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SECTION 1: INTRODUCTION TO THE

SERVICING AND ASSET MANAGEMENT OFFICE HANDBOOK

1.1 WELCOME TO THE SERVICING AND ASSET MANAGEMENT OFFICE

HANDBOOK

This handbook provides Agency staff with the tools needed to service loans efficiently 

and effectively. Its goal is to help staff at the Servicing and Asset Management Office

(Servicing Office), assist borrowers, while making sure that basic legal and administrative 

requirements are met. The handbook provides loan servicing policies for Section 502 direct 

loans and Section 504 loans and grants. Specific procedures to implement these policies are 

described in a separate handbook.

The guidance provided by this handbook is intended to be consistent with all applicable 

laws, Executive Orders, and Departmental regulations, including other Agency regulations. 

Nothing contained in this handbook should be construed to supersede, rescind, or otherwise 

amend such laws, Executive Orders, and regulations.

1.2 USING THIS HANDBOOK

The handbook is organized to allow the reader to look up information on specific topics 

easily. New staff may want to read the handbook in its entirety, while more experienced staff 

may use it as a reference book. Several graphic tools and conventions have been used to make 

information easier to find and understand.

A. Handbook Symbols

• References. The book symbol directs the reader to additional information 

sources, such as laws, regulations, or instructions.

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DISTRIBUTION: WSDC

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN

CHAPTER 1: OVERVIEW
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Paragraph 1.2 Using This Handbook

• State Supplements. State and local laws and the laws of 

Federally-recognized tribes may affect how Agency requirements 

are implemented. Topics commonly affected by such laws 

include the treatment of liens, the liquidation process, and 

environmental policies. The United States symbol denotes subjects for which further 

instructions may be issued through State Supplements which will be filed in 

Appendix 7 of this Handbook or for which individual State laws are likely to be 

particularly relevant.

• Civil rights. The fair housing symbol highlights processing procedures 

with significant fair housing or civil rights implications.

• Deadlines. Time frames for completing required actions are underlined 

to make them easier to locate, for example: “within 7 days.” Unless the text specifies 

business days, all references to days are in terms of calendar days.

• Documentation. The notepad symbol highlights key activities or 

information that must be carefully documented.

B. Citations and Text Boxes

• Regulatory citations. The regulation for the direct single family housing program is 

provided in 7 CFR Part 3550. The text of that regulation is provided in Appendix 1. 

To help readers locate the regulatory authority for procedures described here, 

references to this regulation appear in italicized brackets, for example: [7 CFR

3550.55]. Other regulations or RD instructions are simply referenced.

• Form and letter references. Agency forms and Agency handbook (HB) letters are 

shown in italics. All forms referenced in this Handbook can be found in Appendix 2 

and all handbook letters can be found in Appendix 3.

• Helpful hints. Helpful hints, cautions, or important facts are included in boxes 

throughout the text and shown with the string around the finger symbol.

• Examples and exhibits. Text boxes labeled as examples or exhibits provide a 

specific illustration of a concept described in the text or provide additional detailed 

information. Examples are used when the text box is inserted adjacent to the relevant 

text and is not referenced. Exhibits are used when the text refers to the text box. 

Exhibits are numbered in sequence, using the chapter number; for example,

Exhibit 3-1 is the first exhibit in Chapter 3. _________________________________________________________________________________________

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Paragraph 1.2 Using This Handbook

C. Attachments and Appendices

• Glossary and acronyms lists. Key words and terms are defined in the glossary. A 

list of acronyms used in the handbook is also provided. Both the glossary and list of 

acronyms can be found at the end of the handbook.

• Attachments. Attachments at the end of each chapter contain technical information 

that is specific to the topics covered in the chapter. Attachments are referenced in 

sequence, using the chapter number and a letter, for example, Attachment 4-A is the 

first attachment in Chapter 4.

• Appendices. Appendices at the end of the handbook include forms and other 

reference materials that relate to multiple chapters.

D. Terminology

Because terminology may vary from State to State and change over time, this handbook

 uses certain standard terminology to provide consistency.

• Agency. The term “Agency” is used throughout this handbook to refer to the 

organizational unit within the United States Department of Agriculture (USDA) that 

is responsible for administration of the direct single family housing program.

• Borrower. The term “borrower” refers to one or more individuals who are receiving 

Agency assistance.

• Servicing Office. These terms are used to refer to individuals in the Servicing and 

Asset Management Office, previously known as, the National and Financial 

Operations Center, Customer Service Center, or Centralized Servicing Center. This 

term is used throughout this handbook to refer to the office that services loans and 

grants.

• Field Office. Because the number of offices and the nature of the work conducted in 

each office may vary from State to State, the term “Field Office” is used throughout 

this handbook to refer to the office that is originating the loan.

• Field Staff and Approval Official. These terms refer to a person who is completing 

tasks for purposes other than originating a loan and is located in the field.

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Paragraph 1.2 Using This Handbook

E. How This Handbook Is Organized

• Chapter 1. Overview provides a summary of Section 502 and Section 504 

requirements, and also contains general program and administrative requirements that 

are referenced throughout the remaining chapters (for example, appeals and civil 

rights policies).

• Chapter 2. Regular Servicing covers the transfer of responsibility for a loan from 

the Field Office to the Servicing Office and discusses routine transactions with the 

borrower, including payments, reviewing requests from the borrower that require 

Agency approval, final payments, and recapture. Guidance for two of the regular 

servicing activities -- processing payment subsidies and requirements related to taxes

and insurance -- are large enough to require separate chapters, which follow.

• Chapter 3. Escrow, Taxes, and Insurance covers the Agency's role in 

administering escrow accounts for taxes and insurance, borrower responsibilities 

regarding taxes and insurance, and remedies that may be applied if the borrower fails 

to pay taxes or insurance.

• Chapter 4. Payment Subsidies and Income Determinations includes instructions 

for initiating and renewing payment subsidies, including guidance on making income 

determinations.

• Chapter 5. Special Servicing covers servicing actions that may be required to assist 

borrowers who become delinquent on their accounts including delinquency workout 

agreements, moratoriums on payments, protective advances, and reamortization.

• Chapter 6. Liquidation and Acquisition provides guidance for circumstances in 

which special servicing actions have failed and the borrower's account must be 

liquidated by foreclosure.

Chapter 7. Special Collections describes policies for dealing with unauthorized 

assistance, offsets, and debt settlement.

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SECTION 2: OVERVIEW OF THE

DIRECT SINGLE FAMILY HOUSING PROGRAM

1.3 GOALS OF THE DIRECT SINGLE FAMILY HOUSING PROGRAM

The purpose of the direct single family housing program is to provide low- and very lowincome people the opportunity to own adequate, modest, decent, safe, and sanitary homes in 

rural areas. In providing this service, the Agency strives to meet several goals.

• Customer service. The Agency is committed to providing customer-friendly, 

streamlined service.

• Effective use of resources. As a publicly-funded program, the direct single family 

housing program must use tax dollars efficiently. The Agency aims to minimize 

administrative costs and service loans responsibly.

• Efficient processing. The Agency has streamlined its servicing processes and 

adopted private sector practices to the extent feasible. This not only saves staff time, 

but also allows borrowers to receive the maximum benefit from Agency funds.

1.4 SECTION 502 -- AN OVERVIEW

A. Program Loans

The Section 502 direct loan program is intended to provide very low- and 

low-income people with the opportunity to acquire, build, rehabilitate, improve, or 

relocate dwellings in rural areas. The standard term for a Section 502 loan is 33 

years. However, loans may be made for a shorter term, and in certain cases for 38 years. Each 

loan is made at a note rate established by the Agency as prescribed in RD Instruction 440.1. 

Payment subsidies are available to some borrowers to reduce monthly loan payments. In 

summary, to be eligible for a Section 502 loan, applicants must:

• Have an adjusted income that is at or below the applicable low-income limit at loan 

approval (except for assumed loans or loans to purchase Real Estate Owned (REO) 

property);

• Have an adjusted income that is at or below the applicable moderate-income limit for 

assumed loans or loans to purchase an REO property;

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Paragraph 1.4 Section 502 -- An Overview

• Be unable to obtain sufficient credit from another source;

• Agree to personally occupy the dwelling;

• Meet citizenship or eligible non-citizen requirements;

• Have the legal capacity to incur a loan obligation and not be suspended or debarred 

from participation in Federal programs; and

• Demonstrate both the willingness and ability to repay the loan.

B. Nonprogram Loans

The Agency may provide credit on non-program terms to expedite the assumption of an 

existing program loan or purchase of a REO property by a borrower who is not eligible for the 

Section 502 program. Other uses include conversion of a program loan that has received 

unauthorized assistance, or continuation of a loan after a partial release of security. Nonprogram 

loans are made only when it is in the best interest of the Government, and non-program 

borrowers are not eligible for certain special servicing actions.

1.5 SECTION 504 -- AN OVERVIEW

The Section 504 direct loan and grant program is intended to provide funds to 

homeowners who cannot obtain other credit to repair and rehabilitate their properties or correct 

health and safety hazards. To be eligible, the applicant must have adjusted income that is at or 

below the applicable very low-income limit and meet other eligibility requirements similar to 

those for Section 502 loans. The Section 504 program offers grants to correct health and safety 

hazards for homeowners 62 years of age and older who cannot obtain a loan for this purpose.

A. Section 504 Grants

Grant funds may be used only to make repairs and improvements that will remove 

identified health and safety hazards or to repair or remodel dwellings to make them accessible 

and useable for household members with disabilities. Grants are available only to eligible 

applicants who are 62 years of age or older. Recipients may receive multiple grants, up to a 

lifetime maximum of $7,500.

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Paragraph 1.5 Section 504 -- An Overview

B. Section 504 Loans

Loan funds may be used to make general repairs and improvements to properties and to 

remove health and safety hazards. Borrowers may obtain multiple Section 504 loans, but the 

sum of the outstanding balance on all Section 504 loans cannot exceed $20,000. The loans have 

a maximum term of 20 years and an interest rate of 1 percent.

1.6 THE ROLE OF FIELD OFFICES

Loans are originated and closed in Field Offices. Once loans are closed and the final 

disbursement has been made, they are serviced by the Servicing Office. The Servicing Office

may ask for assistance from Field Staff when a local presence is needed to facilitate a servicing 

action.

In addition, Field Staff have an obligation to report information that comes to their 

attention indicating risks to the security property or changes in borrower circumstances. Such 

items might include knowledge of hazardous dwelling conditions, environmental hazards, nonoccupancy, abandonment, or changes in income. Field Staff who learn of borrower difficulties 

also may recommend that the borrower contact the Servicing Office for assistance.

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SECTION 3: AUTOMATION

1.7 THE DEDICATED LOAN ORIGINATION AND SERVICING (DLOS) SYSTEM

The Agency’s Dedicated Loan Origination and Servicing (DLOS) system is designed to 

expedite loan-making, standardize information collection and recordkeeping, and facilitate 

communication between Field Offices and the Servicing Office. DLOS tracks loans from 

application through servicing using two interconnected systems: UniFi and LoanServ.

A. UniFi

UniFi is a web-based application used for loan origination. It retains applicant 

information, makes complex calculations, and maintains a central record of all activities 

associated with an individual application from the time of pre-qualification through loan closing. 

Information from UniFi is uploaded into LoanServ each night.

B. LoanServ

LoanServ is a mainframe-based 

application that is used to service Agency loans 

and monitor loan performance. LoanServ

should be used to record every action taken by 

the Servicing Office regarding an individual 

borrower’s account.

Since Field Offices have access to some portions of LoanServ, it can help the Servicing 

Office and Field Staff keep abreast of each other’s activities. If the Servicing Office needs 

assistance in the field for some servicing action, LoanServ can be used to send a work queue to 

the Field Staff. For example, a Servicer involved in working out an insurance claim with a 

borrower might ask Field Staff to visit the property to assess the repair work that has been done 

to date. Similarly, if Field Staff obtain information about a change in a borrower’s employment 

status that has not been reported to the Servicing Office, the LoanServ work queue can be used to 

pass that information on to the Servicing Office.

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LoanServ Advantages

Using LoanServ consistently will allow 

different operators at Servicing Office to work 

with a borrower’s account at different times.
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SECTION 4: GENERAL PROGRAM REQUIREMENTS

1.8 CIVIL RIGHTS [7 CFR 3550.3]

The Agency will administer its programs fairly and in accordance with both the letter 

and the spirit of all equal opportunity and fair housing legislation and applicable Executive 

Orders. The civil rights compliance requirements for the Agency are contained in RD 

Instruction 1901-E. Exhibit 1-1 lists the applicable Federal laws and Executive Orders 

and highlights key aspects of these requirements.

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Exhibit 1-1

Major Civil Rights Laws Affecting the

Direct Single Family Loan Program

• Equal Credit Opportunity Act (ECOA). Prohibits discrimination in the 

extension of credit on the basis of race, color, religion, national origin, sex, 

marital status, age, income from public assistance and exercise of rights 

under the Consumer Protection Act.

• Title VI of the Civil Rights Act of 1964. Prohibits discrimination in a 

Federally-assisted program on the basis of race, color, and national origin.

• Title VIII of the Civil Rights Act of 1968 (also known as the Fair Housing 

Act of 1988, as amended). Prohibits discrimination in the sale, rental or 

financing of housing on the basis of race, color, religion, sex, national origin, 

familial status, or disability.

• Section 504 of the Rehabilitation Act of 1973. Prohibits discrimination in a 

Federally-conducted program on the basis of disability.

• Age Discrimination Act of 1975. Prohibits discrimination in a Federallyassisted program on the basis of age.

• Executive Order 11063 as Amended by 12259. Prohibits discrimination in 

housing or residential property financing to any Federal-assisted activity 

against individuals on the basis of race, color, religion, sex, or national 

origin.

• Executive Order 11246. Nondiscrimination in employment by construction 

contractors (and subcontractors) receiving Federally-assisted construction 

contracts in excess of $10,000. It provides for equal employment 

opportunity without regard to race, color, religion, sex, and national origin.

• Executive Order 13166. Prohibits discrimination on the basis of national 

origin, and ensures programs normally provided in English are accessible to 

persons with Limited English Proficiency (LEP).
HB-2-3550

Paragraph 1.8 Civil Rights [7 CFR 3550.3]

A. Nondiscrimination

The various civil rights laws prohibit the denial of loans, grants, services, and benefits 

provided under the Section 502 and 504 programs to any person based upon race, color, national 

origin, sex, religion, marital status, familial status, age, physical or mental disability, source of 

income, or because the applicant has, in good faith, exercised any right under the Consumer 

Credit Protection Act (15 U.S.C. 1601). Discrimination in employment practices also is 

prohibited.

Effective management and 

consistent procedures are good business 

practices that help ensure that all 

borrowers are treated fairly. Poor 

program implementation, whether or not 

discrimination is intended, has possible 

civil rights consequences.

In the servicing process, attention to consistent procedures is especially important in 

several key areas, which are listed below.

• Outreach. Information about the availability of servicing relief and how to apply 

must be broadly disseminated. In addition, the extent of the information, assistance, 

and courtesy extended to those who make inquiries must be consistent.

• Determining eligibility. Servicers must use equal rigor for all borrowers when 

verifying income, considering eligibility for program benefits and assistance, and 

allowing borrowers to clarify information.

• Making exceptions. Standards for offering exceptions must be applied consistently.

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Key Civil Rights Issues

for Loan Servicers

• Access

• Consistency and fairness of treatment

• Disparate impacts -- intended or unintended

• Record keeping
HB-2-3550

Paragraph 1.8 Civil Rights [7 CFR 3550.3]

• Subsidies and other assistance. Opportunities for subsidies and favorable servicing 

remedies must be made available consistently.

• Hearings and appeals. Avenues for remedies when problems arise must be made 

available consistently.

B. Reasonable Accommodations for Persons with Disabilities [7 CFR 15e.130]

No individual with a disability shall, on the basis of their disability, be excluded

from participation in, be denied the benefits of, or otherwise be subjected to discrimination 

under any program or activity conducted by the agency. The Agency must make 

reasonable accommodations to permit persons with disabilities equal access to apply for 

and benefit from Agency programs. Reasonable accommodations may include providing 

facilities that are physically accessible so that all people can come to Agency offices, 

effective communication and outreach tools so that all applicants can get good program 

information (for example, a Telecommunications Device for the Deaf (TDD)), or making a 

modification to an Agency process or procedure to enable access.

When a customer with a disability cannot access a program or finds it difficult to 

meet a specific requirement of a program, the Agency must consider if the same result can 

be reached through different means. The Agency does not distinguish between reasonable 

accommodations and reasonable modifications. Instead, both are captured by the term 

“reasonable accommodations.” Under the regulations, the Agency must follow the 

requirement to make reasonable accommodations through changes that may be necessary to

provide equal opportunity to participate in the federally conducted program or activity.

1.9 REVIEW AND APPEALS [7 CFR 3550.4]

A. ADVERSE DECISIONS

Decisions that are not made in favor of a program participant (applicant or 

borrower) are known as adverse decisions. Adverse decisions must be based upon 

regulations which are published in the Code of Federal Regulations (CFR). For the direct 

SFH programs, any adverse decisions must be based upon 7 CFR Part 3550 (Appendix 1) 

and not the administrative guidance contained in this Handbook. Adverse decisions include: (1) 

administrative actions taken by Agency officials; and (2) the Agency’s failure to take required 

actions within time frames specified in statutes or regulations, or within a reasonable time if no 

deadline is specified. 7 CFR Part 11 is the National Appeals Division (NAD) regulation and 

provides procedures that both Agency officials and program participants must follow when an 

adverse decision is appealed. If the Servicing Office is taking an adverse action on a case that is also 

under the jurisdiction of a Field Office, the Servicing Office should first consult with the Field 

Office. Handbook Letter 101(3550), Standardized Adverse Decision Letter, will be used for all 

adverse decisions unless another format is prescribed in this Handbook. Exhibit 1-2 provides a 

sample of an adverse decision letter.

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Paragraph 1.9 Reviews and Appeals [7 CFR 3550.4]

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Exhibit 1-2

Sample Adverse Decision Letter

Mr. and Mrs. John Doe

1 Main Street

Anytown, Anywhere 01234

Re: Application for $154,000 Direct

Single Family Housing Loan

Dear Mr. & Mrs. Doe, 

Thank you for the opportunity to consider your request for Rural Development assistance. In reviewing your 

request, we considered all information submitted to the Agency and the regulations that govern the assistance for 

which you applied. After careful review, we regret to inform you that we were unable to take favorable action 

on your request. The specific reasons for our decision are as follows:

1. Your income exceeds the maximum income to qualify for our direct single family housing program. 7 

CFR 3550.53(a) requires that an applicant’s income must not exceed the applicable low-income limit for the 

area. In Any County, the maximum income limit is $39,500. According to income reported on your application 

and verified using paystubs and tax returns., your income was calculated at $42,250. Unfortunately, this income 

exceeds the applicable limits. At the time of your loan interview, Mr. Doe indicated that he worked substantial 

overtime last year, and did not anticipate overtime income for this year. According to a verification of 

employment, overtime income has recently been earned this year, and your employer anticipates that you will 

earn at least the same amount of overtime this year as you have earned in the past. Overtime income must be 

considered if it is reasonable to anticipate it will continue. We reverified with your employer that, because of 

recent workforce changes, overtime will continue this year in an amount at least equal to last year. This was 

further confirmed by copies of paystubs which you recently submitted to this office for review.

2. Your credit history was not acceptable. 7 CFR 3550.53(h) requires that an applicant must have an 

acceptable credit history to obtain program assistance. The regulation provides, in part, that a delinquency on 

any debt owed to the Federal Government is an indicator of unacceptable credit. Your credit report reflected that 

you are in default on your student loan which is guaranteed by the Federal Government. 

If one of the above reasons included an unacceptable credit history, please note that a tri-merge credit report on 

you was obtained from Equifax Mortgage Solutions, 815 East Gate, Suite 102, Mount Laurel, NJ 08054; 

telephone (800) 333-0037. You may obtain a free copy of your credit report from Equifax and dispute the 

accuracy or completeness of the report directly to Equifax. While the report was provided by Equifax, the 

decision to deny your request for assistance was made by this Agency and not Equifax.

If you believe our decision is incorrect, or the facts used in this case are in error, you may pursue your rights to 

challenge our decision. Please see the attached for your rights.

Sincerely,
HB-2-3550

Paragraph 1.9 Reviews and Appeals [7 CFR 3550.4]

Letters notifying participants of adverse decisions must contain the necessary information 

regarding an informal administrative meeting, mediation/Alternative Dispute Resolution (ADR), 

appeal rights to NAD, and civil rights. Attachments 1-A through 1-G contain, as necessary, the 

civil rights language and include information on requesting an informal administrative review, 

mediation and rights to NAD. The Attachments are all titled to assist the Servicing Office in 

selecting the correct Attachment for the decision being made. The Attachments do not need to 

be used when an RD Form, Handbook Letter, or other document already includes the appropriate 

participant rights.

B. State Director Responsibilities

State Directors should issue a State Supplement providing guidance for processing appeal 

and mediation requests. The guidance should include an attachment outlining the mediation 

provider(s) specific to their State and identifying an Alternative Dispute Resolution (ADR) 

Coordinator.

 C. ADR Coordinator Responsibilities

The ADR Coordinator is responsible for: Establishing a source/vendor list of 

Community-Based Mediation Centers (CBMCs) and/or Alternative Mediation Service Providers, 

per RD Instruction 1940-E, 1940.206 (c)(1), if the State does not have a USDA-funded 

mediation program. The list will be maintained annually in alphabetical order and the providers 

are selected in sequential order. States will need to maintain documentation to ensure that 

mediation providers receive an equal number of referrals. The list should include the name, 

contact information, and cost of each mediator; the list cannot include arbitrators. The Farm 

Service Agency (FSA) should be able to provide the ADR Coordinator with a list of acceptable 

mediation sources in the State. Other contacts include the National Association of Conflict 

Resolution or State bar association. When making contacts with these sources, make sure the 

Agency requests the services of a mediator and not an arbitrator. A mediator resolves disputes by 

negotiating a resolution through mutual agreement. An arbitrator resolves disputes through 

hearing both parties and then rendering a binding decision and may not be used.

• Verifying that the request for mediation was submitted within 30 days of receipt of the 

adverse action. If so, issuing Attachment 1-D to the program participant. If the State does not 

have a USDA-funded mediation program, the program participant will have 10 days to select a 

mediation service provider. If a selection is not made within the allotted time, issuing 

Attachment 1-F to notify the program participant of the expiration to select a mediation service 

provider.

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Paragraph 1.9 Reviews and Appeals [7 CFR 3550.4]

• Issuing Attachment 1-E to initiate mediation services to the selected provider.

• Ensuring the meditation is conducted within 45 days of receipt of the request.

• Issuing Attachment 1-G to the program participant if the mediation did not resolve the 

dispute.

• Communicating with all parties involved and ensuring they have a copy of the 

mediation documentation.

The ADR Coordinator is not responsible for attending mediations and hearings; that 

responsibility belongs to the Agency representative.

D. Agency Representative (Appeal Coordinator) Responsibilities

When the Servicing Office is taking an adverse action that is not under the jurisdiction of 

the Field Office, the Appel Coordinator will represent the Agency; however, occasionally, 

another appropriate staff member may represent the Agency. The Appeal Coordinator is 

responsible for:

• Furnishing documentation that supports the adverse decision. Since the documentation 

is based on the adverse decision letter, the Appeal Coordinator needs to ensure that adverse 

decision letters list all the reasons for the denial and contains a brief narrative, the applicable 

program provisions, and pertinent facts.

• Representing the Agency in mediations and hearings. This may include a Servicing 

Office face-to-face hearing involving a servicing matter where the Servicing Office Appeals 

Coordinator requested the State Director to appoint Field Staff to attend the hearing and 

represent the Servicing Office. The Servicing Office Appeals Coordinator will provide sufficient 

documentation and phone resources to the person selected by the State Director to adequately 

represent the Agency in the case.

• Implementing the mediation/NAD decision within 30 days after the effective date of 

notice of the final determination.

1.10 AGENCY DECISIONS

A. Informal Administrative Review

When an Agency official makes a decision that will adversely affect a program 

participant, the participant is entitled to an opportunity for a separate informal administrative 

review by the decision maker or next level supervisor. The Agency official must give the 

program participant notice of their right to this review no later than 10 days after the date of 

adverse decision. If the 

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Paragraph 1.10 Agency Decisions [7 CFR 3550.4]

Informal review does not result in a resolution of the matter, Attachment 1-A, Informal 

Administrative Review, will be sent within 7 days.

B. Appealable Decisions

Attachment 1-B will be provided to the participant no later than 10 days after the adverse 

decision, which includes rights to seek a mediation/ADR with the Alternative Dispute Resolution 

(ADR) and/or request a hearing with National Appeals Division (NAD).

In cases where denial of assistance is based upon both appealable and non-appealable 

actions, the denial of assistance is not appealable. Attachment 1-C will be used in these cases and 

will include all reasons for the adverse decision.

C. Non-Appealable Decisions

Certain decisions made by the Agency cannot be appealed. In these cases, the participant is still 

offered an opportunity for an informal administrative review; however, appeal rights to NAD and 

mediation are not offered. The participant will be informed no later than 10 days after the 

adverse decision using Attachment 1-C, Non-Appealable Decision, which provides an 

opportunity to request an informal administrative review and/or NAD request to review the 

accuracy of the Agency’s decision. 

1.11 Participant Rights

The program participant can request applicable appeal options below within 

30 days of receipt of the adverse action. The requests for an appeal can be submitted 

simultaneously; however; the options below should be performed in order. If an 

applicant chooses to skip any of the options below, doing so will waive their right to 

the previous option.

The program participant has the right to a face-to-face hearing in the participant’s State of 

residence. The program participant also has the right to request that the hearing be handled by 

teleconference or a may choose a Record Review.

A. Informal Administrative Review

The program participant must make a request for an informal review in writing, and the 

request will be retained in the participant’s case file. The borrower must submit a written request 

within 30 calendar days from when they receive an adverse decision letter. If unable to determine 

when the letter was received, count 7 calendar days after the date of the adverse decision letter 

(letter date + 7 days = receipt date of letter + 30 days = 37 days when request must be made). 

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Paragraph 1.11 Participant Rights [7 CFR 3550.4]

of the Agency through a telephone or face-to-face meeting at the Agency’s discretion. The 

purpose of the informal administrative review is to further explain the Agency’s reasons for the 

adverse decision, listen to why the participant feels the decision may be incorrect, and obtain any 

further information from the participant to support their request. The review must be completed 

within 45 days of the request. The participant will be notified of the outcome in writing using 

Attachment 1-A. The State Director may require that the decision be reviewed by the next-level 

supervisor or other designated Rural Development official prior to notifying the participant of 

the decision.

B. Mediation

Adverse decisions which are appealable to NAD also require that the participant be given 

the opportunity to seek mediation prior to conducting a hearing with NAD. The purpose of 

mediation is to resolve disputes through the use of a neutral mediator. Mediation must be 

completed within 45 days after the case is referred to the mediation source, unless the complexity 

of the case warrants a longer time frame and all parties agree to a specific time frame. A 

mediator will generally conduct a teleconference between the parties prior to accepting a case to 

determine if the case can be mediated.

There is generally a cost associated with participation in mediation. The cost is 

contingent upon the service provider. When there are costs, they will be shared equally between 

the Agency and the program participant, if Agency funds are available. Where Agency program 

funds are not available, the Agency will participate in mediation if requested by the program 

participant; however, the program participant will be notified in advance of the portion of the 

cost the Agency will pay (if any) and their estimated cost for this service. The State Director will 

ensure that all participants requesting mediation in their State are treated consistently and pay the 

same percentage of the cost toward this service. The State Director may also consent to pay a 

larger percentage (up to 100 percent) of the cost of mediation for participants with incomes 

below the federal poverty level. The Agency will issue Attachments 1-E and 1-F, notifying the 

participant a mediation source selected and cost of such service. If State funds are unavailable, 

the State Office PLCE Initiator will request Program Loan Cost Expense (PLCE) “A” funds from 

the National Office Budget Execution Branch. The State will provide a list of acceptable 

mediators to the participant and request the participant to select or provide an additional 

acceptable provider within 10 days.

If the program participant does not provide the name of a mediation provider within 10 days, 

Attachment 1-F is used to notify the program participant of expiration and their request for 

mediation will be considered withdrawn. Withdrawal or cancellation of a mediation does not 

extinguish the participant’s right to request an appeal with NAD. There are three types of 

mediation services as follows:

_________________________________________________________________________________________

1-18
HB-2-3550

Paragraph 1.11 Participant Rights [7 CFR 3550.4]

• USDA-funded mediation program 

Many States have a mediation program that is annually certified by USDA. These programs 

are funded, in part, by USDA, and were established primarily to mediate cases originating 

from the Farm Service Agency (FSA). In States with a USDA-funded mediation program, 

program participants who are provided appeal rights will be generally referred to the USDAfunded mediation program. In States where alternative mediation sources are readily 

available at a lower cost than the USDA-funded mediation program, the State will follow the 

guidance for States with a CBMC or States without a USDA-funded mediation program, and 

include the USDA mediation program on the list of acceptable providers. 

• Community-Based Mediation Center 

A CBMC is a nonprofit, public entity operating under the guidance of a governing board. Its 

goal is to provide an alternative to the judicial system by the use of trained mediators located 

in the geographical area served. The CBMC provides mediation services to clients regardless 

of their ability to pay. In States without a USDA-funded State mediation program, the CBMC 

is an option. Customers with appeal rights who request mediation can be referred to the 

CBMC. 

• Alternative mediation service providers 

In States without a USDA-funded mediation program or access to a CBMC, Agency officials 

will provide a list of alternative mediation service providers. If there is a significant variation 

in cost between service providers, this option will not be used. 

C. Appeal 

Participants who wish to appeal an adverse decision must submit a written request to NAD 

within 30 days of receiving notice of an adverse decision. If unable to determine when the 

letter was received, count 7 calendar days after the date on the adverse decision letter [date 

on letter + 7 days = date of receipt of letter + 30 days = 37 days when request must be made].

The request must be signed by the participant and include: (1) a copy of the adverse decision 

to be appealed; and (2) a brief statement describing why the participant believes the decision 

is wrong. 

Upon receiving a notice from NAD that an appeal has been filed, the Appeal Coordinator will 

promptly provide NAD with a copy of the Agency record, specific references in 7 CFR Part 3550 to 

support the adverse decision, and any other pertinent information. A copy will also be provided to 

the program participant.

________________________________________________________________________________________

1-19

(05-27-98) SPECIAL PN

Revised (08-04-23) PN 589
HB-2-3550

Paragraph 1.11 Participant Rights [7 CFR 3550.4]

NAD will notify the participant and the Agency once it has made a final determination. If 

NAD reverses the Agency’s decision, the next loan processing action must take place 

within 30 days after the effective date of the notice; unless the Agency requests a review 

of the case by the Director of NAD. For more guidance on the Director review and other 

information regarding appeals, refer to 7 CFR Part 11.

1.12 NAD HEARING PREPARATION

Providing an Agency record means all the materials maintained by an Agency related 

to an adverse decision, including all materials prepared or reviewed by the Agency during 

its consideration and decision-making process related to the adverse decision. The 

Administrative Judge shall set a reasonable deadline for submission of the following 

documents:

(A.) By the appellant;

1. A short statement of why the decision is wrong;

2. A copy of any document not in the Agency record that the appellant

anticipates introducing at the hearing; and

( 3) A list of anticipated witnesses and brief descriptions of the evidence such 

witnesses will offer.

 (B.) By the Agency:

1. A copy of the adverse decision challenged by the appellant;

2. A written explanation of the Agency's position, including the regulatory or 

statutory basis therefor;

3. A copy of any document not in the Agency record that the Agency 

anticipates introducing at the hearing; and

4. A list of anticipated witnesses and brief descriptions of the evidence such 

witnesses will offer.

Not less than 14 days prior to the hearing, the National Appeals Division must 

provide the appellant, the authorized representative, and the Agency a notice of hearing 

specifying the date, time, and place of the hearing. The hearing will be held in the State 

of 

_________________________________________________________________________________________

1-20
HB-2-3550

Paragraph 1.12 NAD Hearing Preparation [7 CFR 3550.4]

residence of the appellant, as determined by the Administrative Judge, or at a location 

that is otherwise convenient to the appellant, the Agency, and NAD. The notice also shall 

notify all parties of the right to obtain an official record of the hearing.

A. Pre-Hearing Conference

Whenever appropriate, the Administrative Judge shall hold a pre-hearing conference 

in order to attempt to resolve the dispute or to narrow the issues involved. A pre-hearing 

conference shall be held by telephone unless the Administrative Judge and all parties 

agree to hold such conference in person.

B. Post-Hearing Procedure

The Administrative Judge may leave the hearing record open after the hearing, to 

allow the submission of information by the appellant or the Agency. The Agency 

representative is responsible to respond to new facts, information, arguments, or evidence 

presented or raised at the hearing. Any new information will be added to the hearing 

record and sent to the other party or parties by the submitter of the information.

C. Timing of Issuance of Determination

The Administrative Judge will issue a notice of the determination on the appeal to the 

named appellant, the authorized representative, and the Agency not later than 30 days 

after a hearing or the closing date of the hearing record in cases in which the 

Administrative Judge receives additional evidence from the Agency or appellant after a 

hearing. In the case of a record review, the Administrative Judge will issue a notice of 

determination within 45 days of receipt of the appellant's request for a record review.

D. Requests for a Director Review

The Appeal Coordinator is responsible for filing a request for a Directors review on 

reversed Agency decisions that have merit and are not favorable to the Agency. The SFH

Administrator or a person acting in such capacity can submit a written request for a 

Directors review within 15 business days after receipt of Administrative Judge’s decision. 

The request should include specific reasons why the Agency believes the determination is 

wrong, including citations of statutes or regulations that the Agency believes the 

determination violates. In consideration of the limited timeframe, the Appeal Coordinator 

should send a request immediately to the Servicing Office.

________________________________________________________________________________________

1-21

(05-27-98) SPECIAL PN

Revised (08-04-23) PN 589
HB-2-3550

Paragraph 1.12 NAD Hearing Preparation [7 CFR 3550.4]

Director, which will be forward to the Single Family Housing Direct Loan Division in 

the National Office for review.

1. The program participant can submit a written request for a Director review within 30 

days after receipt of the Administrative Judge’s decision. The Director will review the 

Administrative Judge’s decision to determine if it was correct. The request should include 

specific reasons why the appellant believes the determination is wrong.

2. A copy of a request for a Director review will be provided simultaneously by the 

submitter to each party to the appeal. The Director will determine whether the decision of 

the Administrative Judge is supported by substantial evidence. Based on such review, the 

Director will issue a final determination notice that upholds, reverses, or modifies the 

determination of the Administrative Judge. The Agency shall implement the final 

determination no later than 30 days after the effective date of the notice of the final 

determination.

3. Reconsideration of a determination of the Director may be requested by the 

appellant or the Agency within 10 days of receipt of the determination.

1.13 CONFLICT OF INTEREST [7 CFR 3550.9]

 All employees must strive to maintain the highest levels of honesty, integrity, 

and impartiality in conducting their activities on behalf of the Agency. The 

Agency’s requirements for handling assistance to employees, relatives, and 

associates are described in RD Instruction 1900-D. State Office, Servicing Office, and 

National Office employee relationships are reviewed by the State Director who will 

obtain the Administrator’s written concurrence for application processing. To reduce the 

potential for conflicts of interest, all processing, approval, servicing, or review activity 

must be conducted by Agency employees who:

• Are not the recipient (applicant or borrower), a recipient’s family member, or a close 

known relative and/or associate of the recipient;

• Do not have an immediate working relationship with the recipient, the Agency 

employee related to the recipient, or the Agency employee who would normally 

conduct the activity; and

_________________________________________________________________________________________

1-22
HB-2-3550

Paragraph 1.13 Conflict of Interest [7 CFR 3550.9]

• Do not have a business or close personal association with the recipient.

A. Borrower Disclosure

 Borrowers must disclose any known relationship or association with Agency employees

when they apply for assistance through the Agency.

B. Agency Employee Disclosure

 Agency employees must disclose any known relationship or association with a 

borrower, regardless of whether the relationship is known to others.

C. Disposition of REO Properties

 Agency employees and members of their families are precluded from purchasing 

REO property, assumptions from Agency borrowers, or security property sold at a 

foreclosure sale. Closing agents and members of their families are precluded from 

purchasing properties in which they have been professionally involved.

1.14 OTHER FEDERAL REQUIREMENTS

Environmental Requirements [7 CFR 3550.5]

The Agency considers environmental quality equally with economic, social and other 

factors in its program development and decision-making processes. Both the Loan Originator 

and the Loan Approval Official are responsible for effectively integrating Agency environmental 

policies and procedures with loan and grant origination and servicing activities. Agency 

environmental policies and procedures and historic preservation requirements can be found in 

RD Instruction 1970. Agency-assisted properties also must meet the lead-based paint 

requirements contained in Exhibit H of RD Instruction 1924-A. Resolution of conflicts or 

significant differences between Agency environmental regulations and State 

or local environmental laws requires prior consultation with the appropriate 

State Environmental Coordinator and, if necessary, National Office 

environmental staff.

________________________________________________________________________________________

1-23

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-2-3550

Paragraph 1.14 Other Federal Requirements [7 CFR 3550.5]

Construction Standards

Sites and dwellings developed or rehabilitated with Section 502 funds must meet the 

construction standards outlined in RD Instructions 1924-A and 1924-C. Existing dwellings must 

be decent, safe, and sanitary and meet all applicable State and local codes.

Administrative Requirements

Agency employees must comply with Agency and Departmental 

administrative requirements.

1. Procurement

Goods and services procured to support Agency activities such as appraisals, 

inspections, broker services, and property management services must conform with the 

policies and procedures of RD Instruction 2024-A.

2. File Management

Files and other Agency records must be maintained in accordance with RD 

Instruction 2033-A.

3. Handling Funds

Funds received in the Field Office that are not part of a borrower’s regular 

installment, for example, credit report fees or appraisal fees are forwarded to the 

Servicing Office using Form RD 3550-17, Funds Transmittal Report. If a borrower did 

not receive a billing statement, Field Staff can submit the payment using Form RD 3550-

27, Substitute Payment Coupon.

1.15 EXCEPTION AUTHORITY [7 CFR 3550.8]

Exceptions to any requirement of this handbook or 7 CFR Part 3550 can be approved in 

individual cases by the Administrator or designee if application of the requirement or 

failure to take action would adversely affect the Government’s interest. Any exception must be 

consistent with the authorizing statute and other applicable laws.

Requests for exceptions are submitted to the Administrator or designee through the 

Deputy Administrator, Single Family Housing and may be initiated by the State Director; the 

Deputy Administrator, Single Family Housing; the Deputy Administrator, Servicing Office; or 

the Director, Single Family Housing Direct Loan Division.

_________________________________________________________________________________________

1-24
HB-2-3550

Paragraph 1.12 Exception Authority [7 CFR 3550.8]

The exception request must provide clear and convincing evidence of the need for the 

exception. At a minimum the request must include:

• A full explanation of the circumstances, including an explanation of the adverse 

effect on the Government’s interest;

• A discussion of proposed alternatives considered; and

• A discussion of how the adverse effect will be eliminated or minimized if the 

exception is granted.

Requests for exceptions regarding architectural and engineering, environmental, or civil rights 

issues must also include the review and comments of the applicable State Office Technical Staff. 

The Deputy Administrator, Single Family Housing will coordinate these exception requests with 

the applicable National Office technical staff prior to submission to the Administrator.

_________________________________________________________________________________________

1-25

(05-27-98) SPECIAL PN

Revised (08-29-19) PN-527
HB-2-3550

(This page was intentionally left blank.)

_________________________________________________________________________________________

1-26
HB-2-3550 

Attachment 1-A 

Page 1 of 1 

ATTACHMENT 1-A

INFORMAL ADMINISTRATIVE REVIEW

(DATE)

We appreciated the opportunity to review the facts relative to your [request for assistance, or 

reduction or termination of benefits, or foreclosure]. We regret the outcome did not grant the 

assistance you requested [or will terminate or reduce the assistance you are currently receiving, or 

will give you relief from foreclosure]. 

If you believe that facts used in this case are in error, you may pursue the alternative options listed in 

the attached adverse decision letter within 30 days of receipt of this letter. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Attachment (adverse decision letter) 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-2-3550 

Attachment 1-B 

Page 1 of 2 

ATTACHMENT 1-B

AN APPEALABLE ADVERSE DECISION

(DATE) 

The described action in the attached letter [did not grant you the assistance you requested or will 

terminate or reduce the assistance you are currently receiving]. If you believe this decision or the 

facts used in this case are in error, you may pursue any or all of the following three options below. 

All three options may be requested simultaneously and must be requested in writing within 30 days 

from the date adverse decision letter is received. If all options are requested and a resolution is 

reached the next available option can be canceled; however; if an option is skipped you will 

automatically waive the right to the previous option. 

Option 1 - Request an Informal Administrative Review 

You may request an Agency official review of this determination by filing a written request no later 

than 30 days after you receive this notice. If you request a review reconsideration, you have the right 

to an informal hearing which you or your representative may attend either personally or by 

telephone. If you choose to seek reconsideration, you may later appeal the determination to the 

National Appeals Division. To request reconsideration, write to the following address and explain 

why you believe this determination is erroneous. The address of the Field Office: 

(Insert applicable address.) 

Option 2 - Request Mediation (Alternative Dispute Resolution) 

Mediation is available as part of Rural Development’s informal appeal process. Mediation may 

enable us to narrow the issues and resolve the matter by mutual agreement. If your state does not 

have a participating USDA-funded mediation program, you may have to pay all or part of the cost of 

mediation. If you request mediation, the continuation of the time frame in which you may request an 

appeal stops. When mediation closes, the clock restarts and you will have the balance of the days 

remaining in that period to request an appeal. To request mediation, you must submit your written 

request no later than 30 days after you receive this notice. To request mediation, write to the RD 

State Director at the following address: 

• (Insert applicable address.)[Rural Development State Director] 

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (08-04-23) PN 589
HB-2-3550 

Attachment 1-B 

Page 2 of 2 

Option 3 - Request an Appeal Hearing to the National Appeals Division (NAD) 

You may appeal this determination to NAD by filing a written request no later than 30 days after you 

receive this notice in accordance with the NAD Appeal procedures found at 7 CFR Part 11. If you 

appeal to NAD, you have the right to a hearing which you or your representative may attend. Once a 

hearing with NAD begins, you waive any rights you might have to reconsideration and mediation. To 

appeal, you must write to NAD at the following address, explain why you believe this determination 

is erroneous, and provide a copy to RD. You must personally sign your written appeal to NAD and 

include a copy of this letter or file an appeal online at the following 

websitehttps://www.usda.gov/oha/nad/appeals

: 

[NAD Assistant Director Address] [Rural Development State Director] 

If you do not timely exercise one of the preceding options, this shall be the final administrative 

determination with respect to this matter in accordance with the regulations at 7 CFR Part 11. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

aplicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Attachment (adverse decision letter) 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases

______________________________________________________________________________
HB-2-3550 

Attachment 1-C 

Page 1 of 2 

ATTACHMENT 1-C

AN ADVERSE DECISION THAT CANNOT BE APPEALED

The decision described in the attached letter did not grant you the assistance you requested or will 

terminate or reduce the assistance you are currently receiving. If you believe that this decision is 

erroneous, you have the following options. 

Option 1 - Request an Informal Administrative Review 

You may request an Agency official review this determination by filing a written request no later 

than 30 days after you receive this notice. If you request reconsideration, you have the right to an 

informal hearing which you or your representative may attend either personally or by telephone. If 

you choose to seek reconsideration, you may later appeal the determination to the National Appeals 

Division. To request reconsideration, write to me at the following address and explain why you 

believe this determination is erroneous. The address of the Field Office: 

(Insert applicable address.) 

Option 2 - Request a Review by the National Appeals Division (NAD) 

Applicants and borrowers generally have the right to appeal adverse decisions, but decisions based 

on certain reasons cannot be appealed. We have determined that reasons for this decision cannot be 

appealed under our regulations. You may request an appeal for the a review of the accuracy of our 

findings, that the decision cannot be appealed, to NAD by filing a written request no later than 30 

days after you receive this notice in accordance with the NAD Appeal procedures found at 7 CFR 

Part 11. 

[NAD Assistant Director Address] [Rural Development State Director] 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade.

(05-27-98) SPECIAL PN

Revised (08-04-23) PN 589
HB-2-3550 

Attachment 1-C 

Page 2 of 2 

Commission. If a person believes he or she was denied assistance in violation of this law, they should 

contact the Federal Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Attachment (adverse decision letter).

Copies for: State and/or National Office Program Director Servicing Office for SFH servicing cases

______________________________________________________________________________
HB-2-3550 

Attachment 1- D 

Page 1 of 2 

ATTACHMENT 1-D 

NOTIFICATION TO APPLICANTS OR BORROWERS OF THE 

ASSIGNMENT OF THEIR CASE TO A MEDIATION SERVICE 

PROVIDER

DATE: 

TO: [Program Participant] 

FROM: Rural Development State Director 

SUBJECT: Request for Mediation Services

This replies to your request for the mediation of your adverse decision. Your request has been 

referred to a [USDA-funded State mediation program] [Community-Based Mediation Center] or [you 

must select from the attached list of certified mediation providers]. 

As indicated in our adverse decision letter, there may be a cost for the mediation. The following is an 

estimate, but you will be advised by the mediation service provider if there will be a cost. Rural 

Development policy is to pay 50 percent of the reasonable cost for mediation. 

$ USDA-funded State mediation program [and address] 

$ Community-Based Mediation Center or Other Mediation Service Provider [and address] 

Attached is an alphabetical list of certified mediators to select a mediator, or subject to our 

concurrence you may request the use of another mediator. 

Within 10 days of the date of this letter, you must provide this office, in writing, with the 

concurrence/selection of the mediator. If you do not, you will waive your right to mediation. Rural 

Development will then contact the mediator, who in turn will contact you to determine if they can 

mediate the issues in your case. You will then have 45 days to complete the mediation. 

When the mediation is concluded, you may file an appeal of the original adverse decision by 

immediately contacting the National Appeals Division (NAD): 

[NAD Assistant Director Address]

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-23550 

Attachment D 

Page 2 of 2 

Once you have been contacted by the mediation provider and if you decide not to pursue mediation, 

you must immediately contact this office (address at the top of this letter). You are responsible for all 

costs incurred by the mediation provider from the time of selection until your cancellation. 

Mediation, or the cancellation of mediation, does not affect your rights to seek an appeal with NAD. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases 

 State ADR Coordinator

______________________________________________________________________________
HB-2-3550 

Attachment 1-E 

Page 1 of 2 

ATTACHMENT 1-E

REQUEST TO A MEDIATION SERVICE PROVIDER

DATE: 

TO: [Mediation Service Provider] FROM: Rural Development State Director 

SUBJECT: Request for Mediation 

CUSTOMER: [Name of the Rural Development customer requesting mediation] [Customer contact 

information] 

The above Rural Development customer has received an adverse decision from our Agency and has 

requested mediation. Attached is a copy of the adverse decision letter and the customer’s request for 

mediation. 

Informal Administrative Review 

_____________The Customer was provided with the opportunity for an informal administrative

 review with the Agency; however, the customer chose not to exercise this option. 

_____________An informal administrative review was conducted; however, the Agency did not

 reverse its decision. 

Jurisdiction of the Case 

The adverse decision in this case was made by the following office. You should contact this office 

for further information on the case: 

[Agency contact: program, individual, address phone and email]

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-2-3550 

Attachment 1-E 

Page 2 of 2 

Payment for Service 

The Rural Development policy is to pay 50 percent of the reasonable cost of the mediation service 

and the customer will pay 50 percent. In addition, we encourage the mediation service to consider the 

customer’s ability to pay. The customer is solely responsible for their portion of the cost of this 

service and should be billed directly. The bill for the Agency’s portion should be submitted to this 

Rural Development State Office: 

[State ADR Coordinator Name and Address]Jurisdiction of case: 

Mediation must be completed within 45 days from the date of this letter, unless both parties agree 

to an extension. We also request a teleconference prior to your acceptance of this case to determine 

whether the adverse decision lends itself to mediation by your service. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Attachments (2): Adverse decision letter 

 Customer’s request for mediation 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases 

 State ADR Coordinator

______________________________________________________________________________
HB-2-3550 

Attachment 1-F 

Page 1 of 2 

ATTACHMENT 1-F

ATTACHMENT FOR NOTIFYING CUSTOMERS OF EXPIRATION OF 

THE 10 DAYS TO SELECT A MEDIATION SERVICE PROVIDER

DATE: 

TO: [CUSTOMER] 

FROM: [State Director] 

SUBJECT: Expiration of Selection of Mediation Service Provider 

On [date], you requested mediation of the adverse decision as outlined in the attached letter which 

did not [grant the assistance you requested or will terminate or reduce the assistance you are 

currently receiving, or will give you relief from foreclosure]. You were also informed that you had 

10 days from [date] to either concur in the mediation service assigned by Rural Development to your 

case, or name another mediation service for our consideration. 

The 10 days to acknowledge the selection of the mediation service provider has expired. Your 

request for mediation therefore has expired, and Rural Development will begin to process the initial 

adverse decision as outlined in the attached letter. 

Request an Appeal Hearing 

Your request for mediation did not take the place of, or limit your right to request an appeal to the 

National Appeals Division (NAD). You may request an appeal hearing by NAD as long as there are 

days remaining from the original 30 days to request an appeal as outlined in the original adverse 

decision letter. You must immediately contact the NAD Assistant Director for your region (at the 

following address) to determine if you can file for an appeal hearing. 

[NAD Assistant Director Address] 

There is no cost for an appeal hearing. Your request must state the reasons why you believe the 

decision is wrong, be personally signed by you, and include a copy of the attached original decision 

letter. A copy of your request must also be sent to the Rural Development State Director: 

[Rural Development State Director Address]

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-2-3550 

Attachment 1-F 

Page 2 of 2 

You, or your representative or counsel, may contact this office at anytime during regular office hours 

to examine or copy the Agency's record relative to the adverse decision. Photocopies will be 

provided to you. Your representative or counsel must have your written authorization to represent 

you and review your file. The NAD Administrative Judge will contact you regarding a time and place 

for the hearing. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U.

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Attachments (2) 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases 

 State ADR Coordinator

______________________________________________________________________________
HB-2-3550 

Attachment 1-G 

Page 1 of 2 

ATTACHMENT 1-G

ATTACHMENT FOR CUSTOMER NOTIFICATION OF UNRESOLVED 

RESULT OF THE MEDIATION OF THE ADVERSE DECISION

DATE: 

TO: [CUSTOMER] 

FROM: [State Director] 

SUBJECT: Unresolved Result of the Requested Mediation 

Your request for mediation has been completed. We regret that mediation did not result in resolution 

of the issues. [We are unable to grant the assistance you requested, or will terminate, or will reduce 

the assistance you requested]. 

If you believe the decision or facts used in the case are in error, you may continue to pursue your 

right to an appeal by the National Appeals Division (NAD). There is no cost for an appeal. 

Please follow the guidance in the paragraph indicated with an "X." 

You requested an appeal hearing to NAD prior to entering into mediation. You must immediately 

write to the Assistant Director of NAD at the address below to determine the number of days 

remaining, if any, to schedule the appeal hearing. 

[NAD Regional Assistant Director Address] 

You did not request an appeal hearing to NAD prior to entering into mediation. If you wish to 

schedule an appeal hearing, you must immediately write to the Assistant Director of NAD at the 

address below to determine the number of days remaining, if any, to schedule the appeal hearing. 

Your appeal request must be received within the remaining days, as determined by NAD, from the 

date when you requested mediation. 

[NAD Regional Assistant Director Address]

______________________________________________________________________________

(05-27-98) SPECIAL PN

Revised (03-31-21) SPECIAL PN
HB-2-3550 

Attachment 1-G 

Page 2 of 2 

Information Regarding Appeals 

If NAD determines that you have appeal rights and you want to exercise those appeal rights, you, or 

your representative or counsel, may contact this office at anytime during regular office hours to 

examine or to have copied the Agency's record relating to the original adverse decision. 

Photocopies will be provided. Your representative or counsel must have your written authorization to 

represent you and review your file. 

The NAD Administrative Judge will contact you regarding a time and place for the hearing. You may 

also request a teleconference hearing in lieu of the face-to-face hearing. At any time before the 

scheduled hearing, you may also request that the Administrative Judge make a decision without a 

hearing. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit 

applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the 

applicant has the capacity to enter into a binding contract); because all or part of the applicant’s 

income derives from any public assistance program; or because the applicant has in good faith 

exercised any right under the Consumer Credit Protection Act. The federal agency that administers 

compliance with this law concerning this creditor is the Federal Trade Commission. If a person 

believes he or she was denied assistance in violation of this law, they should contact the Federal 

Trade Commission, Washington, D.C. 20580. 

The Fair Housing Act prohibits discrimination in real estate related transactions, or in the terms or 

conditions of such a transaction, because of race, color, religion, sex, disability, familial status, or 

national origin. The federal agency that is responsible for enforcing this law is the U. 

S. Department of Housing and Urban Development. If a person believes that they have been 

discriminated against in violation of this law, they should contact the U. S. Department of Housing 

and Urban Development, Washington, D.C. 20410 or call (800) 669-9777. 

Copies for: State and/or National Office Program Director 

 Servicing Office for SFH servicing cases 

 State ADR Coordinator

______________________________________________________________________________