 30, 2023, should be directed to

the Servicing and Asset Management Office at 1-800-414-1226 for information

on available servicing options.

e) After June 3, 2023, applications that require funding will be obligated using new

codes tied to regular annual funding using program type codes:

- Non-ARPA Loan (Very low) – 1087

- Non-ARPA Loan (Low (or moderate)) – 1088

(NOTE: If the applicant is moderate income, you should select the appropriate
HB-1-3550

Appendix 12, Page 16 of 16

product code that reflects the correct loan term for low income. You will receive a 

‘Supervisor Override’ – click ok.)

f) ARPA Refinance Loans already obligated should remain under the previous ARPA Program

Type Codes (1079, 1080, etc.). If you need to de-obligate funds, you can leave the Program

Type Code as is and proceed with your full or partial de-obligation.

Due to the potential pause in the allocation of funds at the beginning of FY 2024, ARPA

applicants that are not obligated prior to the end of FY 2023 should be counseled that

there may be a delay in funding and closing. Funds should be obligated as soon as they

are available using the codes above.

g) When an ARPA refinance loan does not close due to issues identified on the title

work, states should contact the National Office ARPA resource account at

SFHARPA@usda.gov to determine whether the Agency may pay for the title

work. 

h) Every effort should be made to ensure these loans are processed and closed as

timely as possible. State Offices should closely monitor loans which have been

obligated but not yet closed, as well as applications on hand.