HB-3-3560 

Appendix 4 

APPENDIX 4 

HANDBOOK LETTERS REFERENCED IN THIS HANDBOOK 

Handbook Letter 301 (3560), Servicing Letter #1 

Handbook Letter 302 (3560), Servicing Letter #2 

Handbook Letter 303 (3560), Servicing Letter #3 

Handbook Letter 303-A (3560), Servicing Letter #3 for CMP 

Handbook Letter 304 (3560), Preliminary Determination Notice 

Handbook Letter 304-A (3560), Borrower Preliminary Determination Notice 

Handbook Letter 305 (3560), Final Determination Notice/Demand Letter 

Handbook Letter 305-A (3560), Borrower Sent Final Determination 

Notice/Demand Letter 

(02-24-05) SPECIAL PN 

Revised (02-15-19) PN 521 
HB-3-3560 

Appendix 4 

Handbook Letter 301 (3560) 

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Servicing Letter #1 

ROUTINE NOTICE OF SERVICING RESULTS/CONCERNS 

[insert date] 

Dear [insert name of borrower]: 

We are writing to inform you of the results of a recent review of certain selected aspects of your 

operations. A copy of the results of our review is attached [Attach copy of supervisory visit 

report, physical inspection report, compliance review, reserve records, notice of payment due, 

etc.]. 

Please review the attached material and note the areas of concern listed. [if necessary, insert “We 

want to especially bring to your attention the following items:”] 

We are asking that you contact this office within 15 days of the date of this letter to inform us of 

the corrective actions you have taken, or plan to take, to correct the concerns listed. Our office 

address and telephone number are: [insert address and telephone number] 

Sincerely, 

[Signature and title of Official] 

Attachment 

(02-24-05) SPECIAL PN 
HB-3-3560 

Appendix 4 

Handbook Letter 302 (3560) 

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Servicing Letter #2 

NOTIFICATION OF SERIOUS SERVICING CONCERNS 

[insert date] 

Dear [insert name of borrower]: 

We are writing to inform you that certain aspects of your project operations are of serious 

concern to the Agency. 

A brief description of the items of concern which warrant attention is [insert either: “provided 

below:” or “attached.”] 

We would like to arrange a meeting to discuss these concerns. [insert either: “Please contact our 

office to confirm if you can make the tentatively scheduled meeting at the following time, date, 

and location:” or “Please contact our office within 15 days of the date of this letter to make the 

necessary arrangements”]. Our address and telephone number are [insert address and telephone 

number]. 

Please be prepared to discuss the matters of concern identified. [insert: “In particular, you may 

want to bring the following information to the meeting:”] 

We look forward to hearing from you. 

Sincerely, 

[Signature and title of Official] 

Attachment 

(02-24-05) SPECIAL PN 
HB-3-3560 

Appendix 4 

Handbook Letter 303 (3560)

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Servicing Letter #3 

NOTIFICATION OF INTENT TO PURSUE MORE FORCEFUL 

SERVICING ACTIONS 

[insert date] 

Dear [insert name of borrower]: 

We regret that earlier attempts to resolve [state the problems] have not been successful. We are writing to 

inform you that Rural Development intends to take further action unless alternative arrangements are 

promptly made with this office. If you have not contacted us within 15 days, we intend to pursue the [insert 

either: “following actions:” or “attached actions.”] 

[List actions, e.g., Forward a problem case report to the State Director, recommend an investigation by the 

Office of the Inspector General, demand a change in project management, place a recoverable cost charge 

on the account, forward a recommendation to the State Director to issue a Notice of Acceleration, etc.] 

We are hopeful we can avoid the necessity of taking the steps outlined above. Unfortunately, we will be 

forced to do so unless we hear from you within 15 days from the date of this letter. 

Please contact our office immediately if you wish to avoid the actions described above. 

Sincerely, 

_______________________ 

[Signature and title of Official] 

Attachment 

(02-24-05) SPECIAL PN 
HB-3-3560 

Appendix 4 

Handbook Letter 303-A (3560) 

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Servicing Letter #3-A 

_____________________________________________________________________________ 

NOTIFICATION OF INTENT TO PURSUE CIVIL MONETARY PENALTY ACTION 

[insert date] 

Dear [insert name of borrower]: 

We regret that earlier attempts to resolve [state the problems] have not been successful. 

We are writing to inform you that Rural Development will be taking further action unless 

alternative arrangements are promptly made with this office. If you have not contacted us within 15 

days, we intend to forward a recommendation to the Administrator to pursue Civil Monetary 

Penalty action in an effort to bring about program compliance. The open violations resulting in this 

action as of the date of this letter are: 

1. [list the violations] 

2.

3.

The maximum civil money penalty that may be imposed per violation, in accordance with 7 CFR 

3.91(b)(8) and 543 (b)(3)(A) of the Housing Act, is $70,881.00.

Upon receipt of this letter, you should become familiar with the rules governing the Agency’s 

adjudicatory hearing proceedings set forth in 7 CFR part 1, subpart H. You will be given the 

opportunity to settle with the State Director prior to the hearing. Failure to respond adequately to 

the Agency within the 15-day period may result in issuance of a complaint under 7 CFR 3560.461 

without consideration of information that you may wish to provide. 

We are hopeful we can avoid the necessity of taking the steps outlined above. 

Please contact our office immediately if you wish to avoid the actions described above. 

Sincerely, 

_______________________ 

[Signature and title of Official] 

_____________________________________________________________________________________________ 

(02-24-05) SPECIAL PN 

Added (02-15-19) PN 521 
HB-3-3560 

Appendix 4 

Handbook Letter 304 (3560) 

REFERENCE: HB-3-3560, Chapter 9 

PURPOSE: Preliminary Determination Notice for Initial Letter to Recipients of 

Unauthorized Assistance 

PRELIMINARY DETERMINATION NOTICE 

[insert date] 

Dear [insert name of borrower or tenant]: 

Rural Development has determined that (you)(name of tenant) (have, has) received 

unauthorized financial assistance in the form of a (loan, grant, subsidy) amounting to 

$ which must be repaid. 

(Insert a paragraph briefly describing the circumstances under which the 

unauthorized assistance was extended, including the reason(s) as provided in 7 CFR part 

3560 (Subpart O). 

*If unauthorized assistance due from tenant: 

You must notify the tenant in writing that a determination has been made that $ in 

unauthorized assistance was received. Please provide a copy of this notice to our office 

within seven (7) business days. 

The unauthorized assistance determination notice is a preliminary notice, not a demand 

letter. The unauthorized assistance determination will: 

(1) Specify the reasons the assistance was determined to be unauthorized; 

(2) State the amount of unauthorized assistance to be repaid and specify the parties 

responsible for repayment of the unauthorized assistance; 

(3) Establish a place and time when the persons receiving the unauthorized 

assistance determination notice may meet with you to discuss issues related to the 

unauthorized assistance notice such as the establishment of a repayment 

schedule; and, 

(4) Advise the tenants they may present facts, figures, written records, or other 

information within a specified period of time which might alter the determination 

that the assistance received was unauthorized. 

(02-24-05) SPECIAL PN 

Added (07-29-11) PN 450 
HB-3-3560 

Appendix 4 

Upon request by the tenants, you will grant additional time for discussions related to 

an unauthorized assistance determination notice. You must notify this office of 

schedule revisions when additional time is granted to the tenants in this unauthorized 

assistance claim. 

After you have met with the tenants please provide a written explanation as to your 

findings and what, if any, corrective arrangements (e.g., recovery of improper benefit 

agreements, evictions, legal proceedings, etc.) you are making. Complete Form RD 

3560-65 and have the tenant sign the form as their agreement to repay. Please 

provide this office the explanation within 10 days of the date of the meeting with the 

tenant, along with the signed Form RD 3560-65. 

Should recovery of improper payments be required, Agency regulations require 

collection be made by lump sum cash payment, or payment over a reasonable period 

of time. 

If the tenant fails to respond to the unauthorized assistance determination notice or 

fails to agree to a repayment schedule, please send Handbook Letter 305, Final 

Determination/Demand Letter to the tenant and a copy to this office. If you receive no 

response to this letter, please return the Form RD 3560-65 to this office, unsigned. 

*If unauthorized assistance due from borrower: 

We have scheduled an appointment at (a.m.;p.m.) on date for 

you to come into this office to discuss the basis for the Agency’s claim. You may provide 

facts, figures, written records, or other information you have which might alter the 

Agency’s determination that the assistance you have received was unauthorized. 

Necessary servicing actions will also be discussed. 

If you are unable to keep this appointment, please telephone this office at 

(telephone number) to change the appointment. It is urgent that you respond to 

this request. 

Failure to do so within 15 days may result in the Agency initiating appropriate action 

to effect collection. If you agree with our claim of unauthorized assistance, Agency 

regulations require collection be made by lump sum cash payment, or payment over a 

reasonable period of time. 

If you have any questions concerning the subject matter, please contact this office. 

Sincerely, 

[Signature and title of Official] 

Attachment – Form RD 3560-65 (if needed) 

Handbook Letter 305, Final Determination/Demand Letter (if needed) 
HB-3-3560 

Appendix 4 

Handbook Letter 304-A (3560) 

REFERENCE: HB-3-3560, Chapter 9 

PURPOSE: Preliminary Determination Notice for Borrower or Management 

Agent Initial Letter to Recipients of Unauthorized Assistance 

PRELIMINARY DETERMINATION NOTICE 

[insert date] 

Dear [insert name of borrower or tenant]: 

[Borrower and/or Management Agent name] has determined that (you)(name of 

tenant) (have, has) received unauthorized financial assistance in the form of a (loan, 

grant, subsidy) amounting to $ which must be repaid. 

(Insert a paragraph briefly describing the circumstances under which the 

unauthorized assistance was extended, including the reason(s) as provided in 7 CFR part 

3560 (Subpart O). 

You must notify the tenant in writing that a determination has been made that $ in 

unauthorized assistance was received. Please provide a copy of this notice to the Rural 

Development office within seven (7) business days. 

The unauthorized assistance determination notice is a preliminary notice, not a demand 

letter. The unauthorized assistance determination will: 

(1) Specify the reasons the assistance was determined to be unauthorized; 

(2) State the amount of unauthorized assistance to be repaid and specify the parties 

responsible for repayment of the unauthorized assistance; 

(3) Establish a place and time when the persons receiving the unauthorized 

assistance determination notice may meet with you to discuss issues related to the 

unauthorized assistance notice such as the establishment of a repayment 

schedule; and, 

(4) Advise the tenants they may present facts, figures, written records, or other 

information within a specified period of time which might alter the determination 

that the assistance received was unauthorized. 

(02-24-05) SPECIAL PN 

Added (02-15-19) PN 521 
HB-3-3560 

Appendix 4 

 

Upon request by the tenants, you will grant additional time for discussions related to 

an unauthorized assistance determination notice. You must notify the Rural 

Development office of schedule revisions when additional time is granted to the 

tenants in this unauthorized assistance claim. 

After you have met with the tenants please provide a written explanation as to your 

findings and what, if any, corrective arrangements (e.g., recovery of improper benefit 

agreements, evictions, legal proceedings, etc.) you are making. Complete Form RD 

3560-65 and have the tenant sign the form as their agreement to repay. Please 

provide the Rural Development office the explanation within 10 days of the date of 

the meeting with the tenant, along with the signed Form RD 3560-65. 

Should recovery of improper payments be required, Agency regulations require 

collection be made by lump sum cash payment, or payment over a reasonable period 

of time. 

If the tenant fails to respond to the unauthorized assistance determination notice or 

fails to agree to a repayment schedule, please send Handbook Letter 305-A, Final 

Determination/Demand Letter to the tenant and a copy to the Rural Development 

Servicing office. If you receive no response to this letter, please return the Form RD 

3560-65 to the Rural Development office, unsigned. 

If you disagree with the decision or facts used in making the decision, you may file a 

Tenant Grievance under the provisions of 7 CFR 356.160. To initiate the Tenant 

Grievance procedures, you will need to write to this office within 10 calendar days of 

the receipt of this letter and explain why the decision was wrong or to request a meeting 

with us. You can present any new information or evidence with the letter or at the 

meeting. 

*See attachment Tenant Grievance Procedures, 7 CFR 3560.160. 

If you have any questions concerning the subject matter, please contact [Borrower and/or 

Management Agent name]. 

Sincerely, 

[Signature and title of Official] 

Attachment – Form RD 3560-65 (if needed) 

Handbook Letter 305-A, Final Determination/Demand Letter (if needed) 
HB-3-3560 

Appendix 4 

Handbook Letter 305 (3560) 

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Final Determination Notice/Demand Letter to recipient of 

unauthorized assistance to state final determination. Send if borrower 

or tenant fails to respond to an unauthorized assistance determination 

notice or fails to agree to a repayment schedule. 

FINAL DETERMINATION NOTICE/DEMAND LETTER 

[insert date] 

Dear [insert name of borrower or tenant]: 

After careful consideration of all information available, Rural Development has 

determined that you have received unauthorized financial assistance as outlined below. 

[Insert a paragraph to: 

(a) Describe the unauthorized assistance; 

(b) State the amount of unauthorized assistance which must be repaid (same as the 

amount stated in Handbook Letter 304 unless subsequent information provided by 

the recipient caused this amount to be changed); and 

(c) State what further action is to be taken by the Agency. (See 7 CFR 3560, 

3560.709, including termination of tenancy if applicable.) 

(d) Attach Form RD 3560-65 to this letter which describes the amount owed and 

payment agreement. This form should be signed and returned to our office.] 

If you disagree with the decision or facts used in making the decision, you may file a 

Tenant Grievance under the provisions of 7 CFR 356.160. To initiate the Tenant 

Grievance procedures, you will need to write to this office within 10 calendar days of 

the receipt of this letter and explain why the decision was wrong or to request a meeting 

with us. You can present any new information or evidence with the letter or at the 

meeting. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against 

credit recipients on the basis of race, color, religion, national origin, sex, marital status, 

handicap, or age (provided that the recipient has the capacity to enter into a binding 

contract), because all or part of the recipient’s income derives from any public assistance 

(02-24-05) SPECIAL PN 

Revised (02-15-19) PN 521 
HB-3-3560 

Appendix 4 

 

program. Department of Agriculture regulations provide that no agency, officer, or 

employee of the United States Department of Agriculture shall exclude from 

participation in, deny the benefits of, or subject to discrimination any person based on 

race, color, religion, sex, age, handicap, or national origin under any program or activity 

administered by such agency, officer, or employee. The Fair Housing Act prohibits 

discrimination in real estate-related transactions, or in the terms and conditions of such a 

transaction, because of race, color, religion, sex, handicap, familial status, or national 

origin. If an applicant or borrower believes he or she has been discriminated against for 

any of these reasons, that person can write the Secretary of Agriculture, Washington, 

D.C. 20250. 

Applicants also cannot be denied a loan because the applicant has in good faith exercised 

his or her rights under the Consumer Credit Protection Act. If an applicant believes he or 

she was denied a loan for this reason, the applicant should contact the Federal Trade 

Commission, Washington, D.C. 20580. 

*See attachment Tenant Grievance Procedures, 7 CFR 3560.160. 

If you do not cooperate in effecting the necessary adjustments to your account, we will 

have no alternative but to initiate appropriate action to collect the unauthorized 

amount. 

Sincerely, 

[Signature and title of Official] 

Attachment 
Handbook Letter 305-A (3560) 

REFERENCE: HB-3-3560 Chapter 9 

PURPOSE: Final Determination Notice/Demand Letter to recipient of 

unauthorized assistance to state final determination. Borrower or 

Management Agent to send if borrower identified unauthorized 

assistance, when tenant fails to respond to an unauthorized 

assistance determination notice or fails to agree to a repayment 

schedule. 

FINAL DETERMINATION NOTICE/DEMAND LETTER 

[insert date] 

Dear [insert name of tenant]: 

After careful consideration of all information available, [Borrower and/or Management 

Agent name] has determined that you have received unauthorized financial assistance 

as outlined below. [Insert a paragraph to: 

(a) Describe the unauthorized assistance; 

(b) State the amount of unauthorized assistance which must be repaid (same as the 

amount stated in Handbook Letter 304 unless subsequent information provided 

by the recipient caused this amount to be changed); and 

(c) Attach Form RD 3560-65 to this letter which describes the amount owed and 

payment agreement. This form should be signed by the Agency and returned 

to our Rural Development.] 

If you disagree with the decision or facts used in making the decision, you may file a 

Tenant Grievance under the provisions of 7 CFR 356.160. To initiate the Tenant 

Grievance procedures, you will need to write to this office within 10 calendar days of 

the receipt of this letter and explain why the decision was wrong or to request a meeting 

with us. You can present any new information or evidence with the letter or at the 

meeting. 

*See attachment Tenant Grievance Procedures, 7 CFR 3560.160. 

If you do not cooperate in effecting the necessary adjustments to your account, we 

will have no alternative but to initiate appropriate action to collect the unauthorized 

amount. 

Sincerely, 

[Signature and title of Official] 

Attachment 

_____________________________________________________________________________ 

 (02-24-05) SPECIAL PN 

 Added (02-15-19) PN 521 
HB-3-3560 

Appendix 4