HB-1-3555

(03-09-16) SPECIAL PN 14-1

Revised (10-12-23) PN 594

CHAPTER 14: FUNDING

[Official Agency Use Only]

14.1 INTRODUCTION

 Congress appropriates program funds to the Agency for loan guarantees for each fiscal 

year (FY) basis (October 1 through September 30). If Congress has not approved 

appropriated funds at the beginning of a fiscal year, the program may continue to be 

authorized and delivered under a Continuing Resolution until appropriated funds for the 

fiscal year are approved by Congress. While the Agency operates under a Continuing 

Resolution, the Budget Office receives funds that are allotted to the program according to 

the duration of the Continuing Resolution. Throughout this period, funds are allotted 

based on a percentage of the total days for which the Continuing Resolution remains in 

effect. The denominator used in this calculation can be either the amount of funds 

obligated in the previous year or the program level authorized in the Continuing 

Resolution.

 This chapter describes the funding priority process and Agency actions when funds 

are limited. It also outlines the Agency procedure to request funds from the National 

Office reserve.

14.2 PROGRAM FUNDING PROCESS

 Funds are allocated and distributed to the Agency by the budget staff at the beginning 

of each fiscal year through the Single Family Housing Guaranteed Loan Program 

(SFHGLP). The State accounts will receive funds proportionate to the percentage of 

prior year’s actual obligations. Additionally, a portion of the funds will be held in the 

National Office reserve to support State accounts that may require a higher allocation 

compared to the previous year. This measure aims to guarantee adequate funding for the 

SFHGLP across all State accounts, based on the allocated funds approved by the Budget 

Office.

 The National Office will keep lenders and Agency staff apprised of the potential for a 

shortage of available funds with an advance notice.
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14.3 PRIORITIZATION OF FUNDING [7 CFR 3555.107]

 When funding is not sufficient to fund all applications, a priority system is used to 

ensure that applicants who meet the priorities established for the program are selected for 

processing first. The priority system is used to determine the order in which applications 

will be processed. If funds are limited, the Agency will prioritize requests to first-time 

homebuyers or veterans. In the case of applications with equivalent priority status that are

received on the same day, preference in funding will be given to those qualifying for 

veteran’s preference. The following outlines the criteria to meet the prioritization:

1. Households that Qualify for First-Time Homebuyers Preferences [7 CFR 

3555.10]

 A household qualifies for a first-time homebuyer preference if any applicant meets 

any one of the following criteria:

• An individual who has had no ownership interest in a principal residence during 

the three-year period ending on the date of loan closing.

• An individual who is a displaced homemaker and who, except for owning a home 

with a spouse, has had no ownership interest in a principal residence during the 

three-year period ending on the date of loan closing. A displaced homemaker 

who is unemployed or underemployed, and having trouble obtaining or upgrading 

employment. Or an individual who in recent years has worked primarily without 

earnings to care for the home and family and has not worked full-time, full-year 

in the labor force.

• An individual who is a single parent and who, except for owning a home with a 

spouse, has had no ownership interest in a principal residence during the threeyear period ending on the date of loan closing. Single parents include any 

individual who is unmarried or legally separated from a spouse and has custody or 

joint custody of one or more minor children, or is pregnant.

2. Households that Qualify for Veterans Preferences [7 CFR 3555.10]

A household qualifies for a veteran's preference if any applicant has served on active 

duty and has been discharged or released from the active forces on conditions other than 

dishonorable from the United States Army, Navy, Air Force, Marine Corps, or Coast 

Guard. The preference applies to the serviceperson, or the family of a deceased 

serviceperson who died in service before termination of such war or such period or era. 

The applicable time frames are:
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Paragraph 14.3 Prioritization of Funding

(03-09-16) SPECIAL PN 14-3

Revised (10-12-23) PN 594

• During the period of April 6, 1917 through March 31, 1921;

• During the period of December 7, 1941 through December 31, 1946;

• During the period of June 27, 1950 through January 31, 1955;

• For a period of more than 180 days, any part of which occurred after January 31, 

1955, but on or before May 7, 1975; 

• During the period beginning August 2, 1990 through January 2, 1992; or

• Any other prescribed by Presidential Proclamation or law. 

14.4 AGENCY ACTIONS – SHORTAGE OF FUNDS

The following actions will be taken by the Agency when program funding is limited:

A. Agency Actions When Funds Are Not Available

The National Office will keep lenders and Agency staff apprised of the potential for a 

shortage of available funds. If funds become limited, the Agency will allocate funds in 

accordance with the percentage obligated in the prior year under a Continuing Resolution 

or based on the basic allocation formula in RD Instruction 1940-L for the current fiscal 

year.

 Agency staff will place the request on a waiting list and notify the lender that a delay 

is expected. Applicants who qualify for a preference as a first-time homebuyer or as a 

veteran will be placed on the waiting list above those without such a preference, in the 

order received. All other applicants will be placed on the waiting list in date-order below 

those who qualify for preferences.

 Loan guarantee requests will remain on the waiting list until funds become available 

or the lender withdraws the request, whichever is first. 

 If the request is received after funds are exhausted, the Agency will notify the lender 

that the loan guarantee request may be deferred until the following fiscal year. Approval

officials will keep lenders aware of actions to be taken. If there is a possibility that funds 

will soon be available, the request for guarantee may be reviewed. The lender should be 

notified if the Agency cannot honor normal turn-around times. Complete applications 

will be reviewed and funded (as appropriate) on a “first-come first-served” basis. 

Incomplete applications will be returned and may be resubmitted. Lenders should be 

advised of the reason the application is being returned, and what is required to complete 
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Paragraph 14.4 Agency Actions – Shortage of Funds

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the application. The approving office is responsible for keeping the lender abreast of the 

status of the applications submitted and any availability of funds.

B. Agency Actions When Funds Are Not Available – Conditional Commitments 

Subject to Availability of Funds

 When funds are not available, the National Office may authorize issuing Conditional 

Commitments “subject to receipt of congressionally appropriated funds.” In such cases, 

when in the best interest of the Government, the Agency will continue to issue 

Conditional Commitments. 

 When issuing Conditional Commitments that are contingent upon the availability of 

congressionally appropriated funds, Agency personnel will include a specific condition 

stating that the funds are currently unavailable and outlining the expected actions from 

lenders during the interim period. The National Office will provide the authorized

statement for commitments subject to funding, which will be included in the Conditional

Commitment generated by the system. Subsequently, once a Conditional Commitment is 

initially issued with the “subject to availability of funds” language, it will be reissued to 

the lender after funds have been obtained and obligated, with the “subject to availability 

of funds” language removed from the Conditional Commitment. 

 Lenders may close these loans provided they fulfill all the conditions stated on the 

Conditional Commitment. The Agency will not be able to issue a Loan Note Guarantee 

until funding becomes available. When funding becomes available, the lender must make 

a certification there has been no adverse change in the borrower’s financial condition

since issuance of the Conditional Commitment. A lender must certify to the Agency, 

using the process provided on Form RD 3555-18, Conditional Commitment for Single

Family Housing Loan Guarantee, that there have been no adverse changes in the 

borrower’s financial condition since the Conditional Commitment was issued by the 

Agency. The lender will assume all risk of loss until funds become available and the 

Agency issues the Loan Note Guarantee.

14.5 LENDER WITHDRAWAL OF APPLICATION

 If a lender wishes to withdraw an application in the Guaranteed Underwriting System

(GUS), they can do so by clicking the "Withdraw Application" button. However, this 

option is only available if the application's submission status is "Unknown" or 

"Preliminary." If the application's submission status is "Final," the withdraw application 

button will be disabled and the lender cannot withdraw the application at that stage.

 However, if the application status is set to "Pending," the lender has the option to 

recall the application from the "Final" submission status. This means that if the 

application has been finalized but is still in the "Pending" stage under application status,
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Paragraph 14.5 Lender Withdrawal of Application

(03-09-16) SPECIAL PN 14-5

Revised (10-12-23) PN 594

the lender can request to withdraw it. This is a two-step process, first the lender must 

recall the final submission and second withdraw the application. Once the application 

status changes to "In Process" or "Approved," the recall option will be disabled and the 

lender will be unable to recall or withdraw the application.

 In cases where the application status is "In Process" or "Approved," the lender should 

notify the Agency immediately to withdraw the application. By notifying the Agency, 

the loan guarantee request can be removed from the system, and the funds allocated for 

that application can be released back to the state's allotment. This is done to ensure that 

the funds can be utilized for other guarantee requests and maximize the number of loans 

granted.

 It is crucial for lenders to inform the Agency promptly when they no longer require 

the funds to avoid depriving other pending applicants the opportunity to obtain a loan 

guarantee. By releasing the funds, the Agency can reallocate them to deserving applicants 

and facilitate the loan guarantee process efficiently. Some common reasons for 

withdrawing a loan guarantee request are:

• Lender’s rejection of the borrower’s application;

• Change in property; or

• Choice of a loan program other than the SFHGLP.

14.6 AGENCY ACTION – REQUESTING FUNDS FROM THE NATIONAL OFFICE 

RESERVE

Funds may be retained by the National Office during a fiscal year to meet program 

needs or Agency objective. To request funds from the National Office reserve, Agency 

employees will:

• Request funding on the Agency’s SharePoint site at:

https://usdagcc.sharepoint.com/sites/rd_hcfp/SFH1/GRH/OPD. Click on the Need 

Funds button.

• Request actual funding needs by using the dropdown selection for the appropriate 

type of assistance code.

 If the type of assistance is refinance, each funding request must summarize the 

individual request of the cumulative total request for the State.
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14.7 AGENCY ACTION – REQUEST FOR RESTORATION OF FUNDS

 The Guaranteed Loan Division Lender Reporting Section (GLDLRS) of the Servicing 

Office in St. Louis, Missouri will review and approve/deny all restoration of funds 

requests. The following is required to submit a request for restoration of funds:

1. A fully completed Request for Restoration of Funds from a Prior Fiscal Year

form. 

• Agency personnel will complete the form electronically via Adobe. 

• The form will be electronically signed with the employee’s LINC Pass (PIV) 

card. 

• The form should be saved (not printed and scanned). 

• Find the fillable form on the Agency’s SharePoint site at 

https://usdagcc.sharepoint.com/sites/rd_hcfp/SFH1/GRH/OPD. Click on 

Policies and Procedures, then Templates to access the Restoration of Funds 

form.

2. A copy of all Conditional Commitments issued for the loan.

3. If the Agency extended the Conditional Commitment, documentation pertaining 

to the lender’s request and the Agency’s approval must be included with the 

restoration request. Dates are required.

4. A detailed explanation must be entered on the form to indicate whether the 

Agency or lender is at fault.

5. If the restoration request is for a higher obligation amount than the original 

obligation, then additional document is required. The Agency must demonstrate 

that the loan request was reviewed for repayment at the higher amount and the 

loan amount does not exceed the maximum amount based on the property’s 

appraised value.

6. If the lender did not comply with regulatory requirements and a restoration of 

funds from the prior fiscal year is being requested, an exception to the regulatory 

requirement will be required. Submit a request in accordance with Chapter 1, 

Section 1.9 of this Handbook. A copy of the approved exception must be 

submitted with the request for a restoration of funds.
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Paragraph 14.7 Agency Action – Request for Restoration of Funds

(03-09-16) SPECIAL PN 14-7

Revised (10-12-23) PN 594

7. Completed Request for Restoration of Funds from a Prior Fiscal Year form and 

all documentation must be submitted electronically to the GLDLRS within the 

Servicing Office in St. Louis at rd.so.hsb@usda.gov.