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Issuance of the Loan Note Guarantee

Single Family Housing Guaranteed Loan Program 

(SFHGLP)

May 2022

Closing the Loan 
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Today’s Topics

 SFHGLP Handbook 1-3555, Chapter 16

 Regulation 7CFR Part 3555 Subpart C  Handbook Update: Mandatory Use Update  Closing the Loan  Agency Review & Issuance of the LNG  Frequently Asked Questions  Lender Toolkit  Lender Loan Closing (LLC) System
Loan Note Guarantee

Regulation 7CFR Part 3555, Subpart C

Handbook 1-3555, Chapter 16
3

Grow Rural Homeownership 

and Your Business with a
Handbook Update

Handbook 1-3555, Chapter 16
Chapter 16 – Closing the Loan and 

Requesting the Loan Note Guarantee

 Mandatory GUS and LLC Final Rule

 GovDelivery Announcement Published

 Effective May 9, 2022 – Mandatory Use

 Loans not supported by GUS are not impacted

Closing the Loan

HB-1-3555, Chapter 16
Closing the Loan

Handbook 1-3555, Chapter 16
Closing the Loan

 The lender is required to comply with all conditions 

as stated on the Conditional Commitment for 

Single Family Housing Loan Guarantee, Form RD 

3555-18/18E and any attachments.

 The loan must close under the same, or better 

terms as underwritten and approved for in the 

Conditional Commitment.

 A loan should never close prior to the issuance of 

the Conditional Commitment. 

 If loan should close prior to issuance of the 

Conditional Commitment, it will jeopardize the 

issuance of the LNG to the lender

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Timeframe:

 Purchase and Refinance Transactions: The lender has 90 

days from the issuance of the Conditional Commitment to 

close the loan - One 90-day extension may be requested 

prior to the expiration of the Conditional Commitment

 Construction Transactions: The expiration date for the new 

construction, other than the “combination construction 

permanent loan” AKA “Single-Close loan”, should 

correspond with the estimated project completion date but 

not exceed 12 months

 The Agency must grant any approved extensions in writing

 Once the loan closes, the lender should submit the required 

documentation to the Agency within 30 days for issuance of 

LNG

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Compliance:

 The loan must close under the same, or better terms as 

underwritten and approved for as reflected on the 

Conditional Commitment

 Adverse changes may require the release of the application 

submitted in GUS to the lender for correction and 

resubmission

 The Agency must verify in writing prior to loan closing that 

the changes are acceptable

 Rural Development does not require specific loan 

documents for closing

 Any cash back to the borrower must be for pre-paid eligible 

loan purposes only

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Signatures:

 All parties applying for the loan and assuming the responsibility 

of the mortgage debt must sign the loan application and 

addendum

 Standard industry closing documents are utilized when closing 

the loan

 Any person whose signature is required by state law, such as a 

non-purchasing spouse must sign the security instruments 

and/or note

 All owners that will be vested on title must sign the security 

instrument

 Lenders should never encourage or ask borrowers to sign blank 

or incomplete documents

 E-signatures are acceptable

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Power of Attorney:

 Any specific or general POA must comply with state 

law and allow for legal enforcement of the 

mortgage note

 For military personnel, a POA may only be used for 

one of the applications (initial or final) – but not 

both

 For incapacitated borrowers, a POA may only be 

used in specific situations

 Electronic signatures may be accepted with certain 

criteria

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Interest Credit Closing:

 Allowed for loans that were scheduled to close at 

the end of the month but did not due to unforeseen 

circumstances

 Lenders and Borrowers may agree to credit the per 

diem interest to the borrower and have mortgage 

payments begin the first of the succeeding month

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Lender Certification:

 The lender will certify that the loan has been 

underwritten and closed in accordance with the 

regulation and that it meets all conditions set forth 

from the Conditional Commitment

 The lender certification attests that all required 

documentation has been provided to the Agency

 The lender will acknowledge that upon receipt and 

acceptance of the conditions of the Conditional 

Commitment and the required fees that the Agency 

will issue the Loan Note Guarantee

Closing the Loan

HB-1-3555, Chapter 16 and 7CFR 3555.107
Secure Leasehold 

Interest

Native American 

Restricted or Trust

All Other

Applicant must be unable to obtain 

fee-simple title to the property

Evidence that the tribe has enacted legally 

binding and effective foreclosure & eviction

procedures

The appraisal must document 

these conditions

The lease must be in writing, recorded 

and contain all required provisions

The lessor must own 

the fee-simple title

The language regarding amendments to 

mortgages with leasehold interest must be 

inserted in the mortgage

The rent charged for the lease 

must not exceed the rate paid for 

comparable leases 

Evidence that the tribe has adopted 

procedures ensuring that the guaranteed 

loan will always have 1st lien position

Neither the leasehold nor the fee-simple 

title may be subject to a prior lien unless 

Agency authorizes acceptance

Leasehold estates are an accepted practice 

and readily marketable in the area where the 

subject property is located

Forms of Ownership

HB-1-3555, Chapter 16.12

Lender must have a copy of the tribe’s 

lease for use on residential land

Lender will adhere to the Tribe’s 

mortgage, foreclosure and eviction 

ordinances and terms of lease
Hazard Insurance

 Lenders must ensure that borrowers continuously 

maintain insurance

 Hazard policy must be in effect at the time the loan is 

closed

 Borrower occupied properties should have 

replacement cost coverage

 Lenders should adopt accepted industry standards

 Deductibles should not exceed the GREATER of 

$1,000, 1% of the policy coverage or minimum 

deductible offered by borrower’s chosen insurance 

carrier

Flood Insurance

 Required for properties located within a SFHA

 Property must be located in NFIP participating 

community

 Flood policy must be in effect at the time the loan is 

closed

 Flood insurance must cover the LESSER of the 

outstanding principal balance of the loan or the 

maximum amount of coverage allowed under NFIP

 Deductibles should not exceed the GREATER of $1,000, 

1% of the policy coverage or minimum deductible 

offered by borrower’s chosen insurance carrier

Insurance Requirements

HB-1-3555, Chapter 16.12C
Duplicate LNG Lenders utilizing the LLC system can retrieve a reissued LNG from the LLC system, or 

request a certified copy, scanned copy or duplicate original

Closing Date The date of closing will be defined as the closing date listed on the Closing 

Disclosure 

Transfer of Loans/Servicing Rights Lenders may transfer guaranteed loans to other USDA 

approved lenders by following the requirements in Chapter 4 of our handbook

Lien Position The guaranteed loan must have first lien position at closing, however, the lender 

may permit liens junior to the guaranteed if certain criteria is met

Loan Closing

HB-1-3555, Chapter 16
Lender Loan Closing (LLC) System

HB-1-3555, Chapter 16 
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Electronic Closing – Lender Loan Closing (LLC)

HB-1-3555, Chapter 16

Submission

Method

Closing 

documents 

submitted 

electronically 

through LLC 

system

Fees

Upfront 

Guarantee Fee 

and Technology 

fee submitted 

electronically 

through pay.gov

Required 

Documents

Minimal 

documentation 

needed to satisfy 

closing 

requirements

Level 2 

eAuthentication

Apply through an 

approved participating 

SFHGLP lender
Lender Loan Closing System (LLC)

Lender Approval for LLC

• Lenders must complete and 

submit “User Agreement for 

Single Family Housing 

Guarantee Lender Loan 

Closing”

• Lenders must also have an 

approved Form RD 3555-16

• Access the Lender Loan 

Closing (LLC) User Guide on 

the LINC Training & Resource 

site
Lender Loan Closing System (LLC)

Submitting the Closing Package

• Lenders will access the LLC system 

through the USDA LINC site

• Lenders can submit a loan closing, 

cross reference borrowers and view 

documents and payment history

• Lenders will complete all applicable 

field and upload required documents 

through this link

• Payment of the guarantee fee and 

the technology fee will be completed 

through the pay.gov interchange

https://usdalinc.sc.egov.usda.gov/RHShome.do
Lender Loan Closing System (LLC)

SFH Add Loan Closing

• This page will be partially completed 

with information submitted by the 

lender through GUS

• Borrower and application information 

will be pre-populated based on 

lender’s input from application

• All editable fields will be completed 

by the lender

• Non-editable fields will be grayed out
Lender Loan Closing System (LLC)

Important Tips

• Enter Promissory Note Amount as it 

appears on the Note

• Complete Closing Date must be entered 

as it appears on the Closing Disclosure

• Maturity Date should match that of 

Promissory Note

• Interest Rate defaults to 365 days but can 

be changed to 360 by selecting drop 

down box

• Guarantee Interest Rate should match 

Promissory Note
Lender Loan Closing System (LLC)

Fees

• The Fee section is pre-populated based 

on the Loan Amount established for the 

Upfront Guarantee Fee and the current 

Technology Fee

• If Loan Amount DECREASES, the Upfront 

Guarantee Fee amount is modified when 

the page is submitted by the lender

• Deposit Date should remain blank until 

the fees have been transferred from the 

lenders PAD account
Lender Loan Closing System (LLC)

Lender Submission

• Confirm lender submission will take the 

lender through a series of screens to 

review the information as input

• If any of the information is noted to have 

an error or incorrect data, the lender may 

click “Cancel” which will take the user 

back to the “Add Closing” page so that the 

data may be corrected

• Once all data has been verified, click “OK” 

at last prompt to submit for processing
Lender Loan Closing System (LLC)

Document Upload

• Once the package has been 

submitted, the lender will need to 

upload the applicable documents

• Input the borrower ID at the SFH 

Lender Administration List page

• Select appropriate action from the 

Borrower ID hyperlink
Lender Loan Closing System (LLC)

Document Upload

• At Lender Upload Document(s) page, 

select files to upload

• At minimum:

• Promissory Note

• Closing Disclosure

• Click “Upload Documents Completed”
Loan Fees

HB-1-3555, Chapter 16 
Current fee is 1.00%

Subject to change to maintain a 

subsidy neutral program (not to 

exceed 3.5%)

Applies to purchase and 

refinance loans

May finance with loan funds, 

personal funds, or seller 

concessions

Collected via the Lender 

Loan Closing (LLC) system 

at loan closing

Non-refundable once the 

Loan Note Guarantee is 

issued

Upfront Loan Guarantee Fee

HB-1-3555, Chapter 16.4

Upfront 

Guarantee Fee
Current fee is 0.35%

Based on scheduled unpaid 

principal balance

Applies to purchase and 

refinance loans

Due the 1st day of the billing 

month

Servicing lender submits 

payment via the Guaranteed 

Annual Fee (GAF) system

Late fees may not be passed 

onto the borrower

Annual Fee

HB-1-3555, Chapter 16.4

Annual

Fee
Pay.gov

Pay.gov

• Lenders utilizing the LLC 

system must establish a PAD 

for pay.gov 

• System administrators must 

have verified identity in eAuthentication

• Adding a PAD account is 

completed through “Lender PAD 

Account Maintenance”

• The Lender Loan Closing User 

Guide offers step by step 

guidance

https://usdalinc.sc.egov.usda.gov/RHShome.do
Current fee is $25.00

Applies to all loans processed 

through the Guaranteed 

Underwriting System (GUS)

Applies to purchase and 

refinance loans

Can be included in the loan 

amount

Collected via the Lender 

Loan Closing (LLC) system 

at loan closing

Non-refundable once the 

Loan Note Guarantee is 

issued

Technology Fee

HB-1-3555, Chapter 16.4

Technology

Fee
Lender Loan Closing System (LLC)

Lender Payment History

• Select the Payment History tab from 

the Single Family Housing Lender 

Administration List to confirm receipt 

of required fees

• There are several ways to search for 

the loan:

• Lender Branch

• Borrower SSN

• Borrower ID

• Lender Loan Number

• Date Range
Agency Review

HB-1-3555, Chapter 16 
Evidence of documentation 

supporting the properly closed 

loan may be submitted to the 

Agency

DOCUMENTATION

The lender will certify the loan was 

closed in accordance with the 

Conditional Commitment

LENDER CERTIFICATION

The lender will maintain evidence 

of hazard insurance and, if 

applicable, flood insurance

INSURANCE

Self-certified lenders must still 

submit the settlement statement 

and promissory note and obtain 

written authorization from Agency

SELF-CERTIFICATION

Authorization for self-certification 

may be granted if certain 

requirements are met

AUTHORIZATION

SUBMIT

Within 30 days of loan closing, the 

lender must request issuance of a 

loan guarantee

30 DAYS

Requesting the Loan Note Guarantee

HB-1-3555, Chapter 16.3 and 7CFR 3555.107(i)(5)
35

Agency Review and Issuance of LNG

HB-1-3555, Chapter 16.7

INCOMPLETE

• Additional 30 days granted to 

correct

• Agency will contact lender

• Agency will return if corrections 

cannot be made within 30 days

ACCEPTABLE

• Lender will submit electronically

• Fees through pay.gov

• Lender will retrieve LNG through 

LLC system

UNACCEPTABLE

• Agency will not issue LNG if errors 

on closing docs

• If Lender makes necessary 

corrections the Agency will ensure 

the loan meets regulatory 

requirements

• FAQs regarding corrections can 

be found in Attachment 16-B
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Agency Review and Issuance of LNG

HB-1-3555, Chapter 16.7

Loan Note Guarantee

• Once the agency has reviewed and 

approved the loan closing package as 

submitted, the LNG will be available on the 

LLC site

• To access, select “Display Documents” from 

the Single Family Housing Lender 

Administration List page

• Select “Display Documents” from the Action 

Dropdown
Post Issuance of the Loan Note Guarantee

HB-1-3555, Chapter 16 
Retrieving the Loan Note Guarantee

Loan Note Guarantee

• The LNG for Lender Loan closing 

may be viewed from the Single 

Family Housing Lender 

Administration List OR

• Select Obligation or Loans and 

“submit”

• To display available documents, 

select “Display Documents” from the 

Action Dropdown
Single Close Construction Close Out

Single Close 

Construction

• Once construction is complete, 

the lender will need to go back 

into the LLC System to select 

the appropriate “Completion 

Type” 

• Access loan by inputting 

Borrower ID, SSN, Name/State, 

or Lender Loan Number

• Select “Single Close 

Construction/Rehab” in the 

Action drop down
Single Close Construction Close Out

Principal Reduction Only

• Enter the construction complete 

and principal reduction fields

• Update the modified unpaid 

principal balance and the 

amount of the principal 

reduction

• Upload documentation of 

evidence of the principal 

reduction and lender 

certification
Single Close Construction Close Out

Principal Reduction w/ 

Loan Modification

• Enter the construction complete 

and principal reduction fields

• Update the modified unpaid 

principal balance and the 

amount of the principal 

reduction

• Loan Modification Date and 

lower Interest Rate, when 

applicable

• Upload documentation of 

evidence of the principal 

reduction and lender 

certification
Single Close Construction Close Out

Construction Complete 

(No Principal Reduction 

or Loan Modification)

• Enter only the construction 

completion date

• Upload documentation of 

evidence of the principal 

reduction and lender 

certification
Lender and Agency Responsibilities

 Lender must compare the DOT or Mortgage with Title 

Opinion to ensure 1st lien priority

 Lender must ensure that closing instructions have been 

followed

 Agency does not set policy for survey requirements

 Lender must ensure ownership interest protects the 

security property

 Lender must be able to foreclose on property in the event 

of borrower default

 Originating lender may be subject to indemnification if 

they fail to meet lien requirements
Viewing the Loan

View Loan

• The Single Family Housing 

Lender Administration List allows 

users to search the loan by 

status and view loan information

• This information is only available 

to the Holding Lender
Viewing the Loan

View Loan

This allows the Holding Lender to view:

• Annual Fee Amortization

• Annual Fee Due Date

• Fee Amount
Frequently Asked Questions
47

Frequently Asked Questions

A loan closed at a higher loan 

amount than what was authorized 

on the Conditional Commitment. 

Can a principal reduction for the 

overage amount be completed?

No. Since the loan has closed, a 

principal reduction is not acceptable. 

The lender may perform a loan 

modification to correct the loan 

amount to match the issued 

Conditional Commitment or request 

Rural Development to release the 

GUS loan back for correction
48

Frequently Asked Questions

Property taxes in many states are 

paid in arrears, which results in a 

large tax credit at closing. Can an 

applicant receive cash back as a 

result of this credit?

The credit may be used to pay closing 

costs, but cannot result in cash back 

to the applicant. Only costs initially 

paid by the applicant out of pocket 

can be returned to the applicant at 

closing.
49

Frequently Asked Questions

What options are available when the 

Conditional Commitment will expire 

prior to loan closing?

The lender has 90 days from the issuance 

of the Conditional Commitment to close 

the loan with an opportunity for one 90-

day extension. The extension must be 

requested prior to the expiration of the 

Conditional Commitment. The lender is 

responsible for ensuring documentation 

of credit, income, assets, etc. are 

updated as needed.
50

Frequently Asked Questions

An application has been submitted 

to Rural Development for review, 

however, a Conditional 

Commitment has not yet been 

issued. Can the loan close since the 

file has been submitted to Rural 

Development?

No. The loan cannot close prior to 

the lender’s receipt of the 

Conditional Commitment.
51

Frequently Asked Questions

Now that the mandatory use of the 

LLC System is in effect, will the Form 

RD 1980-19 be required?

No. Form RD 1980-19, Loan Closing 

Report is not required for manually 

submitted closing packages.
52

Frequently Asked Questions

Is a principal reduction at closing 

acceptable to prevent the applicant 

from receiving excess cash back?

Yes, a principal reduction at the time 

of closing is acceptable.
53

Frequently Asked Questions

Since a principal reduction at 

closing is acceptable for borrowers 

that would be receiving excess cash 

back, is there a maximum amount 

that is allowed?

No. There is no limit on the amount 

of the principal reduction, however, 

the lender should determine if a loan 

modification would be a better 

option for the borrower.
54

Frequently Asked Questions

Does USDA allow an applicant to 

close in a trust?

No. The two forms of ownership that 

are acceptable to the program are 

fee-simple and a secured leasehold.
55

Frequently Asked Questions

Can the USDA Upfront Guarantee 

Fee be noted as a Mortgage 

Insurance Premium on the Loan 

Estimate and Closing Disclosure?

Although Rural Development does 

not have a requirement as to how the 

fee is noted on the disclosures, the 

preference would be to list the fee on 

a separate line item and note as a 

Guarantee Fee payable to 

USDA/Lender.
56

Frequently Asked Questions

What is the maximum number of 

days allowed for an interest credit?

Rural Development does not have a 

requirement on the number of days 

allowed on an interest credit. 

Lender’s standard protocol is 

accepted.
Lender Toolkit
58

HB-1-3555

https://www.rd.usda.gov/resources/regulations/program-regulations

7 CFR Part 3555

Bookmark It!

Use Ctrl-F to find 

answers quickly!
59

HB-1-3555

HB-1-3555

Bookmark It!

Use Ctrl-F to find 

answers quickly!

https://rd.usda.gov/resources/directives/handbooks 
60

HB-1-3555

Origination FAQs

Bookmark It!

Use Ctrl-F to find 

answers quickly!

https://www.rd.usda.gov/sites/default/files/rd-sfh-faqloanorigination.pdf
61

HBTraining & -1-3555

Resources

Check back for 

updates

Don’t forget to sign up 

for GovDelivery 

updates

https://www.rd.usda.gov/page/usda-linc-training-resource-library 
62

HB-1-3555 Lender Webpage

Monitor posted turn 

times daily

Don’t forget to sign up 

for GovDelivery 

updates

https://www.rd.usda.gov/page/sfh-guaranteed-lender 
63

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!
64

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!
65
66

www.rd.usda.gov

1 (800) 800-670-6553

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