Handbook Updates and Time 

saving tips!

Presented by: Alyssa Rung, Finance and Loan Analyst, Lender and Partner 

Activities Branch
2

Today’s Topics

• Handbook changes

• Chapter 3-Lender Approval

• Chapter 9- Income Analysis

• Chapter 10- Credit Analysis

• Chapter 12- Property and Appraisal 

Requirements

• Chapter 15- Submitting the Application Package

• Chapter 17- Regular Servicing- Performing Loans

• Chapter 18-Servicing Non- Performing Loans

• Chapter 19-Loss Claim - Collecting on the Guarantee

• Time saving tips

• Reminders

• Contacting us

• Q & A

 Procedure Notice (SPECIAL) for Chapters 3, 10, 12, 

17, 18, 19 changes can be found at:

https://www.rd.usda.gov/sites/default/files/sp

112922_0.pdf

 Procedure Notice (PN 573) for Chapters 9 and 15 

changes can be found at:

https://www.rd.usda.gov/sites/default/files/p

n573.pdf

 Procedure Notice (PN 575) for Chapter 18 

changes:

https://www.rd.usda.gov/sites/default/files/pn5

75.pdf
3

HB-1-3555

HB-1-3555

Bookmark It!

Use Ctrl-F to find 

answers quickly!

https://rd.usda.gov/resources/directives/handbooks 
4

Handbook 

Changes
5

Chapter 3 - Lender Approval

Paragraph 3.2-Evidence that all principal 

officers have at least 2 

years of SFH loan 

experience. 

-Must be registered in the 

(SAM) system. 

-Minimum net worth of 

$250,000 or $50,000 in 

working capital plus 1% of 

the total volume in excess 

of $25 million in 

guaranteed loans 

originated, serviced, or 

purchased during the 

lender’s prior fiscal year, 

up to a maximum required 

adjusted net worth of $2.5 

million 

- Have one or more lines 

of credit with a minimum 

aggregate of $1 million. 

Paragraph 3.3-Violations should 

be reported to the 

Quality Assurance 

and Lender 

Oversight Division.

Paragraph 3.4

-Attachment 3-A has 

been updated to 

reflect the chapter 

revisions. 

-Attachments 3-B and 

3-C have been 

removed.

-The Agency’s 

review of the 

lender’s 

application 

includes verifying 

the lender is 

registered in 

SAM.

Quality Assurance and 

Lender Oversight Division 

Email: 

Sfhgld.compliance@usda.gov
6

Chapter 9 – Income Analysis

Paragraph 9.3-Annual Income

ANNUAL

INCOME

FULL INCOME 

DOCUMENTATION

SELF-EMPLOYED 

INCOME 

DOCUMENTATION

VERBAL VERIFICATION 

OF EMPLOYMENT

• Lenders must verify the 

income of each applicant 

and adult household 

members (excluding 

eligible full-time students 

aged 18 and above), not 

just those who are parties 

to the loan note.

 Documented for the 

previous 2 years

• Lenders must obtain W-2s 

or IRS Wage and Income 

Transcripts, in addition to 

paystubs.

• If ownership interest is less 

than 25%, neither the 

“Business Owner” or the 

“Self-Employed” options 

should be selected in GUS.

• Must be obtained within 10 

business days of loan 

closing. 

• Confirmation a selfemployment business 

remains operational must 

be obtained within 30 days 

of loan closing.

PLEASE NOTE that the term “streamlined documentation” has been changed to “alternative income documentation”
Chapter 9 – Income Analysis

Paragraph 9.8-Stable and Dependable Income

• It is the lender’s responsibility to 

review gaps in employment and 

determine if the income is stable and 

dependable.

• A business loss from a closed 

business may be removed from 

consideration under the same 

circumstances that self-employment 

income from a closed business can be 

removed from consideration.

Loss from Self-employed business

In order to be removed from 

consideration applicant must provide a letter of explanation and 

documentation to the lender, which 

includes:

1.When the business was closed

2.Why the business closed

3.How the business was closed

4.Evidence to support the closure of the 

business, which is deemed satisfactory 

to the lender. 
8

Chapter 9 – Income Analysis

Attachment 9-A

The full amount of the “Automobile 

Allowance” and/or “Expense 

Allowance” may be included in the 

repayment income calculation, 

however any liabilities, such as a car 

payment, must be counted in the 

Debt to Income.
9

Chapter 9 – Income Analysis

Attachment 9-A

Income Type Annual Income Repayment Income

“Bonus” and “Overtime” income must have a one-year history and must be in the same 

or similar line of work.
10

Chapter 9 – Income Analysis

Attachment 9-A

Revised the “Child Support” and “Separate Maintenance/Alimony” guidelines to clarify that for income that 

meets the minimum history, but the payment amounts are not consistent, the lender must use an average 

consistent with the payor’s current ability/willingness to pay for repayment income. 
11

Chapter 9 – Income Analysis

Attachment 9-A

Employer-provided fringe benefits that are 

reported as taxable income may be included in 

repayment income. 

For mileage, income must be presumed to 

continue, and may be included when it is 

documented on earning statements as taxable 

income. When a mileage deduction is claimed on 

income tax returns, the calculated amount may be 

added as repayment income. Lenders must follow 

IRS guidance when calculating this amount. 

.

Income Type Annual Income Repayment Income
12

Chapter 9 – Income Analysis

Attachment 9-A
13

Chapter 9 – Income Analysis

Depository Accounts

Recurring 

Deposits

Nonrecurring 

over 

$1,000

DO NOT INVESTIGATE:

 If a deposit is not recurring and not greater 

than $1,000, you do not need to investigate.

* It is the lender’s responsibility to determine if a deposit is 

recurring or not. 

YOU MUST INVESTIGATE:

 Non-recurring deposits over $1,000 must be 

investigated if they are not from wages or 

earnings.

 All recurring deposits that are not from wages 

or earnings, must be investigated, regardless of 

the amount. 
A loan with an underwriting 

recommendation of “Accept” must 

be manually downgraded to a 

“Refer” when the lender becomes 

aware of potential derogatory or 

contradictory information. 

14

Chapter 10 – Credit Analysis

Attachment 10-A
Chapter 12 – Property and Appraisal Requirements

12.5-Residential Appraisal Reports

12.6-Water and Wastewater Disposal Systems

12.9-Existing and New Dwellings

Appraisals must have been 

completed within 180 days 

of loan closing

Water analysis must be no 

greater than 150 days old at 

loan closing

New Construction 

Documentation 

requirements

New Construction 

Documentation
• Personal funds of the applicant utilized to 

fund the repair escrow (excluding loan 

funds or a seller concession) may be 

returned to the applicant. 

• A seller’s personal funds utilized to fund 

the repair escrow (excluding a seller 

concession as part of the sales contract) 

may be returned to the seller. 

• Must be utilized for an eligible loan 

purpose or applied to the principal 

balance. 

16

Chapter 12 – Property and Appraisal Requirements

REMAINING ESCROW FUNDS 
17

Chapter 12 – Property and Appraisal Requirements

12.11-Condominiums and PUD

Condos can be accepted if 

they can be or have been 

approved by HUD/FHA, VA, 

Fannie Mae or Freddie Mac.

Condominium Rider

HOA Fees must be included 

in total DTI

PUD HOA fees must be 

included in total DTI

All homeowners in the PUD 

must be part of the HOA 

and pay lien supported 

assessments.

Condominium projects with ineligible 

characteristics listed under HUD/FHA, 

VA, Fannie Mae, or Freddie Mac 

guidelines are not eligible for 

guarantee. 
HUD/FHA, VA, 

Fannie Mae or 

Freddie Mac

18

Chapter 12 – Property and Appraisal Requirements

12.11-Condominiums and PUD

Acceptability of 

Non-Approved 

Condo Projects

Lenders 

with 

conditional 

authority

Lenders must 

meet the 

selfcertification 

criteria set 

by: 

Evidence 

they have 

reviewed 

docs & 

approved by: 

Lenders needing 

additional guidance in 

performing their 

approval review of the 

condo project can refer 

to:

Conditional 

Commitment 

requests for LNG by 

the lender signifies 

the condominium 

project meets the 

requirements set 

forth by:

Staff with and 

knowledge and 

expertise 

reviewing and 

approving condos 

in accordance 

with:
19

Chapter 12 – Property and Appraisal Requirements

12.11-Condominiums and PUD

Walls-In (HO-6) 

Insurance

Hazard 

Insurance

Flood 

Insurance
20

Chapter 15 –Submitting the Application Package

Attachment 15-A
Submitting evidence of qualified 

alien requirements on GUS Accept 

files is no longer required.

21

Chapter 15 – Submitting the Application Package

Attachment 15-A

Verification of Rent (VOR) is 

required for manually 

underwritten loans with credit 

scores less than 680.

Page

Page
22

Chapter 17 – Servicing Performing Loans

17.3-Reporting Requirements

Loan Servicing | Rural Development (usda.gov)

• For all loans in lender’s portfolio

• Monthly loan status (203)

• Monthly loan default status (264)

Monthly 

reports 

required

• Must be completed by the 6th

government workday of each 

month.

Electronic 

Status 

Reporting (ESR)

• The default is cured

• The mortgage is paid-in-full

• The account is liquidated

Reporting may 

end when:
Section 1: Collecting Efforts and 

Requirements

Paragraph 18.3-Minimum Requirements 

• (c) Before an account becomes 60 days 

past due, if no payment arrangement is 

in place, the lender must send a 

certified letter to the borrower(s) 

requesting an interview for the purpose 

of resolving the delinquency.

• (d) By the 60th day of delinquency, the 

lender must inspect the property for 

occupancy.

Section 5: Assistance in Natural Disasters

Paragraph 18.15-COVID 19 Public Health Emergency

• (b)The effective date of the moratorium on 

foreclosures and evictions now reflect through 

the end of the national emergency. 

• (b) Eligibility criteria includes that the borrower 

was not greater than 120 days past due on 

March 1, 2020.

• Attachments 18-B (Acceptable Foreclosure 

Timeframes) and 18-C (Acceptable State 

Liquidation Costs and Fees)were revised to 

update fees.

23

Chapter 18 – Servicing Non-Performing Loans
Reasonable and customary 

costs related to the 

liquidation and disposition of 

a property are determined by 

the Department of Veteran 

Affairs appraisal fee schedule.

24

Chapter 19 – Loss Claims-Collecting on the Guarantee

19.2-Loss Claim Coverage
25

Time Saving Tips
0

When is it required?

26

Verification of Rent (VOR)

Chapter 10

GUS Accept & 

Accept w/ Full Doc

Refer/Refer w/ 

Caution

Manually 

underwritten

VOR Required X NO  YES -when 

indicated on the 

GUS findings

 YES

How can 

rent be 

verified?

VOR Cancelled 

Checks

Money 

order 

receipts

Credit 

report

Bank 

statements 
Can an applicant be eligible with no rent history?

Yes, three tradelines are required.

27

Verification of Rent (VOR) & Non-traditional credit

Chapter 10

Non-Traditional Mortgage Credit Report (NTMCR)

Self-reported tradelines on a traditional credit 

report

Evidence from third party verifications, canceled 

checks, money order receipts, electronic 

payments, etc.

Insurance 

Payments

Child 

Care

Internet 

or Cell 

Services

Personal 

Loans

Auto 

leases

School 

Tuition

Uninsured 

portion of 

medical bills

Eligible non-traditional tradelines

Non-traditional credit document types
28

Delinquent Federal Taxes & Repayment Plans

Chapter 10 & Attachment 10-A

*Timely is defined as payments that coincide with the approved IRS repayment agreement.

Applicants with 

delinquent 

Federal tax debt = 

ineligible

UNLESS there is a 

repayment plan 

approved by the IRS

A minimum of three 

timely* payments 

must have been made. 

Tax repayment 

agreements 

Include Federal income tax 

repayment plan payments 

in the monthly debt. 

If ten or less months of 

repayment remains per the 

plan, the monthly debt may 

be excluded if the payment 

does not exceed five 

percent of the monthly 

repayment income. The applicant may not 

prepay a lump sum at 

one time to equal 

three monthly 

payments to meet 

this requirement. 
What Student loan payment amounts should be 

used in DTI?

•Lenders must use the payment amount reported on the credit report 

•Or the actual documented payment

When the payment 

amount is above zero:

•Use 0.50% of the outstanding loan balance When the payment 

amount is zero:

29

Student Loan Payments

Chapter 11.2

 If the student loans are paid by another party but are solely in the applicant’s 

name, they still remain the legal responsibility of the applicant and the 

applicable payment must be included in the monthly debts. 

 Student loans on a “forgiveness” plan/program remain the legal responsibility 

of the applicant until they are released of liability from the creditor. The 

applicable payment must be included in the monthly debts.
Lenders may use e-signatures when they 

perfect and maintain:

30

Electronic Signatures

Chapter 15.4

Lenders should be familiar with the securitization requirements of government sponsored 

enterprises (GSE), such as Ginnie Mae, regarding the transferability of eNotes. 

Origination Documents

Loan Closing Documents

Servicing Documents

A first lien 

position

An 

enforceable 

promissory 

note

Meets all 

other agency 

requirements

Examples: Electronic promissory notes, deed of trust, etc. 
What determines the underwriting 

recommendation returned by the 

Guaranteed Underwriting System (GUS)? 

Uses a risk evaluation scorecard

Compliments but does NOT replace the 

consideration and judgement of 

experienced underwriters

Scorecard allows favorable consideration to 

applicants that exhibit positive 

compensating factors

31

GUS Scorecard & GUS Recommendations
32

Assets & GUS

Chapter 9

This section in GUS allows users to enter information 

about borrower assets that will be used to evaluate their 

loan eligibility. Verified assets could offset risks 

associated with the underwriting recommendation.

 Calculate and enter assets correctly to avoid 

receiving errors. 

 When disclosing the assets of the borrower on the 

“Assets and Liabilities” page of GUS, lenders have 

the responsibility to determine if the asset is liquid 

or readily converted to cash and can be done so 

absent retirement or job termination.

 Assets such as 401(k)s, IRAs, etc. may be included in 

the underwriting analysis up to only 60 percent of 

the vested value.

 Assets should never be overvalued as it affects the 

risk assessment provided by the automated 

underwriting system.

 The lesser of the current balance or previous 

month’s ending balance will be input on the “Assets 

and Liabilities” page of GUS.

 In lieu of entering assets in GUS, the lender may 

underwrite to the most conservative approach with 

no consideration of assets on the “Assets and 

Liabilities” page and underwriting recommendation. 

This section in GUS allows users to enter information 

about borrower assets that will be used to evaluate their 

loan eligibility. Verified assets could offset risks 

associated with the underwriting recommendation.
33

Where to find the GUS recommendation

1. View Findings

2. GUS Underwriting 

Findings Report

3. Print PDF option

GUS Recommendations

• Accept

• Accept with Full 

Documentation 

• Refer 

• Refer with Caution

• Ineligible
34

Utilizing Attachment 15-A

ACCEPT

• 3555-21 • Standard Flood 

Determination Form

• Mortgage Payoff 

Statement (if refinance 

transaction)

• Credit Report for Non-

Purchasing Spouse (as 

applicable)

• Appraisal Report
35

REFER/REFER with CAUTION or 

GUS Accept with Full Documentation

• 3555-21, Request for Single Family Housing Loan 

Guarantee

• Underwriting Analysis, Credit waiver (if required)

• Uniform Residential Loan Application

• Complete Income Documentation for all adult 

household members

• Asset verification docs

• Credit Report and supporting docs

• Credit Report for non-purchasing spouse 

(community property states only)

• Verification of Rent

• Mortgage payoff statement (refinance)

• Standard Flood Determination Form

• Evidence of qualified alien

• Appraisal
36

Streamlined Assist Refinance Manual 

Underwrite Review

• 3555-21, Request for Single Family 

Housing Loan Guarantee

• Underwriting Analysis • Uniform Residential Loan Application • Complete income documentation for 

all adult household members 

• Asset verification documentation • Mortgage Payment History for 

previous 12-month period 

• Mortgage Payoff Statement • Evidence of qualified alien • Appraisal, only if the original loan was 

a Direct loan and subsidy recapture is 

due 
1. Application Documents

2. Borrower information

3. File upload instructions

4. Pick type of document

5. Upload File

GUS LENDER USER GUIDE - https://www.rd.usda.gov/sites/default/files/RD-SFH-GUSLenderUserGuide.pdf
INSTRUCTIONS ON HOW TO MOST EFFICIENTLY 

UPLOAD YOUR DOCUMENTS TO GUS!

*Combining files and reduce file size in Adobe before uploading to GUS* 
Appraisal Requirements

Requirements

Clear photos of 

the entire 

property, 

including attic 

and crawl space

*Photos must be in 

color

Stating that 

“the property 

does or does 

not meet HUD 

Handbook 

4000.1 

requirements” 

Borrower's 

name(s) and 

address are 

spelled 

correctly and

match GUS

 If there is an Accessory Dwelling Unit, the appraiser must discuss highest and best use.

 If the appraisal is completed “as improved,” the lender must obtain verification that all required repairs were 

completed, or satisfaction of the requirements and conditions noted in the original appraisal report
eAuthentication

https://www.rd.usda.gov/sites/default/files/rd-sfh-systemaccessandsecurityguide.pdf

IMPORTANT:

Users MAY NOT share access identification in any system, even 

within the same lender institution! Each user must have an 

accurately assigned role, as roles define how much 

functionality is allowed. 

Allows lenders to conduct official business 

transactions online:

 Submitting forms electronically

 Completing applications

 Checking the status of USDA accounts

More access with fewer passwords!
41

GUS Access/User Roles

USER ROLES

Security Administrator • There must be at least one 

from your financial 

organization, we recommend 

two. For larger organizations, 

more than 2 may be beneficial. 

• Assigns proper security roles 

to their associates

• Responsible for assigning, 

modifying, deleting security 

roles for their associates.

Link to form
42

Community Property States (CPS)

Items needed for applicant’s who 

reside or are purchasing in a 

community property state:

 Credit report for non-purchasing 

spouse (NPS)

 Debts of non-purchasing spouse 

must be included in the applicant’s 

repayment ratios, unless 

specifically excluded by state law. 

Lenders must follow applicable 

community property state lending 

laws when the applicant(s) and/or 

property reside in a CPS. 

Lenders are responsible to know 

CPS laws and requirements for 

the treatment of NPS debts.
43

Lenders should ensure that the boxes in this 

section of GUS are marked correctly. Sometimes 

only one box is checked WHEN both should be. 

Example of the CORRECTED file:

Both boxes should have been checked for this 

file, as the property and borrower are in a 

CPS. 0

Community Property State -GUS entry example

Example of a file NEEDING CORRECTION:
Manufactured Housing Pilot has been renewed

Link for Pilot in the Federal Register

Unit must...

• Have no alterations or 

modifications since 

construction in the factory 

except for...

• Porches, decks, or other 

structures which were built to 

engineered designs or were 

approved and inspected by 

local code officials are 

acceptable.

States included in the pilot 

are: CO, IA, LA, MI, MS, MT, 

NV, NH, NY, ND, OH, OR, PA, 

SD, TN, TX, UT, VT, VA, WA, 

WV, WI, and WY. • Have been constructed on or 

after January 1, 2006.

• Not have been previously 

installed on a different 

homesite.

• Have a floor area of not less 

than 400 sq. feet. 

• Meet all other criteria set 

forth in 7 CFR Part 3555 

and HB-1-3555.

Manual File Submission Job Aid
Applicant

& 

Lender’s 

responsibility

Experience

Reputation

Financial 

ability

45

FINAL RULE-Effective November 29, 2022

Lender Financial and Participation Requirements Final Rule, published August 31, 2022 

Builder-Contractor

Link to Final Rule

 Builder-Contractor credit and 

background checks are no longer 

required.
46

FINAL RULE - Effective November 29, 2022

Lender Financial and Participation Requirements Final Rule, published August 31, 2022 

Subject to the 

collection by an 

administrative 

offset

Not subject to an 

administrative 

offset

Delinquent Child 

Support 

Adverse 

Credit 

Items

Not 

Eligible 

May be eligible if:

 Payments are brought current

 Debt is paid in full

 Satisfied by a documented release 

of liability

May be eligible if:

 There is an approved repayment 

agreement in place with 3 timely 

payments made prior to closing

 Arrearage is paid in full prior to 

loan closing

 A release of liability is 

documented

Link to Final Rule
47

Reminders
LINC Library:

https://www.rd.usda.gov/resourc

es/usda-linc-training-resourcelibrary/loan-origination

48

Reminder: Use the most updated forms

eforms:

https://forms.sc.egov.usda.gov/eFor

ms/searchAction.do?pageAction=Br

owseForms&_MenuAction=Yes
49

Form RD 3555-21, Request for SFH Loan Guarantee

Calculations for Annual, 

adjusted, and repayment 

income MUST STILL BE 

PROVIDED! 

!!IMPORTANT!!

Calculations provided must 

match what is entered in GUS

Income worksheet was 

removed from 3555-21

Income calculations must still 

be submitted for all file 

submission types, except for 

GUS Accept files. 

Whether documentation is 

required to be submitted to 

RD or not, lenders must still 

document their permanent 

loan files with income 

calculations.

Ensure all pages of the 3555-21

reflect the revision day of 

August 2022
Lender Resources
51

NEW TRAINING AVAILABLE!! LIVE

Recording!

Direct Link to training:

https://www.rd.usda.gov/resources/usda-linctraining-resource-library/lender-training
52

HB-1-3555

www.rd.usda.gov/sites/default/files/3555-1appendix01.pdf

7 CFR Part 3555

Bookmark It!

Use Ctrl-F to find 

answers quickly!
53

HB-1- Critical Alerts & 3555

Updates

Stay Up-to-Date

Sign Up Today!

Link to receive Emailed Updates
Lender Interactive Network Connection (LINC)

https://usdalinc.sc.egov.usda.gov/USDALINChome.do

Click either circled 

selection to enter 

the RHS home page

You can click on the 

Message Board for system 

messages such as updates 

or expected down times

Training and resource 

library for trainings and 

resources.
55

LINC Library:

www.rd.usda.gov/resources/usda-linc-

training-resource-library/lender-training

Customer Access Lender Line: (833) 314-0168

Monday-Friday from 9:00 am-3:30 pm EST S U C C E S S
https://www.rd.usda.gov/resources/

usda-linc-training-resourcelibrary/lender-training

58

www.rd.usda.gov

USDA is an equal opportunity provider, employer, and lender.
59

LINC Library:

www.rd.usda.gov/resources/usda-linc-

training-resource-library/lender-training

Customer Access Lender Line: (833) 314-0168

Monday-Friday from 9:00 am-3:30 pm EST S U C C E S S