HB-1-3550

3.1 INTRODUCTION

This chapter describes the process of accepting and managing applications, up to the 

point that an applicant is selected for processing. This includes pre-qualifications (largely 

through the Single Family Housing Direct Self-Assessment tool), taking and reviewing 

applications, and selecting applications for processing.

SECTION 1: PRE-QUALIFICATION

3.2 OVERVIEW

Pre-qualification involves using unverified information to evaluate the likelihood that a 

potential applicant, someone who is interested in the program but has not yet applied, would be 

program eligible. The results of pre-qualification are not binding and will not hinder the 

submission of an application. A potential applicant with possible obstacles to program eligibility 

may apply and a potential applicant who appears program eligible is not guaranteed that a loan 

will be made.

The standard pre-qualification method is the potential applicant’s self-assessment 

using the Single Family Housing Direct Self-Assessment tool. Agency staff should refer 

potential applicants to the tool in their marketing materials, while speaking to them, etc. Prequalifications completed by the Agency staff are limited. To access the Self-Assessment tool, 

visit: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and click on the Single 

Family Housing Direct tab.

3.3 PROCEDURES FOR PRE-QUALIFICATION

On those limited occasions where the Agency staff completes a pre-qualification, 

the Loan Originator should follow the procedures below. 

• Obtain information from the potential applicant about household members, income, 

deductions, debt, and the county where they want to purchase a home. 

• Order an in-file credit report if the potential applicant has signed Form RD 3550-1, 

Authorization to Release Information, and if it would aid in the review.

• Check the Department of the Treasury’s Do Not Pay (DNP) portal and check the 

applicant’s social security number against Agency records by using LoanServ’s “SSN 

CROSS REFERENCE” softlink key. Staff should refer to the DNP SharePoint site

for the most current guidance about using the portal, sources to be checked, 

appropriate action, etc. If the “SSN CROSS REFERENCE” reveals a current loan or 

active application, follow the appropriate action below. 

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Revised (10-19-23) PN 595

CHAPTER 3: APPLICATION PROCESSING
HB-1-3550

Paragraph 3.3 Procedures for Pre-Qualification

o If the pre-qualification is for a subsequent loan, the Loan Originator should 

continue processing.

o If the pre-qualification is for purchase, the Loan Originator should contact 

the applicant for additional information in order to determine the appropriate 

action. For example, if the applicant is also a borrower on an existing 

Agency loan but is divorced, and the divorce decree did not make them 

responsible for loan payments, the applicant should contact the Servicing 

Office to apply to be released from liability on the existing loan before 

applying for a new loan.

o If the applicant has an active loan application in another Field Office, the 

applicant must decide to either transfer the existing application to the new 

servicing area or continue processing with the existing servicing area, as 

they may not have two applications in process at the same time.

• Enter the information in UniFi, register the pre-qualification following the instructions in 

the DLOS Training Manual, and generate the Eligibility Summary using standard terms 

(unless the potential applicant appears to qualify for adjustments to the standard terms). 

If the potential applicant is working with a leveraged partner, consider the possible 

leveraging funds.

• Discuss the results with the potential applicant and emphasize that the results are 

informal and unbinding. As applicable, consider the below when discussing the results 

and refer to Attachment 3-F for guidance on addressing negative results.

o Moderate-Income Applicant: Discuss the possibility of obtaining a nonprogram 

loan or obtaining a Guaranteed Rural Housing (GRH) loan.

o Insufficient Repayment Ability: Discuss the possibility of obtaining subsidized 

funds from other sources, reducing debt, and adding additional parties or a cosigner to the note. See Paragraph 4.24 for a detailed discussion of other 

considerations related to maximum loan amounts.

o Potential Ability to Obtain Other Credit: If a potential applicant’s credit 

history, income (i.e., they appear to be above the very low-income limit), 

assets, and lack of apparent need for payment assistance indicate that they 

should be able to qualify for a GRH loan or private financing, the potential 

applicant should be informed that they should attempt to obtain other credit.

• If the pre-qualification was not conducted face-to-face or over the telephone, use 

Handbook Letter 19 (3550), Pre-qualification Review, to prompt the opportunity to 

counsel the potential applicant.

• Retain all pre-qualification records in accordance with RD Instruction 2033-A and 

Electronic Customer File (ECF) guidance.

• As applicable, encourage the potential applicant to seek credit counseling or take a 

homeownership education course. NEVER discourage the potential applicant from 

applying.

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SECTION 2: HOMEOWNERSHIP EDUCATION

3.4 HOMEOWNERSHIP EDUCATION REQUIREMENT [7 CFR 3550.53(i)]

The Agency requires applicants who are first-time homebuyers to complete 

homeownership education training as early in the application process as possible since the 

training will prepare them for shopping, buying, financing, and owning a home. While the 

training should be completed by the applicant prior to them entering into a contract to purchase 

or construct a home, the applicant should be encouraged to take the training as soon as they 

express an interest in homeownership (e.g., when they call inquiring about the program or apply 

for a loan) for maximum benefit.

A. State Director Assessment of Homeownership Education [7CFR 3550.11]

The State Director will assess the availability of certified homeownership 

education in their respective states on an as-needed basis, but no less frequently than every

three years and maintain an updated listing of providers and their reasonable costs.

The accepted homeownership education formats are as follows:

• Online counseling.

• Classroom, one-on-one counseling, or interactive video conference.

• Interactive home study or interactive telephone counseling of at least four hours 

duration.

To be included on the list, the provider must have a certificate of completion 

process and homeownership education counselors that are certified by any of the following:

• The Department of Housing and Urban Development (HUD);

• NeighborWorks America (NWA);

• The National Federation of Housing Counselors(NFHC);

• National American Indian Housing Council (NAIHC); or

• The State Housing Finance Agency or other qualified organization approved by the 

State Director.

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(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571
HB-1-3550

Paragraph 3.4 Homeownership Education Requirement

In addition, the State Director may include homeownership education provided by 

USDA Cooperative Extension System staff.

Online homeownership education courses offered and accessible on a national, non-state 

specific basis, will be reviewed and approved by the National Office. This is not intended to endorse 

a particular online course but to have a process by which these types of online courses will be 

evaluated in a uniform manner for usage by all states. A State Director may assess a state specific 

online course for inclusion in their list of providers.

Where there is a fee charged to the applicant for homeownership education, the state will 

also assess commonly used resources of funding for the applicant to pay for their homeownership 

education. In addition, organizations that provide free homeownership education will be identified 

ensuring applicants are aware of free training options available within their state.

The provider will issue a letter or certificate of completion to document that the applicant 

has satisfactory knowledge of these minimum topics:

• Preparing for homeownership (evaluate readiness to go from rental to 

homeownership)

• Budgeting (pre- and post-purchase)

• Credit counseling

• Shopping for a home

• Lender differences (predatory lending)

• Obtaining a mortgage (mortgage process, different types of mortgages)

• Loan closing (closing process, documentation, closing costs)

• Post-occupancy counseling (delinquency and foreclosureprevention)

• Life as a homeowner (homeowner warranties, maintenance, and repairs)

Generally, a valid letter or certificate of completion of homeownership education that is less 

than two years old at date of loan closing will be considered acceptable. When appropriate, 

the provider may tailor the homeownership education training to the needs of the applicants, 

while ensuring satisfactory knowledge of the minimum required homeownership education 

topics. For example, if an applicant has already executed a purchase and sale agreement on 

a house, the provider may decide after conference with the applicant, to condense or omit 

the homeownership education section on “shopping for a home”.

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Paragraph 3.4 Homeownership Education Requirement

B. Providing Homeownership Education Information to the Applicant

The Loan Originator must ensure that applicants who are first-time homebuyers complete 

homeownership education training as early in the application process as possible. Applicants 

should be instructed to complete the training prior to entering into a contract to purchase or 

construct a home for maximum benefit. In addition, the Loan Originator must assist the applicant 

by providing the list of approved local homeownership education providers to the applicant 

along with the standardized application package. 

The list of approved local providers will also include eHome America, Framework, and 

Utah State University Extension which are nationally approved online homeownership education 

providers. Registration information includes: eHome America - https://ehomeamerica.org/usda,

cost is $75; Framework - https://www.frameworkhomeownership.org/, cost is $75; and Utah 

State University - https://extension.learn.usu.edu (select Home Buyer Education), cost is $60 for 

the applicant and $5 for a co-applicant.

The applicant must be informed that should 

there be a fee for the homeownership education 

course selected and there are no other sources for 

payment, the fee may be added to the loan amount 

at loan closing (see Paragraph 6.4 Fees and 

Related Costs). The applicant should be advised 

that if they do not close on their loan, they will still be responsible for the homeownership 

education fee. 

C. Exception Provision

The State Director may grant an exception to the homeownership education requirement 

for individuals in geographic areas where certified homeownership education is not reasonably 

available in the local area. However, a conservative approach to the exception provision is 

recommended, as generally, all efforts are encouraged to have applicants undertake 

homeownership education early in the homeownership process to gain maximum benefit.

Whether such homeownership education is “reasonably available” will be determined based on 

an assessment of factors including, but not limited to: distance, travel time, geographic 

obstacles, and cost. On a case-by-case basis, the State Director may grant an exception to the 

homeownership education requirement, provided the applicant documents a special need such as 

a disability that would impede completing a homeownership course in the above mentioned 

formats listed in Paragraph 3.4 A. 

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Consistency Is Key

Be sure to use consistent procedures 

when providing information to ALL 

applicants.
HB-1-3550

SECTION 3: APPLICATIONS [7 CFR 3550.55]

3.5 BEGINNING THE APPLICATIONPROCESS

An interested party can begin the application process by:

• Requesting that the Agency mail or email them an application or they can obtain one 

in person at any Field Office. The Field Office will provide the standardized 

application package (which can be found in the SFH Direct SharePoint site under 

General Info > Useful Documents). The standardized application package is 

maintained by the National Office and can only be altered with a State Supplement 

approved by the National Office.

• Applying online. To apply online, an interested party must first register to obtain a 

USDA eAuthentication identification and password. The user must complete the 

steps to verify their identity for the eAuthentication account in order to obtain 

access to submit an application package via eForms. Additional guidance on 

submitting applications via eForms is provided in the standardized application 

package. https://forms.sc.egov.usda.gov/eForms/welcomeAction.do?Home

• Engaging the service of a loan application packager. Loan application packagers, 

who are separate and independent from the Agency, provide an optional service to 

parties seeking a housing loan by helping them navigate the loan application 

process. Packagers may include Section 523 self-help grantees, certified packagers, 

and other packaging types as specified in Attachment 3-A.

The Agency supports partnerships with loan application packagers since packagers can 

provide outreach and presence in counties where a Field Office is not located; assist the Agency 

in reaching very low-income applicants; promote the program in underserved areas; prescreen 

potential applicants; counsel potential applicants on how to improve their ability to qualify for a 

home; ensure that applications are complete and accompanied by the supporting documentation 

needed for the Agency’s decision; and give applicants insight into the Agency’s application 

process and regulations. Attachment 3-A provides processing guidance for Field Offices and 

packagers.

3.6 APPLICATION RECEIPT AND CASE FILESETUP

The “Date Application Received” field in UniFi must be completed promptly but no 

later than 3 business days after receipt of an application; and applications (including application 

received via eForms) must be reviewed within 3 business days after receipt to determine if the 

Loan Estimate disclosure requirement was triggered (see Paragraph 3.8) and to determine if 

items are missing.

A. Missing Items

The Loan Originator should contact the applicant after reviewing the application to obtain 

any missing items. Handbook Letter 11 (3550), Request Information, should be sent to the 

applicant requesting the missing items and stating that their application will be withdrawn if the 

missing information is not received within 15 days. 

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Paragraph 3.6 Application Receipt and Case File Setup

If an application submitted by a loan application packager is determined to be 

incomplete, the following statement must be sent to the packager in writing within eForms or 

email: “No action can be taken until all the noted items have been received in this office. The 

loan application package is missing the following items: [list of missing items]. Please complete 

the package and resubmit the package in its entirety within [enter 15 days from the date of 

written notice] .”

After the Agency accepts a package as complete, if additional information is needed and 

Handbook Letter 11 is sent to the applicant, a copy must be provided to the packager and 

intermediary (if present).

B. Collections

Collection of payment for credit report fees must be processed daily in accordance with 

RD Instruction 1951-B. An application must be entered into UniFi promptly but no later than 3 

business days after receipt to obtain the account number needed for remittance of the credit 

report fee. The credit report is not required to be ordered at the time of remittance of the credit 

report fee. The credit report will be ordered at the time the application is selected for processing. 

Remittance will be through the electronic fee service in LoanServ for a check or savings account 

deposit slip, or Form RD 3550-17, Funds Transmittal Report for a cashier’s check or money 

order. A daily collection log must be maintained in accordance with RD Instruction 1951-B. A 

print screen from LoanServ, or Form RD 3550-17, Funds Transmittal Report with copy of check, 

deposit slip, cashier’s check or money order, should be filed in the office’s collection log and in 

the applicant’s ECF. Field Offices must comply with the internal control procedures prescribed 

in RD Instruction 1951-B and Form RD 1951-44, Management Control and Review of Field 

Office Collection Activities.

C. Case File Setup

The Loan Originator should promptly setup the case file by:

• Entering data. Information from the application should be entered in UniFi.

• Establishing the electronic file. The applicant’s file should be established 

according to the standardized document types and classifications available in 

ECF, and RD Instruction 2033-A, Management of Rural Development 

Records. For subsequent loans, the new documentation should be added to 

ECF with the subsequent loan number.

• Beginning the required Single Family Housing Checklist. Use Attachment 3-G, 

502 Single Family Housing Checklist, for Section 502 loan applications and 

Attachment 12-C, 504 Single Family Housing Loan & Grant Checklist, for Section 

504 loan/grant applications. States may add additional page(s), subject to prior 

approval from the National Office, to reflect required processes related to state 

laws. The checklists are required and intended as a processing aid for Agency 

staff.

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Revised (11-18-22) PN 571
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The application is a working document. Whenever revised or verified information is 

received, the appropriate UniFi field should be updated. At loan closing, a final application will 

be generated to reflect the updated information gathered during the loan approval process.

3.7 COMPLETE APPLICATION

An application is considered complete when an applicant, loan application packager, or 

Agency-approved intermediary submits a fully completed and signed uniform residential loan 

application and all the applicable items listed in Attachment 3-J. When the loan application 

package is submitted via eForms, a signature is not required on Form RD 410-4 since the eForms 

submission serves as proof of signature.

Upon receipt of these items, the Loan Originator should perform the necessary 

verifications and make an eligibility determination recommendation. If the application package 

does not contain a written explanation of derogatory credit, assume its absence is acceptable (at 

least initially). If derogatory credit appears on the tri- merge credit report and an explanation was 

not provided with the application, then an explanation may be requested.

In place of Form RD 410-4, a current industry standard application form may be accepted 

when accompanied by the Agency’s supplemental pages (6-10) of Form RD 410-4. Once 

complete, the date must be entered in the “Application Complete Date” field in UniFi. It is 

important that this date be correct because it is used to track priority for processing.

Once a complete application is received, the application should be reviewed for 

eligibility within 30 days. If the applicant is not eligible, the Loan Approval Official will deny 

the application. If the applicant is determined eligible, the Loan Originator will determine if 

funding is available, using guidance outlined in Section 4 of this chapter, prior to issuing a 

Certificate of Eligibility (COE). Only eligible applicants will be placed on the waiting list in the 

event funding is not available. If an eligibility determination cannot be made within 30 days of 

complete application, Handbook Letter 3-B (3550), Waiting Period (Extended Processing 

Timeframe), will be sent to the applicant with the approximate waiting period until an eligibility 

determination can be made.

If an applicant wants their application to be transferred to a different servicing area, the 

steps outlined in Chapter 5 of the DLOS Training Manual must be followed by the original and 

receiving areas; and the receiving area will perform their own eligibility and underwriting 

analyses.

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Paragraph 3.6 Application Receipt and Case File Setup
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Paragraph 3.8 Compliance With Other Federal Requirements

3.8 COMPLIANCE WITH OTHER FEDERALREQUIREMENTS

A. Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) 

Integrated Mortgage Disclosures

The Truth in Lending Act and Real Estate Settlement Procedures Act Integrated 

Mortgage Disclosures (TRID) rule, issued by the Consumer Financial Protection Bureau 

(CFPB), integrates the disclosure requirements associated with the individual TILA and RESPA 

regulations. This regulation is intended to simplify the disclosures associated with a mortgage 

loan transaction and assist consumers understand the cost of credit and the difference of such 

cost among creditors. TRID requires lenders to provide applicants with pertinent and timely 

disclosures of the nature and costs of the real estate settlement process, these disclosures are the 

Loan Estimate and the Closing Disclosure. Any loan, including a Section 504 loan, is subject to 

TRID if a security interest will be taken on the property.

1. Initial Disclosures: Loan Estimate, Written List of Service Providers andSpecial 

Information Booklet 

A loan application for TRID purposes is the submission of the following information: (1) 

applicant’s name, (2) applicant’s monthly income, (3) applicant’s social security number to 

obtain a credit report, (4) property address, (5) an estimate of the value of the property, and (6) 

mortgage loan amount sought. 

When an application as defined by TRID is received, the following initial disclosures 

must be provided to the applicant within 3 business days of receiving the application but no later 

than 7 business days before loan closing: 

• Handbook Letter 5 (3550), Cover Letter for Initial Disclosures Package;

• CFPB’s standard Loan Estimate (all construction loans require a Loan Estimate be issued to the 

consumer for both the construction and purchase loans); 

• Attachment 3-I, Settlement Service Providers List and Mortgage Loan Application 

Related Disclosures; and

• CFPB’s “Your home loan toolkit: A step-by-step guide”.

Business days for Loan Estimate purposes are Monday-Friday. If the initial disclosures 

are not provided to the applicant in person, the applicant is considered to have received the 

disclosures 3 business days after they are delivered or placed in the mail. The terms of the Loan 

Estimate are binding for at least ten (10) business days from when it is issued, subject to 

tolerances and changed circumstances, unless a revised Loan Estimate is issued before settlement 

or the Loan Estimate expires.

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Revised (10-19-23) PN 595

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Paragraph 3.8 Compliance With Other Federal Requirements

TRID establishes variation limitations between the charges disclosed in the Loan 

Estimate and the final charges listed in the Closing Disclosure. All lender charges, including 

fees paid to a packager or qualified intermediary, which are imposed on a consumer must 

be disclosed whether financed, paid by the buyer, paid by the seller, or paid by a third 

party. Closing costs are divided into charges that cannot increase (Zero Tolerance), charges that 

in total cannot increase more than ten percent (10% Tolerance), and charges that can change (Not 

Subject to Tolerance). When the charges in the Closing Disclosure exceed the tolerance 

thresholds, the Loan Estimate is not considered to have been provided in good faith and the 

Agency is required to reimburse to the borrower the amount by which the tolerance was 

exceeded. The Loan Originator is responsible for issuing accurate and timely TRID disclosures.

The Loan Estimate cannot be revised and reissued unless changed circumstances occur. 

“Changed Circumstances” is defined by regulation as: (1) An extraordinary event beyond the 

control of any interested party or other unexpected event specific to the consumer or transaction; 

(2) Information specific to the consumer or transaction that the creditor relied upon when 

providing the required disclosures and that was inaccurate or changed after the disclosures were 

provided; or (3) New information specific to the consumer or transaction that the creditor did not 

rely on when providing the original disclosures. In the event changed circumstances occur, the

Loan Originator must send the revised Loan Estimate within 3 business days of receiving 

the information that established the change but no later than 7 business days before closing. 

Only those fees impacted by the changed circumstance may change and supporting 

documentation must be retained in the case file for no less than three years after settlement. A 

revised Loan Estimate cannot be provided on or after the date of the Closing Disclosure. The 

Closing Disclosure can be issued instead of a revised Loan Estimate if a closing date has been 

determined, final fees calculated, and it is sent at least 7 business days prior to loan 

consummation. Either the revised Loan Estimate or Closing Disclosure can be used to reset 

tolerance and terms.

The Loan Estimate, which gives a preliminary indication of the amount of escrow 

required, does not explain the concept of escrow. During the applicant orientation, escrow will 

be explained and the Agency’s requirements will be outlined.

2. Final Disclosure: Closing Disclosure

Under the TRID regulation, creditors must ensure the consumer receives the Closing 

Disclosure at least 3 business days before loan consummation (all construction loans require a 

Closing Disclosure be issued to the consumer for both the construction and purchase loans). 

The mailbox rule states that if a disclosure is not provided to the consumer in person, the 

consumer is considered to have received the disclosure 3 business days after it was delivered or 

placed in the mail. Business days for Closing Disclosure delivery are all calendar days except 

Sundays and legal public holidays.

“Consummation” occurs when the consumer becomes contractually obligated to the creditor. 

Although consummation may commonly occur at the same time as closing or settlement, it is a 

legally distinct event that is not the same thing as closing or settlement.

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Paragraph 3.8 Compliance With Other Federal Requirements

While the closing agent/attorney will complete the Closing Disclosure, the Agency is 

ultimately responsible for meeting the accuracy and delivery requirements of this form. The 

appropriate Agency staff will review the Closing Disclosure prepared by the closing agent and, if

correct, will proceed (or authorize the closing agent/attorney) to provide the disclosure to the 

applicant within the timeframe provided by the law. 

If there is more than one applicant involved in a transaction, the Closing Disclosure may 

be provided to any applicant with primary liability on the obligation for purchase transactions. 

However, for transactions with a rescission period, the Closing Disclosure must be given 

separately to each applicant who has the right to rescind under the regulation.

The Agency must redisclose the terms and costs on the Closing Disclosure if certain 

changes occur to the transaction after the Closing Disclosure was first provided to the applicant 

and that cause the disclosures to become inaccurate. Revising the Closing Disclosure after it has 

been provided to the applicant may require an additional 3 business day waiting period prior to 

consummation.

B. Truth in Lending Act

The Truth in Lending Act (TILA) is intended to assist consumers understand the cost of 

credit and the difference of such cost among creditors. The Agency is required to issue a Truth 

in Lending Statement disclosing specific information about the terms and costs of the loan for all 

unsecured Section 502 or 504 loan transactions. The Annual Percentage Rate (APR) is one of 

the key components of the truth in lending statement and it represents the cost of the credit 

expressed as a percentage. For loans where a security interest will not be taken on the property, 

Form RD 1940-41, Truth in Lending Statement, must be issued within 3 business days of 

receiving a complete application as defined above. If the APR varies by more than one-eighth of 

a one percent at the loan closing, the Truth in Lending Statement must be re-issued using the 

actual terms of the transaction.

C. Fair and Accurate Credit Transaction Act

In accordance with the Fair and Accurate Credit Transactions Act of 2003, the Agency is 

required to disclose to the applicant, upon request, the score that a credit bureau distributed and 

was used in connection with their loan. In addition, the Agency is required to disclose the key 

factors affecting the applicant’s credit scores. Therefore, Attachment 3-H, Credit Score 

Disclosure, will be provided to the applicant with the standardized application package. It must 

be explained to the applicant that the credit score will not be used to determine loan approval but 

only to presume acceptable credit in lieu of other credit underwriting practices.

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Paragraph 3.8 Compliance With Other Federal Requirements

D. Equal Credit Opportunity Act (Regulation B)

The Equal Credit Opportunity Act (ECOA) of 1974 prohibits creditors from 

discriminating against credit applicants who are members of a protected class (as discussed in 

Chapter 1).

Regulation B, which implements the provisions of the ECOA, outlines the rules lenders 

must adhere to before, during, and after an application for credit is received and evaluated.

Agency activities covered under Regulation B include but are not limited to: information and 

documentation requirements, verification procedures, how standards to determine 

creditworthiness are used, actions taken on the application, modification of credit terms, and 

collection procedures. The application processing procedures prescribed in this handbook take 

into consideration the various provisions and requirements outlined in Regulation B, including 

the notification requirements. Following these procedures and using consistency when 

processing Section 502 and 504 loan applications ensures compliance with this regulation.

Under Regulation B, lenders are required to provide loan applicants a written notification 

of their right to receive a copy of the appraisal report and deliver such appraisal in a prompt 

manner but no later than 3 business days before closing.

To comply with this requirement, the Loan Originator must provide the following:

• Notification of Right to Receive a Copy of the Appraisal: The Agency is required 

to provide to the applicant a written notification of the applicant’s right to receive a 

copy of all written appraisals, or any other acceptable valuation, developed in 

connection with a mortgage application to be secured by a first lien on a dwelling. 

The appraisal notification, which is included in Attachment 3-I, must be issued within 

3 business days of receiving a loan application with a specific property to be 

financed. Providing Attachment 3-I along with pertinent TRID disclosures meets the 

appraisal notification requirement.

• A Copy of the Appraisal: In accordance with Regulation B, and as stated in the 

appraisal notification, the Agency must provide to the applicant a copy of the 

appraisal, or any other written valuation, promptly upon completion but not later than 

3 business days prior to closing, whichever is earlier. For the Agency’s purposes, 

upon completion occurs when the Loan Approval Official has reviewed the appraisal 

and made the lending decision. If the loan application is approved without using the 

subject to appraisal allowance, the Loan Originator should provide a copy of the 

appraisal along with Form RD 3550-7, Funding Commitment and Notification of 

Loan Closing; if the application is rejected, it should be sent along with Handbook 

Letter 15 (3550), Standardized Adverse Decision Letter, or Handbook Letter 17 

(3550), Adverse Decision Involving an Appraisal, whichever is applicable. If the 

loan application is approved using the subject to appraisal allowance (which is 

permitted throughout the fiscal year), the applicable box on Form RD 3550-7 must 

be checked and a copy of the appraisal must be promptly provided to the applicant 

once it is received, reviewed, and accepted by the Agency. Applicants do not have to 

request a copy of the appraisal to receive one. If there is more than one applicant, the 

Loan Originator may send a copy of the appraisal to only one applicant.

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Paragraph 3.9 Withdrawing And Rejecting Applications

3.9 WITHDRAWING AND REJECTINGAPPLICATIONS

An applicant can withdraw an application at any time by writing or calling the Field 

Office. The Agency may withdraw the application if the applicant fails to respond to the 

Agency’s written request for information in a timely fashion. In most cases, as specified in this 

handbook, the response time is 15 days. However, in some situations such as obtaining bids for 

repair work, a longer timeframe may be warranted. In these limited situations, the response time 

will be up to 30 days. All letters to applicants requesting information must clearly indicate that 

the application will be withdrawn if the appropriate information is not provided within the 

specified time frame.

When an applicant is rejected, they must be informed, in writing, of the adverse decision 

and their review and appeal rights. All reasons for the rejection must be clearly documented.

Applicants who are over the low-income but within the moderate-income limit should be issued 

Handbook Letter 1 (3550), Moderate Income Options with Attachment 1-C, which is signed by 

the Loan Approval Official, if the only reason for the adverse decision is that the applicant is 

over the low-income but within the moderate-income limit. However, if the applicant is 

determined to be over the low-income but within the moderate-income limit and there are other 

adverse factors, then Handbook Letter 15 (3550), Standardized Adverse Decision Letter with 

Attachment 1-C should be issued. 

Once an application has been withdrawn or rejected, an applicant who wishes to reapply 

must complete a new application form. The Loan Originator must record in UniFi that the 

application has been withdrawn or rejected. Only in the following situations can an application 

be reopened: 

• If the National Appeals Division has overturned the rejection of an application; 

or

• The Loan Approval Official has reviewed and reconsidered the rejection of an 

application.

In these situations, Attachment 3-E must be completed and forwarded to the 

Servicing and Asset Management Office (Servicing Office), SFH Assistance Section, for 

processing.

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Revised (10-19-23) PN 595
HB-1-3550

SECTION 4: SELECTION FOR PROCESSING

3.10 OVERVIEW

In general, applications are selected for processing based on the priorities described in 

Paragraph 3.13. If available funding is not sufficient for all eligible applications on the waiting 

list, the priorities described in Paragraph 3.13 will be used to determine the selection of 

applications for available funds. This section discusses the appropriate actions to take to notify 

applicants of their status and select applications for processing in the proper order.

3.11 DETERMINING WHETHER FUNDS ARE AVAILABLE

The Loan Originator must determine whether funds are available before proceeding 

with further processing. Loan Originators will review the number of applications on hand in 

UniFi at least quarterly. A sufficient number of applications will be reviewed, and Certificates 

of Eligibility will be issued, as appropriate, based on expected state and national funding 

availability by income category over the next 90 days. The Loan Approval Official may use 

historical data, but generally the number of outstanding Certificates of Eligibility will not 

exceed 150 percent of the expected funding. State Directors will issue State Supplements to 

provide guidance about how many applications should be processed based on available 

funding levels.

A. Regular Funding

Nationwide, at least 40 percent of Section 502 loan funds must be allocated to very lowincome households. Since each state meets this goal in different ways, Loan Originators also 

may have to consider the guidance provided through State Supplements in determining whether 

funds are available for the applicant’s income category.

In rare situations, the funds available may be less than the amount for which the applicant 

is eligible. If this occurs, it is important to follow consistent procedures. An example of a 

possible procedure is provided in Exhibit 3-1.

3-14
HB-1-3550

Paragraph 3.11 Determining Whether Funds Are Available

Special Funding

Each year the National Office may designate funds to address special high-priority needs 

identified by the Agency. If an applicant falls into one of those high priority needs areas and 

funds are available, the application can be processed immediately. For example, in a year in 

which funds have been set aside to target a particular geographic area, an application from a 

household willing to seek a property in that area could be processed ahead of other applications.

Information about funds available for high-priority needs are distributed to Field Offices 

through State Supplements, based on guidance from the National Office through RD Instruction 

1940-L.

3.12 IF FUNDING IS NOTAVAILABLE

If funds are insufficient to proceed processing an application from an applicant who has 

been determined eligible, the applicant should be notified using Handbook Letter 2 (3550), 

Funds Not Available that they have been determined eligible, but funding is not currently 

available. The letter should indicate the expected waiting time before funding will become 

available to the applicant, given the applicant’s priority status.

When funds are not readily available to obligate a loan request from an eligible applicant 

who has already been issued a Certificate of Eligibility and/or who has identified a property, 

Field Offices should issue Handbook Letter 4 (3550), Funds Not Available – Certificate of 

Eligibility/Identified Property.

3-15

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571

Exhibit 3-1

Procedures if Funds are Inadequate for the

Next Applicant on the WaitingList

Applicant A is next on the waiting list and qualifies for a

$175,000 loan. Applicant B is eligible for a $140,000 loan. The funds 

available are $145,000.

• Call State Office to ask for more funds.

• Document the results of this conversation. If no more money is

available, offer Applicant A $145,000.

• If Applicant A accepts, proceed.

• If Applicant A does not accept, go to Applicant B and keep 

Applicant A at the top of the waiting list for the next 

available funds.
HB-1-3550

3.13 SELECTING APPLICATIONS FOR PROCESSING

Applications will be selected for processing using the priorities specified in this 

paragraph.

A. Selection Procedures

Within the respective priority categories, completed applications will be processed in the 

order received. In the case of applications with equivalent priority status that are received on the 

same day, veterans’ preference will first be extended to those qualifying applicants.

When funds are limited and eligible applicants will be placed on the waiting list, the 

priorities specified in this paragraph will be used to determine the selection of applications for 

available funds. If a Field Office has a backlog of unprocessed applications, a list of unprocessed 

applications should be generated from UniFi. The Loan Originator must select applications for 

processing based on each applicant’s priority and the date the application was determined 

complete as outlined in Paragraph 3.7. The number of applications selected will be determined 

based on guidance from the State Director.

Whenever applicants are selected for processing, a copy of the waiting list should be 

maintained and placed in an operational file to document that the applications were processed in 

the correct order. This is important because the electronic files will be overwritten, leaving no 

documentation to verify that proper procedures were followed.

B. Processing Priorities

A priority system is used to ensure that applicants who meet the priorities established for 

the program are selected for processing first. The priority system is used only to determine the 

order in which applications will be processed. A priority will be established once an application 

has been determined complete; the priority should be marked on Attachment 3-G and 

completed in the Registration Screen in UniFi. Once applicants are selected for processing, the 

order in which they actually receive funding will depend on how long it takes to conduct all 

required verifications and how long it takes the household to locate a property. Attachment 3-C 

provides a case study that illustrates the use of priorities in selecting applicants for processing.

The Agency gives processing priority to applicants who have an especially serious need 

for immediate assistance and for loans that are to the Agency’s benefit. Applicants with higher 

priorities must be processed before those with lower priorities. Applicants who do not qualify 

for any priority should be processed only when no applications with a priority remain 

unprocessed. Within each priority category, applications should be processed in the order they 

are considered complete. The types of priorities are described below.

1. First Priority: Subsequent Loans to Correct Health and Safety Hazards

Current Agency borrowers who request subsequent loans to correct health and safety 

hazards will be selected for processing first.

3-16
HB-1-3550

Paragraph 3.13 Select Applications For Processing

2. Second Priority: REO Property or Transfer/Purchase of Agency-Financed Property

Applicants interested in obtaining loans for purposes that are in the Agency’s interest, 

but that do not directly involve removing hazards in a security property, will receive 

second priority for processing. These are loans related to the sale of Real Estate Owned 

(REO) property and loans related to the transfer and assumption (or purchase with new 

loan proceeds) of property owned by a program borrower.

3. Third Priority: Hardships

Applicants facing housing-related hardships will receive third priority for processing.

Hardship circumstances include living in deficient housing for more than 6 months. 

Deficient housing is defined as a dwelling that lacks complete plumbing, lacks adequate 

heating, is dilapidated or structurally unsound, has an overcrowding situation that will be 

corrected with loan funds, or is otherwise uninhabitable, unsafe, or poses a health or

environmental threat to the occupant or others. To retain the hardship designation, the

resulting loan must eliminate the deficient housing issue which existed at the time of the 

application. Other hardship circumstances include current homeowners in danger of 

losing a property through foreclosure due to circumstances beyond their control, and 

other circumstances determined appropriate by the State Director on a case-by-case 

basis.

3-17

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

Example - Deficient Housing Scenario

The Smiths are an 8-person household currently living in a 2-bedroom apartment. They 

qualify for hardship processing because they are overcrowded with more than 2 people 

per bedroom. In order to retain the hardship priority, they would need to purchase a 

property (4 or more bedrooms) which corrects the overcrowding condition.

If the Smiths selected a 3-bedroom property, they would no longer qualify for the 

hardship processing/funding priority. However, assuming the dwelling meets the 

property requirements, a loan could be made on the dwelling when funds become 

available under the fifth/general priority, as the Agency has no minimum number of 

bedroom requirement based on household size.
HB-1-3550

Paragraph 3.13 Selecting Applications for Processing

4. Fourth Priority: Loans that Bring in Additional Resources

Applicants seeking loans for the construction of dwellings in an RHS approved 

Mutual Self-Help project, loan application packages funneled through an Agencyapproved intermediary under the certified loan application packaging process, and loans 

that will leverage funding or financing from other sources as outlined in Paragraph 10.1. 

A., will receive fourth priority for processing. 

5. Fifth Priority: Applicants who do not qualify for priority consideration in the 

above listed priorities will be selected for processing after all applications with priority 

status have been processed.

C. Veterans’ Preference

If applicants with equivalent priority status apply for assistance on the same day, 

applicants qualifying for a veterans’ preference will receive priority processing. Applicants are 

eligible for a veterans’ preference if they served in the military forces of the United States, or 

are the family of deceased servicemen who died in service, during any war between the United 

States and any other nation (see 42 U.S.C. 1477).

D. Notifying Applicants Who Are Selected for Processing

When funds are available, applicants selected for processing will be sent Handbook 

Letter 11 (3550), Request Information, if updated and/or additional information is needed 

which may have expired since the eligibility determination. 

Paragraph 4.3 E. describes the required verifications in detail. If an applicant fails to 

provide the needed information within 15 days, the application will be withdrawn. 

Applicants who provide the required information, but cannot be funded that quarter, 

should be notified that they will be selected again when the next quarterly allotment becomes 

available. When funds become available in the subsequent quarter, the Loan Originator should 

contact the applicant to determine whether the household has experienced any changes in 

circumstances that might require new verifications before processing.

3-18
HB-1-3550

HB-1-3550

Paragraph 3.14 Purging the Waiting List and Waiting Period Updates

3.14 PURGING THE WAITINGLIST AND WAITING PERIOD UPDATES

The waiting list should be purged periodically to ensure that the Agency’s records are not 

burdened with applications (which have previously been determined eligible) from households 

that are no longer interested in the program. Once every 6 months, the Loan Originator must 

determine how soon funding will be available to process applications, and generate Handbook 

Letter 3-A (3550), Waiting Period (Funds Not Available), for each application on the waiting list. 

This letter notifies applicants that in order to keep their application active, they must return the 

response form attached to the letter or the application will be withdrawn. If an applicant does not 

respond within 15 days of the date of the letter, the application should be withdrawn. 

Applications which were unable to have an eligibility determination made within 30 days 

of complete application and were sent Handbook Letter 3-B (see Paragraph 3.7), should be sent 

another Handbook Letter 3-B to update the applicant on the estimated wait time. At a minimum, 

Handbook Letter 3-B should be sent within 30 days, and again at 6 months of complete 

application if an eligibility determination has not yet been made. When sending Handbook Letter 

3-B after 6 months from the date of completed application, applicants should be notified that to 

keep their application active, they must return the response form attached to the letter or the 

application will be withdrawn. If an applicant does not respond within 15 days of the date of the 

letter, the application should be withdrawn.

Exhibit 3-2

Application Status

HB Letter 3-A, 

Waiting Period (Funds Not 

Available)

HB Letter 3-B, 

Waiting Period (Extended 

Processing Timeframe)

Determined Eligible, Funds 

Not Available

(HB Letter 2 already sent) 

Send 6 months from date of HB 

Letter 2 if funds are still not 

available. Applicant must notify 

Agency if still interested in

assistance; withdraw application if 

not notified within 15 days. 

Continue to send every 6 months if 

funds are not available, but 

applicant remains interested. 

N/A

Not Yet Determined Eligible 

(e.g., due to application 

backlog)

N/A

Send within 30 days of complete 

application, and at 6 months if still 

unable to make eligibility 

determination. Upon the 6-month 

notification, applicant must notify 

Agency if still interested in

assistance; withdraw application if 

applicant does not respond within 

15 days. 

3-19 (01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

3.15 VERIFICATIONS

Once an applicant is selected for processing, the Loan Originator should update any items 

which may have expired since the eligibility determination was made. The Loan Originator 

should collect and verify items required for the Agency’s decision (e.g., do not collect birth 

certificates to verify age/name of a dependent, require verification of a prior address, etc.).

Generally, the Loan Originator should consider copies of pay stubs and other available 

documentation before using 3rd party verification forms that must be initiated by the Agency. 

When verification forms are sent to a respondent to verify an applicant’s information, they 

should be accompanied by Form RD 3550-1, Authorization to Release Information, and a preaddressed, pre-stamped envelope. If the respondent does not return the verification form within 

14 days, the Loan Originator must place a reminder telephone call. If a respondent returns an 

incomplete verification form or if additional information is needed, the Loan Originator should 

contact the respondent.

An applicant should not be penalized if a respondent refuses to provide the requested 

information. If the respondent does not respond to the verification form after 14 days and does 

not respond to a follow up call, the Loan Originator should move to the use of alternative methods 

of verifying the information. All conversations and follow up actions for obtaining verifications 

should be documented carefully. Detailed procedures for assessing the results of these 

verifications are provided in Paragraph 4.3 E. 

A. Types of Verifications

1. Third-Party Generated Documents

The preferred form of verification are those documents which are readily accessible 

to the applicant and generated by a third-party to officially record their financial dealings 

or involvement with the applicant. Examples of third-party generated documents include 

paycheck stubs, bank statements, and benefit award letters.

3-20
HB-1-3550

Paragraph 3.15 Verifications

2. Written Third-Party Verifications

Written third-party verifications tend to be used as an alternative form of verification.

Correspondence should take place directly between the third party and the Agency (or 

loan application packager) using Agency forms. Transmission of the completed 

verification via fax or secured email is acceptable.

3. Oral Third-Party Verifications

Oral verifications should only be used if the applicant has worked for the employer 

for less than a year or the other types of verifications are inconsistent or suspicious. Oral 

verifications should be carefully documented in the running record.

B. Evaluating Verified Information

All verifications should be checked for completeness and for discrepancies from 

information provided by the applicant. Any discrepancies should be discussed with the applicant 

and clarifications should be documented carefully. Verification sources may be contacted 

directly, if necessary, to clarify information.

3-21

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-A 

Page 1 of 29 

ATTACHMENT 3-A 

LOAN APPLICATION PACKAGERS

The Agency supports partnerships with loan application packagers since packagers can 

provide outreach and presence in counties where a Field Office is not located; assist the 

Agency in reaching very low-income applicants; promote the program in underserved areas; 

prescreen potential applicants; counsel potential applicants on how to improve their ability to 

qualify for a home; ensure that applications are complete and accompanied by the supporting 

documentation needed for the Agency’s decision. 

The packaging types that undergo an Agency approval process (either directly by the Agency 

or through intermediary involvement) are noted below. 

• Section 502 Direct Loan Program:

o Certified packaging which includes an entity eligibility component as 

well as a packager’s experience/training/testing component.

o Approved non-certified packaging which includes an entity eligibility 

component but no packager’s experience/training/testing component. 

• Section 504 Loan/Grant Program:

o Public and private nonprofit packaging which includes an entity 

eligibility component but no packager’s experience/training/testing 

component.

• Section 523 self-help grantee packagers may package Section 502 loan and 

504 loan and/or grant applications under this attachment’s guidance provided 

the applicant is not participating in a mutual self-help project.

Packagers that do not fit the types above are considered “other” and have no entity or packager 

eligibility component. As such, use of “other” packagers is discouraged if they charge a packaging 

fee and any fee they do charge is not an eligible loan purpose. 

This attachment provides packaging fee tables, outlines general requirements which must be met by 

all packaging types, and details how to become a certified packager or how to become an 

intermediary. A Section 502 loan application package (certified or non-certified) that does not meet 

the requirements of this attachment, including all applicable items listed in the cover letters for both 

Phase 1 and Phase 2, will be considered a referral only and the packager or intermediary may not 

charge a packaging fee. In addition, intermediaries (if present) must conduct a quality assurance 

review for both Phase 1 and Phase 2. 

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571
HB-1-3550

Attachment 3-A 

Page 2 of 29

Section 502 Direct Packaging Type, Permissible Packaging Fee, and Eligible Loan Purpose:

The Section 502 direct packaging type and who is involved impacts the permissible packaging 

fee amount and whether the fee is an eligible loan purpose. Duplicate fees for packaging services 

are not permitted.

502 Direct Packaging 

Type

Permissible 

Packaging Fee

Regulated by 7

CFR Part 3550 Eligible Loan Purpose?

Certified packaging 

body with an 

intermediary

Up to $2,000 split 

between certified 

packaging body and 

intermediary

Yes 

3550.52 (d)(6)

and 3550.75

Yes

Certified packaging 

body without an 

intermediary (occurs 

when the State Director 

approves an opt-out 

request or when a state is 

not served by an 

intermediary)

Up to $1,750

Yes 

3550.52 (d)(6)

and 3550.75 Yes

Intermediary acting

as a certified packaging 

body Up to $1,750

Yes 

3550.52 (d)(6)

and 3550.75

Yes

Approved non-certified Up to $750 Yes 

3550.52 (d)(6) Yes

Other non-certified 

packaging arrangements 

(packaging activities 

outside of the Agency’s 

regulatory controls such 

as packaging by for-profit 

entities)

Not regulated and 

discouraged when 

a fee is charged

No

No.

In addition, the 

Agency will review 

the impact of the fee 

to the applicant and 

will make the 

determination if it 

adversely affectstheir 

qualification.
HB-1-3550

Attachment 3-A 

Page 3 of 29

Section 523 Grantees Who Package Section 502 Direct Non-Self-Help Loan Applications: 

Applications submitted under the Section 523 Mutual Self-Help program are excluded from 

the certified loan application packaging process; and may not include a packaging fee as an

eligible loan purpose since grantees receive grant funds to package (among other things) and

are provided technical and management assistance. However, a grantee and its staff may 

package Section 502 or Section 504 non-self-help loan applications in accordance with the 

guidance in this attachment. Regardless of which type of loan is being packaged, Section 523 

grantees will follow the packaging guidance in this attachment related to pre-eligibility 

counseling, applicant disclosures, application submissions, and the use of eForms.

Additionally, when grantees also serve as packaging bodies for Section 502 non-self-help loan 

applications there exists the possibility that an applicant originally interested in pursuing a 

self-help loan through Rural Development may ultimately decide to pursue a non-self-help 

loan through Rural Development. This change could occur early in the packaging process or 

after the loan application package is submitted to the Agency. The table below outlines what 

fee is permissible depending on the loan type and/or when such a switch occurs.

Grantee’s packaging 

type:

Applicantselects 

mutual self-help 

before the 

application 

package is 

submitted to the 

Agency.

Switch occurs after the 

package is submitted 

to the Agency but 

before the Agency 

determines the 

applicant’s eligibility 

(which is generally a 

small window of time).

Switch occurs after the 

Agency determines the 

applicant’s eligibility.

Section 523 

Technical 

Assistance (TA) 

grantee packaging 

for a self-help 

applicant

Grantee cannot attempt to collect a packaging fee. The services provided are 

considered part of the TA services charged to the grant.

Certified packaging 

body with an 

intermediary

Grantee must funnel 

the package through 

an intermediary to 

share a packaging 

fee of up to $2,000 

with the 

intermediary.

Grantee cannot attempt 

to collect a packaging 

fee. The services 

provided are considered 

part of the TA services 

charged to the grant.

Grantee cannot attempt to 

collect a packaging fee. 

The services provided 

would be considered part 

of the TA services 

charged to the grant.

Certified packaging 

body without an 

intermediary (i.e.

State Director 

approved opt-out 

or state does not 

have an 

intermediary)

Grantee can charge a packaging fee of up to

$1,750.

Approved non-certified 

packager

Grantee can charge a packaging fee of up to

$750.

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571
HB-1-3550

Attachment 3-A 

Page 4 of 29

To reduce the possibility of such a switch occurring and to account for disclosure requirements, 

grantees must make it clear to potential applicants upfront that they have the option of applying 

through the self-help program or non-self-help route to purchase a contractor built or existing 

home and explain what will occur should they switch from self-help to non-self-help (e.g., a 

packaging fee may be charged).

Section 504 Loan and/or Grant Packaging Type, Permissible Packaging Fee, and Eligible Loan 

Purpose:

The Section 504 loan and/or grant packaging type and who is involved impacts the permissible 

packaging fee amount and whether the fee is an eligible loan purpose. The Section 504 program 

is not a part of the certified packaging process (e.g. intermediaries are not involved in reviewing 

Section 504 applications). The Agency and the packaging body will execute a Memorandum of 

Understanding (MOU) using the standardized format, which can be found in SharePoint. Other 

than inserting the entity’s name, states served, the contact persons, and the name/title of the 

authorized representative signing on behalf of the organization, no other changes to the MOU can

be made. Duplicate fees for packaging services are not permitted. Section 523 TA grantees 

submitting an application involved in a rehabilitation project which uses Section 504 loan funding 

are also subject to this guidance.

504

Packaging Type

Permissible 

Packaging Fee

Regulated by 7

CFR Part 3550 Eligible Loan and/or 

Grant Purpose?

Public and private 

nonprofit 

organizations that 

are tax exempt under

the Internal Revenue 

Code

Up to $750 Yes 

3550.102 (d)(5)

Yes

Other packaging 

arrangements

Not regulated and 

discouraged when 

a fee is charged

No

No.

In addition, the Agency 

will review the impact of 

the fee to the applicant 

and will make the 

determination if it 

adversely affects their 

qualification.
HB-1-3550

Attachment 3-A 

Page 5 of 29 

General Packaging Processing Guidance:

All packagers are expected to comply with this general packaging processing guidance regardless of 

their packaging type (certified, approved non-certified, self-help grantee, public/private nonprofit, or 

other). The packager will gather and submit the information needed for the Agency to determine if 

the applicant is eligible along with a fully completed and signed uniform residential loan application. 

For the Section 502 loan program, this review will be completed using the borrower eligibility 

requirements found in Chapter 4 and the Worksheet for Computing Income and Maximum Loan 

Amount Calculator available on the SFH Direct Loan Application Packagers resource page 

(https://www.rd.usda.gov/programs-services/services/direct-loan-application-packagers). For the 

Section 504 program, this review will be completed using the borrower eligibility requirements in 

Chapter 12 and the 504 Automated Worksheet available on the SFH Repair Loan & Grants webpage 

(https://www.rd.usda.gov/programs-services/single-family-housing-repair-loans-grants).

If the potential applicant appears to be ineligible for the program (at any time in the packaging 

process), the packager should counsel them on ways to improve their situation. Packagers 

should not submit loan application packages to the Agency (or to an intermediary if present) 

that are unlikely to be determined eligible by the Agency staff. If the program does not appear 

to be a good fit for the potential applicant, the packager should advise the potential applicant 

that the program does not appear to be a good fit, notify them that they will not continue 

packaging the application as a result but that the potential applicant is welcome to apply 

directly to the Agency. Potential applicants who were considering building via the self-help 

program but who do not appear to qualify for a loan should be counseled that applying directly 

to the Agency would exclude participation in the self-help program.

If the potential applicant appears to be eligible for the program, the packager will:

• Provide the potential applicant with the required disclosure letter. The letter must follow 

the format provided in this attachment and must be signed by the potential applicant. 

• For applicants who are not participating in the self-help program, strongly discourage 

the potential Section 502 direct program applicant from locating a property until the 

Agency receives their application package and issues Form RD 1944- 59, Certificate of 

Eligibility (COE).

• Applicants for the self-help program may be advised of potential property locations and 

house plan options in order to package an application with an appropriate loan amount 

for the project.

• Collect all the items that the Agency will need to consider the package complete. The 

Application Submittal Cover Letter (as provided in this attachment) must be completed 

and included in the submitted loan application package. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-A 

Page 6 of 29

• Applications submitted by all packaging types will be submitted via eForms.

• For the certified process: If an intermediary is present, the packager will send the 

items to the intermediary for a quality assurance review. Once the package is 

accepted by the intermediary, the package will be sent to the Agency via eForms.

• For Section 523 TA grantees submitting applications for a self-help build or 

rehabilitation project, the grantee packager will submit the application directly to 

the Agency via eForms.

• The packager will need to obtain the potential applicant’s credit report to conduct 

a preliminary credit analysis. Any cost for the credit report is considered part of 

the packaging fee and should not be charged to the applicant. The Agency will 

not furnish a credit report for packaging purposes.

• When gathering verifications, the packager should use the preferred sources 

outlined in Chapter 4. Preferred sources generally do not involve asking thirdparties to complete an Agency form and can be obtained with information readily 

available to the applicant (such as pay stubs, award letters, etc.). If a third-party 

verification must be obtained because the preferred source involves a fee, the 

packager may request and receive the form directly. Packagers typically should 

not obtain Form RD 1910-5, Verification of Employment (VOE), nor should 

Agency staff request VOEs for all applications. VOEs should only be obtained if 

the applicant does not have access to paystubs or the information can only be 

obtained through a source which charges a fee.

• Packagers should only gather documents needed for the specific application. For 

example, do not obtain a Landlord’s Verification (Form RD 1944-60) when the 

applicant(s) seemingly qualify for a streamlined credit history analysis. Only 

collect and remit items needed for the Agency’s decision.

• The Agency will accept appraisals ordered by self-help grantees, certified packagers, 

and Agency-approved intermediaries (‘authorized third-party’) provided that:

• Rural Development (RD) is notified of the intent to order the appraisal and 

the cost of the appraisal prior to any contractual commitment. Once 

notified, Rural Development will:

• Within three business days of receiving this notification, issue the 

applicant a third-party appraisal Loan Estimate (LE) and 

accompanying tailored Handbook Letter 5.

• List the cost of the appraisal as provided by the authorized third 

party, which may exceed the Agency’s prevailing appraisal fee in 

Paragraph 5.20 of this handbook.
HB-1-3550

Attachment 3-A 

Page 7 of 29 

• Authorized third-party orders the appraisal only after:

• Receiving notification from RD to proceed with the order. 

• Explaining to the applicant that they are ordering the appraisal on 

the applicant’s behalf and that the applicant will have to cover the 

fee, out-of-pocket, if the loan does not close. 

• The authorized third-party may choose to collect the 

appraisal fee from the applicant prior to ordering. The 

appraisal fee, even though paid to the third party, is an 

allowable excess cost and is eligible to be reimbursed to 

the borrower from their loan proceeds at loan closing. A 

paid receipt must be forwarded to the Field Office to 

ensure proper credit and disclosure on the settlement 

statement. The appraisal fee must be paid prior to closing 

by the self-help grantee, certified packager, intermediary, 

or applicant. The appraisal fee can be reimbursed at 

closing but cannot be invoiced by the appraiser at closing. 

If the authorized third-party or applicant cannot pay for 

the appraisal and wait for reimbursement, then the 

appraisal must be ordered by the Agency. 

• Authorized third-party provides a copy of the paid invoice for the appraisal 

along with a copy of the appraisal that: 

• Meets the Uniform Standards of Professional Appraisal Practice and 

Agency appraisal standards, as described in Chapter 5, Paragraph 

5.14 of this Handbook, and 7 CFR 3550, § 3550.62 Appraisals. 

• Lists Rural Development as an “intended user”.

• The appraisal is reviewed for acceptability by Rural Development. 

• RD must complete Form RD 1922-15, “Administrative Appraisal 

Review for Single Family Housing.” 

• At a minimum, the first five appraisals obtained by an authorized 

third-party will receive a pre-closing technical review.

• All appraisals which are subject to a technical pre-closing review, 

must be entered into the Appraisal Hub on SharePoint to assist with 

the monitoring of performance and compliance. 

• RD staff appraisers should complete their review within three 

business days. At the discretion of the appraisal staff, additional 

revisions or reviews may be required. 

• When additional revisions are needed, they will be addressed by RD 

staff appraisers, in coordination with the Field Staff and the 

authorized third-party. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-A 

Page 8 of 29

• Once the Administrative Appraisal Review (and any applicable technical pre-closing 

review) determines the appraisal is acceptable, the RD processing office must ensure 

the applicant is promptly provided a copy of the appraisal, which must be at least three 

business days prior to closing.

• Loan funds may be used to reimburse the payor of the appraisal fee at loan closing. The 

amount of reimbursement for the appraisal may exceed the Agency’s standard appraisal 

fee (HB-1-3550, Chapter 5, Paragraph 5.20). The paid invoice for the appraisal and 

instructions for “paid outside of closing” reimbursement will be sent to the closing 

agent for proper disclosure and settlement. The Agency will not pay the appraiser 

directly.

If the applicant indicates they wish to withdraw their application which has already been 

submitted to the Agency, the packager must obtain written confirmation from the applicant 

requesting the Agency withdraw their application, or have the applicant contact the Agency 

directly to request withdrawal.
HB-1-3550

Attachment 3-A 

Page 9 of 29 

Required Disclosure Letter: All packagers, regardless of packaging type, must give potential applicants 

this letter after inserting the appropriate letterhead and information where indicated with brackets. Once 

signed by the potential applicant, the packager may assemble the application and submit to the Agency in 

accordance with the guidance in this attachment.

Page 1 of 3

[Insert applicable letterhead: If under the certified packaging process, this required 

disclosure letter must be on the qualified employer’s letterhead. If outside the certified

packaging process or for self-help applications, the packager’s letterhead can be used.]

Dear Potential Applicant:

After talking with you, we think that a direct Section [insert 502 or 504, whichever is

applicable] single family housing loan through the Rural Housing Service (known as the 

“Agency”) is a good loan for you. The Rural Housing Service is an Agency of the United 

States Department of Agriculture.

We do not work for the Agency; we are an outside loan application packager. [Insert name

of organization] will assist you in applying for a loan through the Agency. We do not 

guarantee that your loan application will be approved or funded by the Agency. 

For our services, you will pay a loan application packaging fee of [insert applicable fee 

amount based on the packaging fee tables in Attachment 3-A. For self-help 

applications, enter $0]. The fee is due only if the Agency approves you for a loan and the 

loan closes. We will assist you in finding means to cover the fee from various sources. To

the extent other sources are unavailable, we may waive the fee. [If the organization meets 

the regulatory requirements of 7 CFR 3550 insert, “Under certain circumstances, part 

or all of this fee may be included in your loan.”] 

You are not required to work with a loan application packager to receive assistance from 

the Agency [if self-help, enter “unless you are applying to participate in a mutual selfhelp program”]. You may work directly with the Agency and avoid the loan application

packaging fee. Working with our organization provides you with the following benefits: 

• We will act as a go-between for you and the Agency.

• We will make sure that your paperwork is in order, which should shorten the time it takes 

for the Agency to make an eligibility decision. All information collected will be maintained 

with the highest degree of confidentiality.

• [Insert the following statement if and only if the loan application package will be 

funneled through an Agency-approved intermediary, includes minimum leveraged 

funds, or is a mutual self-help application: “Your application will be considered a 

fourth funding priority when funds are insufficient to serve all program eligible 

applicants.”]

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571
Page 2 of 3

[Insert the following if a Section 502 non-self-help loan is being requested: “You are strongly 

discouraged from identifying a property or entering into a purchase agreement until such time as the

Agency issues a Certificate of Eligibility (COE). If and when a COE is issued by the Agency, we 

will help you gather and submit the property information needed by the Agency.”]

We are required to disclose to you and the Agency if we have a financial interest in the property, 

once a property is identified (i.e., developer, builder, seller of, real estate agent, or have any other 

such financial interest). You are not required to purchase a property in which we have a financial 

interest nor are you required to use our services to locate a property. We will still help you gather 

and submit the property information to the Agency. As a loan application packager, we may only 

provide you information on Agency policy and may not influence you to purchase a specific 

property.

[Insert the following if an organization’s employee/board member or packager have a real 

estate agent license: We receive a financial interest when you purchase a home with the services 

of [insert name of real estate agent and/or company] who is a real estate agent and is also 

associated with our organization. You are not required to work with [insert name of real estate 

agent and/or company] as your real estate agent for us to package your loan. If you desire to use 

the service of a real estate agent or company, you may engage the service of any real estate agent or 

company or you may locate a property on your own.]

[Insert the following if the application is part of a mutual self-help project: As a Section 523 

technical assistance grantee, we will assist you with assembling or identifying property 

information for submittal to the Agency.]

We look forward to working with you in preparing an application for an Agency direct loan. 

Respectfully,

[Insert name of organization]

Please complete, sign/date, and return this letter to us so that we can serve as your loan application 

packager.

HB-1-3550

Attachment 3-A 

Page 10 of 29
HB-1-3550

Attachment 3-A 

Page 11 of 29 

Page 3 of 3

WAIVER OF PROVISIONS TO THE PRIVACY ACT OF 1974

To serve as your advocate with the Agency, we need to be kept informed of the Agency’s 

processing of your application and we may need access to items directly obtained by the Agency. 

By signing below, you authorize the Agency to release to and discuss with [insert name of 

organization and the name of the intermediary if present] any information we may seek or 

request from the Agency’s records concerning your application for Agency assistance.

I/we acknowledge these facts and confirm my/our desire to work with [insert name of 

organization]. I/we received this letter on the of 20 . 

_______________________________________________________________________________________

Potential Applicant’s Name/Signature/Date (spell out full name and then sign)

_______________________________________________________________________________________

Potential Co-Applicant’s Name/Signature/Date (spell out full name and then sign)

_______________________________________________________________________________________

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
Packaging Phase 1: Application Submittal Cover Letter

This cover letter must be used to submit all packaged loan applications to the Agency. Insert the 

appropriate letterhead and information where indicated with brackets; and for each item listed in the 

letter, either checkmark and include the item in the package or mark it as not applicable (N/A).

Completion and submission of this cover letter along with all the checkmark items constitutes a 

complete loan application package; and is phase 1 of the loan application packaging process. 

All packaging types must submit the application package via eForms.

Page 1 of 2 

[Insert applicable letterhead: If under the certified packaging process, use the qualified 

employer’s letterhead. If outside the certified packaging process, or for mutual self-help 

applications, the packager’s letterhead can be used.] 

[Insert date of submission]

Dear [insert “Rural Development” if working without an intermediary or insert the name of 

intermediary if working with one]:

The following documents are submitted via eForms to your office for review of the loan 

application package for [insert applicant(s) name]:

□ A copy of [insert “Attachment 3-J” if Section 502 or “Attachment 12-E” if Section 504] 

with all the items applicable for the applicant(s) marked and included in the package.

□ Completed [insert “Worksheet for Computing Income and Maximum Loan

Amount Calculator” if Section 502 or “504 Automated Worksheet” if Section 504] 

□ Copy of the credit report and preliminary credit analysis.

□ Applicant(s) has a valid credit score(s) of (640 or higher if Section 502 or 620 or 

higher if Section 504 loan) and no significant delinquency. 

□ Applicant(s) credit score(s) is not valid or less than the threshold.

□ Form RD 1944-60, Landlord’s Verification, if applicable and score is less than the 

threshold. 

□ Applicant(s) explanation of derogatory credit (if applicable).

□ A loan application narrative which includes an eligibility analysis (income, 

creditworthiness, repayment ability, and payment shock (if applicable)), support of any 

exceptions being requested, and an overall recommendation on the loan application request.

□ A signed copy of the required disclosure letter found in Attachment 3-A.

HB-1-3550

Attachment 3-A 

Page 12 of 29
(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

Page 2 of 2

Please cc: the following contacts as information is shared with the applicant and when critical 

processing activities occur:

Packager contact and email address:

[insert the contact and email address for the application]

Intermediary contact and email address:

[insert the contact and email address for the application]

Sincerely,

[insert packager’s name and qualified employer if applicable]

HB-1-3550

Attachment 3-A

Page 13 of 29
Certified packagers routing through an intermediary will submit the application to the intermediary 

who will conduct a quality assurance review prior to transmitting the loan application package to 

the Agency via eForms. All other packaging types will submit the application directly to the

Agency by eForms.

Upon receipt of a packaged loan application, the Agency will:

• Process the application in accordance with program guidance. As a nationwide program 

with guidance set at the national level, Agency staff will not modify the definition of a 

complete package or ask packagers to perform functions or provide materials over and 

above what is detailed in program guidance. The Agency will accept the electronic Form 

RD 410-4 submitted through eForms; a signature is not required on the RD 410-4 for the 

application to be considered complete. Certified application packagers and intermediaries 

who choose to accept electronic signatures for other application documents must meet the 

standards and requirements set forth in the E-Sign Act, as well as all other applicable 

federal and state regulations and guidelines; and are charged with the same responsibility 

of due diligence with electronically signed documents as they are with paper documents. 

(However, a borrower’s original, handwritten signature must always be obtained on the 

following legal documents obtained at closing: Form RD 1940-16, Promissory Note; 

Form RD 3550-14, Real Estate Mortgage or Deed of Trust (State Specific); Form RD 

3550-12, Subsidy Repayment Agreement; Form RD 3550-24, Grant Agreement; Form 

RD 1955-49, Quitclaim Deed or Warranty Deed; RD 3550-22, Assumption Agreement 

Single Family Housing; Form RD 3550-10, Condominium Rider; and Form RD 3550-11, 

Planned Unit Development Rider.) 

• Order a tri-merge credit report through UniFi (regardless of the type of credit report 

obtained by the packager). 

• Share processing information and updates with the loan application packager (including 

self-help grantees serving as packagers) and intermediary (if present) as information is

shared with the applicant and when critical processing activities have occurred. Critical 

processing activities include but are not limited to: receipt of the loan application 

package, information requests, changes to income calculations or a requested loan 

amount, the eligibility determination, receipt of an appraisal, the underwriting decision, 

and preparation for closing. After the loan application package is accepted, the Agency 

will communicate directly with the applicant(s) if additional information is required. 

When correspondence is sent to the applicant, the packager and intermediary (if 

present) will be copied. 

If and when the Agency has issued a COE, the packager will assist the applicant with phase two 

of the loan application packaging process which is assembling and submitting the property 

information.

HB-1-3550

Attachment 3-A 

Page 14 of 29
HB 1 3550

Packaging Phase 2: Property Submittal Cover Letter

This cover letter must be used to submit property information for packaged loan application 

previously submitted to the Agency under phase 1. Insert the appropriate letterhead and information 

where indicated with brackets; and for each item listed in the letter, either checkmark and include the 

item in the package or mark it as N/A. Completion and submission of this cover letter along with all 

the checkmark items constitutes a complete property submission; and is phase 2 of the loan 

application packaging process. In the event the property is already identified at the time phase 1 or 

the packaged loan application is for repairs, the property submission should be submitted 

simultaneously with the phase 1 submission. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-A 

Page 15 of 29 
HB-1-3550

Attachment 3-A 

Page 16 of 29 

Page 1 of 2

[Insert applicable letterhead: If under the certified packaging process, use the

qualified employer’s letterhead. If outside the certified packaging process, or for selfhelp applications, the packager’s letterhead can be used.] 

[Insert date of submission]

Dear [insert the name of intermediary if present since they will do a quality

assurance review on the property submission before sending it to Rural 

Development or insert “Rural Development” if an intermediary is not present]:

The following documents are submitted via encrypted email to your office for 

review of the loan application package for [insert applicant(s) name]:

□ A fully executed purchase agreement with applicable addendums

□ A copy of current appraisal, if applicable (see HB-1-3550, Attachment 3-A, “General

Packaging Processing Guidance” section)

□ A copy of the property eligibility website determination that confirms

the property is in an eligible rural area

□ For existing properties:

□ Copy of a whole house inspection

□ Identification of proposed repairs

□ Proposal for completing repairs (e.g., amended purchase agreement indicating

seller will repair prior to closing, buyer is providing funds, applicant is

requesting loan funds, etc.)

□ Copy of deed or legal description

□ Copy of existing survey or plot plan drawn to scale (if available)

□ Property tax history and/or assessment information sheet (online sources acceptable)

□ For new construction or significantrepairs:

□ Certified plans

□ Specifications

□ Cost estimates

□ Other applicable items:

□ Packaging fee invoice (for the certified packaging process, invoice

must identify how the fee will be shared between the certified

packaging body and the intermediary – for instance: $500 to the

certified packaging body and $1,500 to the intermediary)

□ Updated income, debt, and asset verification documentation (i.e.,

paystubs, award letters, bank statements, confirmation of new debt

payments, etc.) for any items which have expired since the Phase 1

submission, or will expire within the next 30 days

□ Updated Worksheet for Computing Income and Maximum Loan Amount Calculator

(updated income, household composition, or other eligibility details if changes have

occurred since the Certificate of Eligibility, and requested loan amount and property

details based on selected property)
Page 2 of 2 

□ Updated loan application narrative which addresses any changes from the

Phase 1 submission

If you have any questions regarding this submittal, please contact packager with copy to 

intermediary contact: 

Packager contact and email address:

[insert the contact and email address for the application]

Intermediary contact and email address:

[insert the contact and email address for the application]

Sincerely,

[insert packager’s name and qualified employer if applicable] 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-A 

Page 17 of 29 
Upon receipt of the property information, the Agency will:

• Issue the Loan Estimate; the packaging fee must be shown on the Loan Estimate

under “Origination Charges” for regulated packaging activity

• Order the flood hazard determination and complete an environmental analysis on the

property

• Review/accept plans/specs or repair proposals

• As applicable, order an appraisal, review/accept the appraisal upon receipt (see “General Packaging

Processing Guidance” section of Attachment 3-A for guidance on third-party appraisals)

• Determine property eligibility

• As it relates to the packaging fee:

• Confirm the fee amount listed on the invoice matches the disclosure letter issued by

the packager/intermediary and signed by the applicant

• Confirm the fee amount is within the permissible limit

• Determine how the packaging fee will be paid, considering that:

• The fee as stated on the invoice cannot be altered by the

Agency even if it cannot be fully covered by loan funds

• The fee may be paid with any combination of loan proceeds

(assuming adequate loan to value ratios), affordable housing

products, gift funds, seller contributions, and/or buyer funds

• Any reduction or waiver to the fee can only be authorized by the

packager and intermediary (if present) and should be reflected in an

updated invoice

• Complete loan underwriting and

• Approve the loan and obligate loan funds using the applicable packaging program type

code; issue Form RD 3550-7, Funding Commitment and Notification of Loan Closing,

to the applicant; and prepare for loan closing; or

• Deny the loan request and provide the applicant with the applicable rights

Packagers should be well acclimated with 7 CFR Part 3550 and Handbook-1-3550, both of 

which can be found at https://www.rd.usda.gov/resources/directives/handbooks. Packagers 

are required to:

• Comply with the Equal Credit Opportunity Act and the civil rights requirements contained

in RD Instruction 1901-E.

• Prepare an Affirmative Fair Housing Marketing plan (AFHMP), if they intend on

submitting five or more loan application packages to purchase and/or construct dwellings in

the same subdivision. The completed AFHMP must be submitted to the local Rural

Development office for review and approval.

• Understand and (if applicable) comply with the SAFE Act. The SAFE Act, which is a

Federal regulation with state-level enforcement and possible requirements over and above

the federal minimum standards, addresses those engaged in loan originator activities. Rural

Development does not enforce or monitor SAFE Act compliance.

HB-1-3550

Attachment 3-A 

Page 18 of 29 
• Provide the Agency with complete, accurate, and timely information needed to comply 

with the disclosure requirements under the Truth in Lending and Real Estate Settlement 

Procedures Act Integrated Mortgage Disclosures. Packagers are not authorized to issue the 

Loan Estimate or Closing Disclosure on behalf of the Agency. 

• Be in good standing with the Government (e.g., not suspended or debarred from 

participating in Federal programs).

Please note that the packager’s performance will be monitored by the Agency. If the packager 

submits a significant number of packages that are incomplete and/or ineligible, the State 

Director may determine their services to be unacceptable.

Items specific to the Certified Loan Application Packaging Process:

The certified loan application packaging process involves three distinct parties:

• Agency-certified loan application packager. 

o An individual certified by the Rural Housing Service (RHS) to package section 

502 loan applications. Certification is verified by the intermediary through whom 

application packages are routed. 

o Must be employed (employee or independent contractor) by a qualified employer.

• Qualified employer. 

o An affordable housing nonprofit organization, public agency, tribal housing 

authority, or State Housing Finance Agency that meets the requirements of 

§ 3550.75 (b)(2).

o Involved in the 502 direct program certified loan application packaging process.

• Agency-approved intermediary. 

o An affordable housing nonprofit, public agency, or State Housing Finance 

Agency approved by RHS to perform quality assurance reviews on packages 

prepared by Agency-certified loan application packagers through their qualified 

employers.

o National Office reviews/approves applications and will update the Agency’s 

website as new intermediaries are approved.

Becoming a Certified Packager:

An individual interested in becoming a certified packager should take the following steps:

1. Ensure that you are employed by a qualified employer who meets the requirements 

stated above. Employment can be in various forms such as: a contract basis, parttime or full-time employee.

2. Become familiar with the SFH Direct Loan Application Packagers resource page at 

https://www.rd.usda.gov/programs-services/services/direct-loan-applicationpackagers. This page contains notices of upcoming certified loan application 

packaging trainings, training webinars, the intermediary coverage map, and other 

resources related to packaging Section 502 direct loan applications. 

(1-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-A 

Page 19 of 29
3. Contact the intermediary(ies) in the state(s) in which you wish to package loans. 

Each intermediary will have an agreement for you to review/sign in order to package 

loan applications through them. You may work with multiple intermediaries 

depending on the service area you wish to cover. 

4. Once you have identified with an intermediary as being part of the certified 

packaging process, you have 12 months to take the loan application packaging 

course and pass the corresponding test. It is your responsibility to provide evidence 

to the intermediary that you have completed this requirement. During the 12-month 

period, you may package loans and funnel them via the intermediary who will 

conduct the quality assurance review and provide technical assistance.

Loan Application Packaging Course:

Under the certified packaging process, the course requirements outlined in 7 CFR

3550.75(b) (1)(iii),(b)(3)(vii) and (c) can be fulfilled by the Agency approved packaging course 

offered by NeighborWorks, the Housing Assistance Council, and Rural Community Assistance 

Corporation. Please note that:

• Upcoming trainings are listed under the SFH Direct Loan Application Packagers 

resource page at https://www.rd.usda.gov/programs-services/services/directloan-application-packagers

• Due to limited training availability, the Agency may approve parties to participate 

in the certified packaging process even if the training has not been completed and 

provided all other requirements are met upfront; however, the participation in the 

certified packaging process is contingent upon the party’s successful completion of 

the course requirements within a reasonable timeframe. Parties will have one year 

from the date of being added to the certified packaging process to complete the 

course requirements and provide evidence to the appropriate party (intermediary or 

Agency depending on the situation) that the requirements have been fulfilled. 

Failure to provide the necessary evidence within the allotted time will result in 

immediate removal from the certified packaging process. For certified packagers 

funneling through an intermediary, the intermediary is responsible for monitoring 

compliance with the course requirements and notifying the certified packager of 

their removal from the process if not met. For certified packagers with an approved 

opt-out, the State Office is responsible. Once removed, the party won’t be able to 

participate in the process until the course requirements have been met (and all other 

requirements continue to be met).

HB-1-3550

Attachment 3-A 

Page 20 of 29
HB-1-3550

Attachment 3-A 

Page 21 of 29

• Course participants should take the corresponding test within 30 days of completing 

the course. A score of 70 percent or higher is needed to pass. If the participant 

does not pass the initial test, they can retry up to two more times within 90 days 

from taking the course. Failure to pass the test after three attempts will result in the 

need to retake the Agency-approved training. 

• A recent, now former, Rural Development employee with five or more years of 

residential loan experience acquired while working in the Agency’s singlefamily 

housing programs is exempt from the course requirements.

• After having taken the course and passing the test, the Agency may require a 

certified packager to retake the course/test in order to continue participating in the 

certified packaging process. This requirement may be triggered by an extended 

period of packaging inactivity, unacceptable packaging performance, a 

recommendation from the intermediary, or other justifiable reason.

Intermediary Approval:

Entities interested in becoming an Agency-approved intermediary are encouraged to view the training 

webinars “Role of the Intermediary” and “How to Become an Intermediary” before beginning the

application process. Both webinars can be found on the SFH Direct Loan Application Packagers 

resource page at https://www.rd.usda.gov/programs-services/services/direct-loan-applicationpackagers.

To apply to be an Agency-approved intermediary under the certified packaging process, an interested 

party must furnish sufficient documentation to demonstrate to the Agency’s satisfaction that they 

meet each of the conditions specified in 7 CFR 3550.75(b)(3) and as further detailed below. This 

documentation constitutes the application. Applications to be an Agency- approved intermediary are 

welcomed at any time and emailed to SFHDIRECTPROGRAM@usda.gov. The application will be 

reviewed by National Office with input from the applicable State Office(s). Decisions by the Agency

on intermediary applications are not appealable to the National Appeals Division. 

Once approved, the Agency will execute a Memorandum of Understanding (MOU) with the 

intermediary. A copy of the MOU and a list of approved intermediaries can be found on the SFH 

Direct Loan Application Packagers resource page at https://www.rd.usda.gov/programsservices/services/direct- loan-application-packagers. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
Instructions: For each eligibility requirement, complete the cover sheet to identify the information

being provided and enter the date of the document being submitted. If an item is not applicable, 

enter “N/A”. 

COVER SHEET FOR SUBMITTAL OF INTERMEDIARY APPLICATION

Based on our submittal of the information below, [insert name of the entity submitting 

an application] seeks to become an approved intermediary for the certified loan 

application packaging process in [insert the state(s) in which you are applying to be an 

intermediary]:

Eligibility Requirement Identify the documentation 

being submitted as evidence 

thisrequirement has been met

Document 

Date

*Be a public agency or a Section 501 (c)(3) nonprofit IRS nonprofit

organization as evidenced by the organization’s determination letter for 501

Internal Revenue Service (IRS) nonprofit (c) (3) status

determination letter for 501 (c) (3) status. A public

agency may include:

(a) Any state board, commission, committee, State statute

department, educational institution, or other state

agency which is created by or pursuant to state statute,

other than courts and the legislature;

(b) Any county, city, school district, special purpose Ordinance

district, or other municipal corporation or political

subdivision of the state;

(c) Any subagency of a public agency which is created

by or pursuant to statute, ordinance, or other 

legislative act, including but not limited to planning

Other legislative act 

(identify act below):

commissions, library or park boards, commissions,

and agencies; and

(d) Any policy group whose membership includes

representatives of publicly owned utilities formed by 

or pursuant to the laws of this state when meeting

Formation of publicly 

owned utilities 

together as or on behalf of participants who have

contracted for the output of generating plants being

planned or built by an operating agency.

*Be in good standing in the state(s) of its operation as Certificate of Good

evidenced by a Certificate of Good Standing or Standing from the Secretary

equivalent documentation from the applicable of State

Recent State filings

HB-1-3550

Attachment 3-A 

Page 22 of 29
Eligibility Requirement Identify the documentation 

being submitted as evidence 

thisrequirement has been met

Document 

Date

*Have the capacity to serve multiple qualified Narrative describing

employers and their Agency-certified loan application current processing

packagers throughout an entire state or entire states volumes/staffing and

and have the capacity to perform quality assurance projected processing

reviews on a large volume of packaged loan volumes/staffing; and indicate

applications within five business days of how volumes will be

receipt. addressed within timeframes

Identify what state or states the interested party 

proposes to serve and provide details on their capacity 

to serve the identified state(s).

Narrative identifying 

states to be served and 

capacity

*Be engaged in affordable housing in accordance with Copy of articles of

their regulations, articles of incorporation, or bylaws. incorporation

 Copy of bylaws

 Copy of regulations

*Be financially viable and demonstrate positive 

operating performance as evidenced by an 

independent audit paid for by the applicant seeking to 

be an intermediary.

Copy of most recent 

independent audit for [insert 

year]

*Have at least five years of verifiable experience with 

the Agency’s direct single family housing programs 

(specifically the Section 502 direct program, the 

Section 504 repair programs, and/or the Section 523 

mutual self-help housing technical assistance 

program). Verifiable experiences would include, but 

are not exclusive to, routinely leveraging resources for 

individual transactions (e.g. providing affordable 

housing products to Agency borrowers), packaging 

loan applications, and/or being a self-help grantee or 

technical and management assistance contractor. To 

the greatest extent possible, the submission should 

detail collaborations and dollars leveraged.

Narrative detailing 

how/what experience 

requirements have been met

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571

HB-1-3550

Attachment 3-A 

Page 23 of 29
Eligibility Requirement Identify which documentation 

submitted as evidence this 

requirement has been met

Document 

Date

*For certified packagers, a letter of recommendation 

from the intermediary that completed the quality 

assurance reviews on packages, which should include 

the number of closed loans, and complete and 

incomplete applications in the last 12 months (as 

applicable). The overall success rate will be

calculated using the same method described in the 

“Request to Work Without An Intermediary” section 

of Attachment 3-A.

Copy of letter/email 

from [insert the applicable 

state(s)]

*Demonstrate that its quality assurance staff has 

experience with packaging, originating, or 

underwriting affordable housing loans. Provide a 

resume for each quality assurance staff member. The 

breadth and depth of their combined skills and 

qualifications will be considered during the Agency’s 

application review process.

Resume provided for 

[insert name(s) of quality 

assurance staff]

Provide a quality control plan that is customized to the Copy of quality

applicant’s organization. The quality control plan must assurance plan which

show there are controls in place to process application addresses:

packages that will likely result in an eligibility

determination by the Agency. The plan should include Item 1

at a minimum, but not limited to: (1) procedures for

obtaining and evaluating loan application documents Item 2

(e.g. credit checks and income verification); (2)

measures the applicant will take to prevent the Item 3

submission of incomplete or ineligible application

packages to the Agency; (3) the standard operating Item 4

procedures for employees who will be involved with

or affected by the quality control process; and, (4)

procedures for ensuring accurate information is

submitted to the Agency.

Ensure that their quality assurance staff completes an Evidence of course

Agency-approved loan application packaging course attendance by staff

reasonable amount of time if selected. Evidence of passing

test successfully

OR

Certification that this

requirement will be

completed within a reasonable

timeframe as specified by the

Agency should the application

be approved

HB-1-3550

Attachment 3-A 

Page 24 of 29
Eligibility Requirement Identify which documentation 

submitted as evidence this 

requirement has been met

Document 

Date

Provide a letter jointly signed by the organization’s 

Executive Director and Board President affirming the 

organization will not be the developer, builder, seller 

of, or have any other such financial interest in the 

properties for which the application packages are 

submitted by the organization as an intermediary 

pursuant to this notice. NOTE: An intermediary that 

is also a Community Development Financial 

Institution (CDFI) will not be considered 

noncompliant when CDFI funds are tied to the 

transaction.

Copy of signedletter

Provide a training and support plan that focuses on the 

measures the applicant will take to provide 

supplemental training, technical assistance, and 

support to certified loan application packagers and 

qualified employers to promote quality standards and 

accountability. (Note that the Agency may require 

implementation of Agency developed and/or approved 

training and support plan once accepted as an 

intermediary pursuant to this notice.)

Copy of training and 

support plan 

Letter of recommendation from the Rural 

Development Housing Program Director for each state 

you are proposing to serve.

Copy of letter/email from 

[insert the applicable 

state(s)]

Have the authorized representative for your 

organization sign the standard Memorandum of 

Understanding (MOU) between the intermediary and 

the Agency, which can be found at: 

https://www.rd.usda.gov/programsservices/services/direct-loan-application-packagers.

Other than inserting the entity’s name, the 

intermediary’s contact person, and the name/title of 

the authorized representative signing on behalf of the 

organization, no other changes to the MOU can be 

made. If unauthorized changes are made, the MOU 

will be nullified. If approved, the Agency will sign 

and fully execute the MOU.

MOU signed/dated

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571

HB-1-3550

Attachment 3-A 

Page 25 of 29
Identify main point of contact for intermediary. This Name:

is the person who may be contacted by the Agency, Title:

potential packagers, and potential applicants for Address:

information. Phone:

Email:

Fax:

Intermediary website:

Identify the person who is authorized to sign a MOU Name:

on behalf of the entity. Title:

Address:

Phone:

Email:

Fax:

*A State Housing Finance Agency (HFA) need not demonstrate meeting these items, given the 

State’s HFA purpose, vision and structure.

Signature of authorized representative Date

HB-1-3550

Attachment 3-A

Page 26 of 29
Intermediary Involvement:

If a state is served by multiple intermediaries, a certified packaging body may choose which 

intermediary through which to funnel their packaged loan applications. 

State Directors will require all certified packaging bodies to funnel packaged loan applications 

through an intermediary (if present in the state) unless the certified packaging body requests and 

meets the requirements for an opt-out as outlined below. If a certified packaging body serves 

multiple states, the request must be made on a per state basis. These opt-out requirements will 

help ensure that opt-out requests are handled in a consistent manner nationwide. 

Requests To Work Without An Intermediary: 

State Directors may approve an opt-out request from a certified packaging body when the request 

is supported by the intermediary based on the quality and quantity of loan application packages 

submitted by the certified packaging body through the intermediary. At a minimum, the certified 

packaging body must have funneled at least 20 loan application packages through the same 

intermediary and have funneled packages through the same intermediary for a period of at least 

12 months before an opt-out can be considered. With these minimums in mind, the intermediary 

will support the request if the certified packaging body has a 90% or higher overall success rate.

The overall success rate is based on 1) the number of 

applications submitted which are complete and 2) the 

number of loans closed vs. applications submitted. 

To calculate the overall success rate for an opt-out 

request, the rate for complete applications received and 

applications closed will be averaged.

Cases where an applicant chose to withdraw their 

application despite being eligible based on a welldocumented loan application package will not be counted 

against the packager (i.e. the application will be counted 

as a complete application).

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-A 

Page 27 of 29

Sample calculations 

Complete application rate calculation:

Applications submitted: 10

Applications complete: 7 

7 divided by 10 = 70% success rate 

Overall success rate calculation: 

Applications complete: 70%

Applications closed: 95%

Total: 165%

165% divided by 2 = 82.5% overall
The intermediary will apply the following conditions when the request cannot be initially supported; 

these conditions specify when a subsequent opt-out request will be supported.

• Overall success rate of 85% - 89.99% at the time of the original opt-out request: Requires 

an additional three months of oversight and support by the intermediary and five or more 

complete application packages with a 90% or higher success rate.

• Overall success rate of 80% - 84.99% at the time of the original opt-out request: Requires 

an additional six months of oversight and support by the intermediary and ten or more 

complete application packages with a 90% or higher successrate.

• Overall success rate of less than 80% at the time of the original opt-out request: Requires 

an additional 12 months of oversight and support by the intermediary and 20 or more 

complete application packages with a 90% of higher successrate.

A statement of support from an intermediary is not required when a State Housing Finance 

Agency requests an opt-out through the State Director.

When an intermediary is not involved because an opt-out request from a certified packaging 

body was approved by the State Director or because an intermediary doesn’t cover a particular

state, it will fall upon the State Office to:

• Ensure that a certified packaging body meets and continues to meet the conditions 

outlined in 7 CFR 3550.75(b)(1), (b)(2), (d), and (e).

• Enter into a MOU with the certified packaging body using the standardized format 

(which can be found in SharePoint).

• Update the Agency’s state-level website using a standardized template to identify 

certified packaging bodies with an approved opt-out.

When an intermediary is not involved because a non-certified packaging body was approved by 

the State Director, it is the State Office responsibility to:

• Ensure that a non-certified packaging body meets and continues to meet the

conditions outlined in 7 CFR 3550.52 (d)(6).

• Enter into a MOU with the non-certified packaging body using the standardized

format (which can be found in SharePoint).

• Update the Agency’s state-level website using a standardized template to identify 

non-certified packaging bodies.

HB-1-3550

Attachment 3-A

Page 28 of 29
An Intermediary’s Performance Elements

Intermediaries enter into a MOU which details performance elements. While the MOU contains 

other requirements, which are also considered when assessing performance, the minimum 

performance elements and their rating structure are defined below:

1. The intermediary will outreach to parties that could potentially serve as a certified 

packaging body.

2. It is expected that packaged loan applications funneled through the intermediary will 

receive a high rate of Agency approval (with minimal need for the Agency to request 

additional information). The following measures (applied to both applications received 

and closed) will be used, on a per state basis, for timeframes to be determined by the 

Agency. These rates will be calculated using the same method as identified earlier in this 

attachment:

a. Success rate of 90% or higher: Excellent.

b. Success rate of 85% - 89.99%: Meets.

c. Success rate of 80% - 84.99%: Needs to improve in the following quarter or face 

possible revocation.

d. Success rate of under 80%: Subject to immediate revocation of intermediary 

status.

3. On a per state basis and for timeframes to be determined by the Agency, at least 30 

percent of the applications submitted under this MOU must be from eligible very lowincome applicants, with the balance from eligible low-income applicants.

Based on these criteria, a scoring system will be used to rate overall performance during a 12 

month period:

# Minimum Performance 

Elements Met

Status of MOU Action Required By 

The Intermediary

Improvement Timeframe

3 out of 3 Excellent None N/A

2 out of 3 Acceptable Emphasis on 

improving deficient 

area

Within the next quarter

1 out of 3 Unacceptable Immediate action to 

improve in deficient 

areas

If no improvement within 

the next quarter, MOU is 

revoked

0 out of 3 Immediate 

revocation

N/A N/A

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-A

Page 29 of 29
ATTACHMENT 3-B 

FOLLOW-UP QUESTIONS FOR

HB-1-3550

Attachment 3-B 

Page 1 of 4 

FORM RD 410-4, UNIFORM RESIDENTIAL LOAN APPLICATION 

Form RD 410-4, Uniform Residential Loan Application is designed to obtain a broad 

range of applicant information. To accurately process an Agency loan, however, the Loan 

Originator must review the application carefully and ask follow-up questions to ensure that all 

relevant information has been obtained. This attachment provides a list of questions that may be 

useful for each section of the application. Not all questions will be needed for all applicants, and 

additional information may be needed in some cases. 

I. Type of Mortgage and Terms of Loan

• None.

II. Property Information and Purpose of Loan

• Determine whether the applicant intends to purchase a Real Estate Owned (REO) 

property or assume a loan from a program borrower and explain how this may 

affect their processing priority.

• Determine whether the applicant is interested in a leveraged loan or if the 

application was submitted by a packager, including an explanation of 

how this affects their processing priority. 

• If the applicant wishes to refinance, obtain details about why and also inquire about 

the type and condition of their home. The Agency will refinance loans only in 

limited circumstances.

• If the applicant will not reside in the property, confirm that the applicant wishes to 

obtain a nonprogram loan. 

• If the applicant is requesting a subsequent loan to improve the property, determine 

whether the repairs are necessary to maintain the security, or to meet the family’s 

housing needs and explain how the processing priorities would be applied. 

III. Borrower Information (as well as Additional Information Required for RHS Assistance)

• Name, age, and relationship of all household members.

• Confirm number and ages of dependents.

• Any foster children or foster adults?

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-B 

Page 2 of 4

• Any full-time students?

• Any household members with disabilities?

• Any elderly household members?

• If the household qualifies as an elderly household, does the household have 

extensive medical expenses?

IV. Employment Information (as well as Additional Information Required for RHS 

Assistance)

• If there is an adult household member who has recently changed jobs, determine the 

reason for the job change.

• If there is an adult household member for whom no employer information has been 

provided, determine whether the person is employed.

• If any adult household member is unemployed, determine for how long.

• Discuss employment gaps in excess of 30 days with the applicant.

V. Monthly Income and Combined Housing Expense Information (as wellas 

Additional Information Required for RHS Assistance)

• Verify that income listed is comprised of all sources of income, including income 

from applicants, spouses of applicants (even if the spouse is a minor), and any other 

adult household members.

• If the income history reveals significant fluctuations, discuss the income trends with 

the applicant.

VI. Assets andLiabilities

• If the household reports owning real estate, discuss the type of property owned to 

verify that the reported market value is reasonable.

VII. Details of Transaction

• If completed by applicant, review information to confirmaccuracy.

• If the applicant reports any judgments, bankruptcies, lawsuits, foreclosures or deeds 

in lieu of foreclosure, or delinquencies on a Federal debt or any other obligations, 

determine the particular circumstances.
HB-1-3550

Attachment 3-B 

Page 3 of 4

VIII. Declarations

• If the applicant reports any alimony, child support, or separate maintenance 

obligations, verify that it is included as a liability in Section VI of Form RD410-4.

• If the applicant has applied for a nonprogram loan, determine whether any part of a 

proposed down payment will be borrowed, since other debt will affect repayment 

ability.

• If the applicant is not a U.S. citizen, verify that he or she is a qualified alien.

• If the applicant does not intend to occupy the property, verify that the applicant 

intends to obtain a nonprogram loan.

• If the applicant has had ownership interest in a property, determine how that interest 

was disposed of to ensure that it was not disposed of at below market value.

IX. Acknowledgment and Agreement

• None.

X. Information For Government MonitoringPurposes

• None.

(01-23-03) SPECIAL PN

Revised (01-06-17) PN 492
HB-1-3550

Attachment 3-B 

Page 4 of 4

Additional Information Required for Agency Assistance

• If the applicant has received prior assistance, determine whether there were any 

repayment problems, and in the case of a Section 504 loan or grant, whether the 

assistance limit has been reached.

• If the applicant is a veteran, or family of a deceased service person, determine the 

dates of service, the type of discharge received, and the date of death, if deceased.

• If the applicant lists a household member as disabled, determine whether the 

household may be entitled to a deduction for the costs of dependent care to allow a 

household member to further their education or to work, and whether any 

reasonable accommodations may be required.

• If the applicant lists childcare costs, determine whether child care is needed to 

allow a household member to further their education or to work (if it is to allow the 

applicant to work, determine whether the salary the applicant receives is equal to or 

greater than the cost of child care and the age of the child for which care is being 

provided).

• If the applicant indicates that the present dwelling has physical problems or is 

overcrowded, obtain details about the nature and duration of the problem.

• If the applicant did not include alimony, child support, or separate maintenance 

information in Section V of Form RD 410-4, make sure the information is provided.
HB-1-3550

Attachment 3-C 

Page 1 of 4

ATTACHMENT 3-C 

CASE STUDY - PROCESSINGPRIORITIES

Applications will be selected for processing using the priorities specified in Paragraph 3.13. The 

Field Office currently has a backlog of applications in Big Gap County which has been designated 

as a high priority needs area for which the Agency has a special set-aside. The Loan Originator 

must review the following applications to process any that can take advantage of the set-aside 

funds and to select applications for processing in anticipation of additional funding not designated 

for set-asides that will be available soon. Part I provides information on the applicants, their current 

situations, and the dates of the applications. Part II illustrates the analysis and ranks the 

applications in the order of selection.

Part I. Applicants

Application 

Complete 

Date

Applicant Description

9/5 De Moura Ms. De Moura has owned her home, which was financed by a local 

lender for 3 years. Last year, she was laid off from her job but has 

found a new position that pays only half the salary. As a result, she is 

behind in her loan payments and the lender has accelerated her loan. 

Ms. De Moura would like to refinance with Agency funds.

9/6 Sapienza The Sapienzas used a Section 502 loan to purchase an existing home. 

They are requesting a subsequent 502 loan to install a retaining wall 

because of erosion in the backyard.

9/7 Yao The Yaos wish to purchase a newly built house. They would like to 

obtain a Section 502 loan and their loan application package was 

submitted via an Agency-approved intermediary.

9/8 Jones The Joneses moved into the area 4 months ago and would like to 

purchase an existing house using Section 502 funds because the rental 

unit the family occupies is too small for the family and has an 

inadequate heating system.

9/9 Garcia The Garcias would like to purchase a home from Greenes who have 

been paying regularly on their Section 502 loan but are now 

transferring out of state.

9/9 Olsen The Olsens wish to purchase a Real Estate Owned (REO) property 

using Section 502 funds. In addition, Mr. Olsen served in active 

military duty during the Vietnam war. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-C 

Page 2 of 4

Application 

Complete 

Date

Applicant Description

9/14 Brown The Browns used a Section 502 loan to purchase an existing home. 

Their septic system no longer works properly and needs significant 

repairs, and they are requesting a subsequent 502 loan to repair it. 

They are 2 payments behind on their initial loan.

9/15 Johnson The Johnsons would like to purchase a home from a current Agency 

borrower but have income well above the low-income limit.

9/16 Smith The Smiths would like to build a home on a site in Big Gap County.

9/21 Pawlikowski The Pawlikowskis have been without adequate plumbing for 8 months. 

They would like to purchase a newly built house using Section 502 

funds.

9/21 Deitrich The Deitrichs would like to build a new house because they feel their 

current 3-bedroom home is too small to accommodate Mr. and Mrs. 

Deitrich, their 3 children, and his Aunt Greta, who has recently moved 

in. They wish to fund the construction through a Section 502 loan.

9/23 Whitfield The Whitfields wish to purchase a home from an Agency borrower 

who has an accelerated account.

Part II. Establishing Priorities

Selection 

Order Applicant

Application 

Complete 

Date

Priority Priority Status

N/A Johnson 9/15 N/A Although the Johnsons are not program-eligible, 

they may purchase the home under nonprogram 

terms. No additional funds are required because 

a nonprogram borrower can only assume the 

outstanding balance at new rates and terms.

Processing need not be delayed until additional 

funds are available.

N/A Smith 9/16 N/A The Smithsreceive funding immediately from 

the set-aside.

1 Brown 9/14 1 The Browns receive first-priority processing for 

new funds because they are requesting a 

subsequent loan to remove health and safety 

hazards. The Loan Originatorshould counsel the 

Browns to contact the Servicing Office to 

resolve the delinquency. The Loan Originator 

may need to coordinate with the Servicing 

Office about whether a loan or protective 

advance is most appropriate.
HB-1-3550

Attachment 3-C 

Page 3 of 4

Selection 

Order Applicant

Application 

Complete 

Date

Priority Priority Status

2 Olsen 9/9 2 Since the Olsens are purchasing an REO property, 

the Agency gives second-priority processing to 

their request.

3 Garcia 9/9 2 The Garcias receive second-priority processing 

because they are assuming a home from an 

Agency borrower. Although their application was 

completed on the same day as the Olsens’, the 

Olsens receive priority because Mr. Olsen 

qualifies for a veterans’ preference.

4 Whitfield 9/23 2 The Whitfields receive second-priority processing 

because they are assuming a loan from an existing 

Agency borrower. Purchasing a home from a 

borrower who has an accelerated account does not 

give the Whitfields processing priority over the 

Garcias who also are assuming a loan from a 

current borrower. Within priority categories 

applications are selected by application date.

5 De Moura 9/5 3 Ms. De Moura receives third-priority processing 

because she is in danger of losing her home 

through foreclosure due to circumstances beyond 

her control.

6 Pawlikowski 9/21 3 Since the Pawlikowskis have been living in 

deficient housing for at least 6 months, they 

receive third-priority processing.

7 Yao 9/7 4 The Yaos receive fourth-priority processing 

because their loan application package was 

submitted via an Agency-approved intermediary

8 Sapienza 9/6 5 The Sapienzasreceive fifth-priority processing; they 

are requesting a subsequent loan to make needed 

repairs for a condition that, at this time, does not 

constitute a health and safety hazard.

The Sapienzas application will be processed after 

all applicants with priorities have been processed.

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-C 

Page 4 of 4

Selection 

Order Applicant

Application 

Complete 

Date

Priority Priority Status

9 Jones 9/8 5 The Joneses receive fifth-priority processing. 

Although they have been living in deficient 

housing for 4 months, they are currently 2 

months short of receiving second-priority 

processing. If within 2 months funding is still 

not available, the Joneses would receive secondpriority processing, and would be processed 

before the Olsens.

10 Deitrich 9/21 5 The Deitrichs receive fifth-priority processing. The 

application will be processed after all applicants 

with priorities have been processed. Although the 

family believes the house is too small, it is not 

sufficiently overcrowded to be considered 

deficient, because there are no more than 2 people 

per bedroom.
ATTACHMENT 3-D 

RURAL DEVELOPMENT

RURAL HOUSING SERVICE

“Applicant Information Sheet” - Single Family Housing

The Rural Housing Service (RHS) provides loans in rural areas to eligible low- and very 

low-income applicants. The loan may be to purchase existing housing, purchase and repair 

existing housing, purchase a building site and construct a dwelling, or purchase new housing. 

Rural areas typically include open country and places with a population of 10,000 or less and, 

under certain conditions, towns and cities between 10,000 and 20,000 population. 

For detailed information on income limits and eligible areas, visit: 

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.

The property must be in good repair or placed in good repair with loan funds. For an 

existing property, a whole house inspection performed by a qualified inspector is needed. The 

buyer and seller should discuss who will cover the cost of the whole house inspection and 

address this item in the purchase agreement.

All who apply get equal consideration without regard to race, color, national origin, 

religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental 

status, income derived from a public assistance program, political beliefs, or reprisal or 

retaliation for prior civil rights activity.

To apply, complete all the applicable items in the attached checklist of items to 

accompany the uniform residential loan application and submit the package using one of the 

options below: 

• Through a loan application packager. To locate an application packager, please visit 

https://www.rd.usda.gov/sites/default/files/RD-SFH-IntermediaryMap.pdf.

• Apply online after registering to obtain a USDA eAuthentication identification and 

password. https://forms.sc.egov.usda.gov/eForms/welcomeAction.do?Home

• Return to the Rural Development office using the address(es) below. If an email 

address is listed below, password protect the email to protect personal identifiable 

information.

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571

HB-1-3550

Attachment 3-D 

Page 1 of 5
A loan application packager provides an optional service to an applicant seeking a housing loan by 

helping to navigate the loan application process. A packager can help determine if the Section 502 

Direct Loan Program is a good fit and, if so, help to assemble a complete loan application package. 

Loan application packaging fees can generally be included in the Rural Development loan or can be 

paid by the seller, builder, or third party. Packagers do not work for or represent Rural Development.

Eligible loan application packagers can either work with or without an approved intermediary. An 

intermediary is an affordable housing nonprofit, public agency, or State Housing Finance Agency 

approved by Rural Development to perform quality assurance reviews on loan application packages. 

Loan application packages funneled through an approved intermediary receive priority processing. 

Priority status may also include applications for: 

• Agency borrowers requesting subsequent loans to correct health and safety hazards

• Applicants interested in obtaining loans for Real Estate Owned property or related to the 

transfer and assumption of property owned by a program borrower 

• Applicants facing housing-related hardships (please identify any housing-related hardships you may be 

experiencing on the Attachment 3-J, which is completed as part of the standardized application package). 

Loan applications which do not qualify for priority consideration will be selected for processing after 

all applications with priority status have been processed. 

Please contact a loan application packager or the above Rural Development office if you have 

questions regarding what needs to be in your application package or if would like assistance in 

completing a form. To determine if you qualify, review these frequently asked questions: 

“CAN I ASSESS MY ELIGIBILITY PRIOR TO APPLYING?”

Using the Single Family Housing Direct Self-Assessment tool, potential applicants may enter 

information online to determine if the Section 502 Direct Loan Program is a good fit for them prior 

to applying. The tool will provide a preliminary review after a potential applicant enters information

on their general household composition, monthly income, monthly debts, property location, estimated 

property taxes, and estimated hazard insurance.

To access the tool, visit https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and click 

on the Single Family Housing Direct tab. 

Potential applicants are welcome to submit a complete application for an official determination by 

Rural Development regardless of the self-assessment results. Upon receipt of a complete application, 

Rural Development will determine the applicant’s eligibility using verified information and the 

applicant’s maximum loan amount based on their repayment ability and the area loan limit for the 

county in which the property is located. 

HB-1-3550

Attachment 3-D 

Page 2 of 5
“DOES IT MATTER HOW MANY OTHER BILLS I HAVE TO PAY?”

RHS will look at your monthly obligations and how much you currently owe to others. We’ll want to

know if paying back the proposed loan on top of your other payments will be difficult for you.

“WHAT IF I THINK MY INCOME IS TOO LOW?”

Having enough income to repay your loan is an important part of getting a loan; however, the RHS 

loan may be subsidized. A subsidized loan is based on the applicant repaying a percentage of their 

income toward the housing payment, taxes, and insurance. The percentage is generally 24 percent of 

the applicant’s household income. 

“WHAT CAN I DO IF MY INCOME IS TOO LOW?”

Consider applying with a co-applicant if there is another member of your household willing and able 

to be a note signer. RHS will then look at your combined income and credit when determining 

repayment ability. You may also consider a cosigner. A cosigner is an individual who will not reside 

in the dwelling, but who is willing to be responsible for the debt. You may also consider applying for 

down payment assistance programs in your area which provide affordable housing products. Many

areas have Housing Finance Agencies, Housing Authorities, or Nonprofit Agencies which administer 

these programs. Funding from these sources can be combined with Rural Development loan funds. 

“HOW CAN I DETERMINE IF MY INCOME IS ADEQUATE TO REPAY A LOAN?”

The amount of your proposed monthly house payment, real estate taxes, insurance, and other credit 

debts cannot exceed 41 percent of your gross monthly income. If you have questions regarding how

this determination is made, you may contact the local Rural Development Office shown on the front 

cover. 

“CAN I GET A LOAN IF I’M UNEMPLOYED?”

A steady source of income is very important to getting a loan. An applicant must show sufficient 

resources to repay the housing loan. Not having a job or a stable source of income may have an 

impact on the Agency’s decision. Experience has shown that applicants with stable jobs and income 

sources are more likely to repay the loan. 

“WILL YOU FIND OUT ABOUT OTHER CREDIT I’VE HAD?”

Yes. Your credit report provides information on your payment history including any difficulty you 

have had repaying other loans or credit cards. That information will be used to determine if you can

repay the loan. If you are unsure what your credit history contains, you can obtain a free credit report

by calling 1-877-322-8228 or logging into https://www.annualcreditreport.com. By law, individuals 

are entitled to receive one free credit file disclosure every 12 months from each of the nationwide 

consumer credit reporting companies – Equifax, Experian and TransUnion. 

This free report cannot replace the credit report that the Agency will obtain to determine eligibility.

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-D 

Page 3 of 5
“HOW LONG WILL IT BE BEFORE I CAN MOVE INTO MY NEW HOME?”

Typically, applicant eligibility, loan approval, and loan closing may be accomplished within 

approximately 120 days of filing a complete application. However, depending on the availability 

of Government funding, this timeframe may be extended. The applicant is periodically advised 

regarding the status of their application when there is lack of funding.

Applications will be processed based on the following priorities: 1) subsequent loans to correct 

health and safety hazards, 2) loans to purchase homes owned by RHS and loans to transfer and 

assume (or purchase with new loan funds) properties owned by RHS borrowers, 3) hardships as 

defined by RHS, 4) loans that bring in additional resources as defined by RHS, including loan 

application packages funneled through an approved intermediary, and 5) applications that do 

not qualify for priorities 1 - 4. Within each priority category, veterans’ preference will be given 

to applicants who were discharged or released (except for a dishonorable discharge) from the

U.S. active forces (regardless of the position held – administrative support, combat, mechanics, 

medical, transportation, etc.) and who actively served during eligible periods.

“HOW MUCH MONEY WILL I NEED FOR A DOWN PAYMENT?”

A down payment is generally not required. Loans may be made for up to 100 percent of the 

market (appraised) value. Simply put, this means if the sales price of the property is equal to or 

less than the appraised value, no down payment is needed.

“DOES THIS MEAN I WON’T NEED ANY CASH TO GET A LOAN?”

Generally, the applicant will need some cash available. There are costs associated with the credit 

report, appraisal report, escrow, and other related closing costs. The credit report fee is always 

paid by the applicant upfront. The first year’s hazard insurance premium and whole house 

inspection report fee are paid prior to closing unless included in the loan amount. Costs pertaining 

to the appraisal, escrow, and loan closing may be included in the loan amount. You may also 

negotiate with the seller to contribute a percentage toward closing costs. Any agreement with the 

seller should be entered into prior to signing and documented in the purchase agreement or sales 

contract.

“DOES THE APPLICANT HAVE OTHER RESPONSIBILITIES?”

Yes. Rural Development staff are available to assist the applicant from the application to loan 

closing. The applicant is responsible for providing requested information timely. The 

information may be requested by Rural Development staff, a loan application packager, a real 

estate agent, or a closing agent. Failure to provide information timely results in delayed 

decisions and other actions.

HB-1-3550

Attachment 3-D

Page 4 of 5
Yes. The applicant must:

1. Be without decent, safe, and sanitary housing.

2. Be unable to obtain a loan from other resources on terms and conditions that they can 

reasonably be expected to meet.

3. Possess the legal capacity to incur the loan obligation.

4. Be a U.S. citizen, a U.S. noncitizen national, or a qualified alien and provide 

acceptable evidence of qualified alien status.

“WHAT ARE THE TERMS OF THE LOAN?”

The maximum repayment period is 33 years and, under certain conditions, 38 years if the 

applicant is income eligible and the longer term is necessary to show repayment ability. Rural 

Development staff can work with you if you are determined eligible, to determine whether a 

38-year term is appropriate. The maximum repayment period for manufactured homes is 30 

years.

“WHERE MAY HOUSES BE LOCATED?”

Houses must be located in a rural area, on desirable sites with an adequate supply of safe 

drinking water and suitable arrangements for sewage disposal. Streets must have an all-weather 

surface and be maintained by a public body or a homeowner’s association. 

“WHAT ABOUT THE FEATURES OF THE HOME AND SITE?”

While cost and features vary in different areas of the country, the home and site must be 

modest. A modest site generally cannot be subdivided under local zoning laws, does not 

include land or structures that will be used principally for income-producing purposes, and 

complies with local zoning requirements. An existing home with an in-ground swimming 

pool may be considered modest; however, in-ground swimming pools with new construction 

or with properties that are purchased new are prohibited. Under certain conditions, an 

exception to these standards may be granted on a case-by-case basis. The value of a dwelling 

may not exceed the area loan limit for the area in which the applicant is requesting financing.

WHO IS RESPONSIBLE FOR INSPECTING THE HOME?

The applicant/borrower is responsible for hiring a qualified inspector to conduct a whole house 

inspection on an existing property and for making inspections necessary to protect their interests. 

While a Rural Development staff member or designee may inspect a property during and/or 

following construction or repair, these inspections do not create or imply a warranty or guarantee 

on the condition of the property. 

“WHERE MAY I APPLY?”

Applications are made at the local Rural Development office or through an application packager 

serving the area where the house will be located. To locate your nearest Rural Development 

office, please visit: https://offices.sc.egov.usda.gov/locator/app?state=us&agency=rd. To locate 

an application packager, please visit https://www.rd.usda.gov/sites/default/files/RD-SFHIntermediaryMap.pdf. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-D 

Page 5 of 5
HB-1-3550

Attachment 3-E 

Page 1of 1 

ATTACHMENT 3-E 

REQUEST TO REOPEN A REJECTED APPLICATION IN LOANSERV

Application Number: 

Name of Applicant: Name of Co-Applicant: 

Reason for Request (check only one):

National Appeals Division (NAD) overturned the rejection of the application.

The Loan Approval Official reviewed and reconsidered the rejection and 

recommends reinstatement.

Please PRINT name of requesting official: 

Signature of requesting official: Date: 

Title of requesting official: 

FOR STATE OFFICE USE ONLY:

*Request Approved: **Request Denied: 

PRINT the Housing Program Director’s name:

Housing Program Director’s signature: Date: 

*If approved, the State Office should fax form to SFH Assistance Section at 314-457-4441 and 

notify the Field Office of the approval. 

**If denied, fax form back to originating office to place in applicant’s case file.

(01-23-03) SPECIAL PN

Revised (03-09-22) SPECIAL PN
HB-1-3550

Attachment 3-F 

Page 1 of 3

ATTACHMENT 3-F 

HOW TO ADDRESS NEGATIVE PRE-QUALIFICATION RESULTS 

The purpose of this attachment is to instruct the RHS staff on how to handle discussions 

concerning negative pre-qualification results. Since pre-qualifications are based on unverified 

information and infile credit reports, the results are not binding. To avoid implying that the 

results are official, the following scripts are to be used in each given situation: 

Situation 1: The potential applicant has credit blemishes (be it bankruptcy, collections, etc.)

on their infile credit report.

Proper Response: 

Let the potential applicant know that their credit record does not have to be perfect to be eligible 

for a loan. Inform the potential applicant that past credit blemishes can be acceptable if their 

overall credit record demonstrates an ability and willingness to repay obligations or if their credit 

blemishes occurred as a result of circumstances beyond their control. Counsel the potential 

applicant on how to correct the credit blemishes and share with the potential applicant the credit 

standards as outlined in HB-1-3550, Chapter 4. Be sure to explain to the potential applicant that 

fulfilling suggestions provided by the RHS staff will improve their chances of qualifying for a 

loan, but not guarantee loan approval. 

Unacceptable Response: 

Informing the potential applicant that based on the results of the infile credit report, they do not 

meet our credit standards and would not qualify for a Section 502 direct loan. 

(01-23-03) SPECIAL PN

Revised (07-08-09) PN 430
HB-1-3550

Attachment 3-F 

Page 2 of 3

Situation 2: The potential applicant does not appear to qualify for an amount sufficient to

purchase a decent, safe, and sanitary dwelling.

Proper Response

Counsel the potential applicant on ways to improve their financial status (i.e. paying off small 

debts, debt consolidation, increasing their income, etc.) and inform the potential applicant that a 

qualifying co-signer may be added to an application to compensate for a lack of adequate 

repayment ability. Also refer the potential applicant to state and nonprofit agencies that might 

be willing to extend forgivable loans and/or grants. 

Unacceptable Response: 

Telling the potential applicant that they do not qualify for a loan due to a lack of repayment 

ability.

Situation 3: The potential applicant presently owns a home.

Proper Response:

Let the potential applicant know that if their dwelling is structurally unsound, functionally 

inadequate, or too small to accommodate the needs of the household, RHS may be able to 

provide financing to improve the existing dwelling or to purchase a new one. In addition, let the 

potential applicant know that RHS may be able to refinance the property under certain 

circumstances (refer to HB-1-3550, Chapter 6.5). 

Unacceptable Response:

Informing the potential applicant that the Section 502 direct loan program is designed for firsttime homebuyers only. 
HB-1-3550

Attachment 3-F 

Page 3 of 3

Situation 4: The household’s adjusted annual income appears to be over the income limit.

Proper Response:

Inform the potential applicant that to qualify for a Section 502 direct loan, their household’s 

adjusted annual income must be within our established income limit based on household size and 

location. Also let the potential applicant know that if they should exceed the income limit for the 

direct loan program other options are available (assumed loan, purchase of a REO property, a 

Guaranteed Rural Housing loan, and other credit). 

Unacceptable Response:

Informing the potential applicant that they do not qualify for a Section 502 direct loan because it 

appears as though they are over income based on the unverified income information. 

(01-23-03) SPECIAL PN

Revised (07-08-09) PN 430
Attachment 3-G

502 Single Family Housing Checklist

THIS CHECKLIST DOES NOT REPLACE THE RUNNING RECORD!

This document should be filed under Folder A for an Electronic Customer File (ECF)

Once clear, readable copies are uploaded and confirmed in ECF the originals can be destroyed following 

the requirements of RD Instruction 2033-A (e.g., PII must be cross-cut shredded) except for the 

documents identified on the Index of Essential Records which are maintained in locking-type fire proof 

filing cabinets/safes in accordance with RD Instruction 2033-A, 2033.(b)(1)(iii).

Borrower Name: Co-Borrower Name:

Borrower Phone: Co-Borrower Phone:

Borrower Email: Co-Borrower Email:

Processing Priority: 1 2 3 4 5

ECF RP Date

Application Processing

Review application for completeness within 3 business days of receipt. Promptly contact the applicant to request 

any missing information. Follow up with a letter advising applicant of a 15-day deadline for submission or the 

application will be withdrawn. Mark the file as inactive until complete. (HB-1, 3.6)

A LO Attachment 3-J

J LO Packaging Phase 1: Application Submittal Cover Letter (if applicable)

C LO RD 410-4, Uniform Residential Loan Application, (or current industry standard “Uniform 

Residential Loan Application” along with pages 6-10 of RD 410-4)

When the 410-4 is submitted using eForms, a signature on the 410-4 is not needed (HB- 1, 3.5)

C LO RD 3550-1, Authorization to Release Information (for each adult household member) (HB- 1, 3.5)

LO If an application includesthe information required by TRID, forward to the applicant within 3

business days of receipt of the application (HB-1, 3.8):

C HB Letter 5 (3550), Cover Letter for Initial Disclosures Package

C CFPB’s “Your home loan toolkit: A step-by-step guide”

C CFPB’s LoanEstimate Attachment 3-I, Settlement Service Providers List & Mortgage 

App. Related Disclosures

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

ECF – Electronic Customer File (refer to the ECF Classifications – Quick Reference Guide in SharePoint) 

RP - Responsible Party

LO – Loan Originator

LAO – Loan Approval Official

HB-1-3550

Attachment 3-G 

Page 1 of 9
HB-1-3550

Attachment 3-G 

Page 2 of 9

C LO For an unsecured loan,send RD 1940-41, Truth in Lending Statement.

Date returned

C LO Check the Department of the Treasury’s DNP Portal for each applicant, retain copy in ECF (if

not completed at Pre-qual) (HB-1, 3.3, 4.11) (https://fiscal.treasury.gov/DNP/)

C LO Check LoanServ’s “SSN CROSS REFERENCE” softlink key (if not completed at pre-qual) (HB1, 3.3, 4.11)

D5 LO If not a citizen, check S.A.V.E Database. See Attachment 4-D for additional guidance (HB-1,4.20)

https://save.uscis.gov/web/vislogin.aspx

C LO Identification (HB-1, 4.21)

Evidence of age

Taxpayer’s ID number

Photo ID

C LO Funds Available; send HB Letter 11 (3550), Request Information (HB-1, 3.14)

C LAO Funds Not Available; send HB Letter 2 (3550), Funds Not Available (HB-1,3.13)

D5 LAO Send HB Letter 3-A (3550) Waiting Period (Funds Not Available) if funds are not available 6 

months after sending HB Letter 2 (Signed by LAO) (HB-1, 3.14)

D5 LAO Send HB Letter 3-B (3550) Waiting Period (Extended Processing Timeframe) if eligibility 

determination is not made within 30 days of receipt of complete application (Signed by LAO) (HB-1, 

3.7)

Send subsequent HB Letter 3-B (3550) if eligibility determination is not made within 6 months of 

complete application (Signed by LAO) (HB-1, 3.14)

LO Underwriting – enter ‘pre-qual’ and ‘application complete’ dates on Stage Updating Screen – Be sure 

to enter actual purchase price, if known.

Income

D1 LO Paycheck stubs (4 most recent & consecutive weeks, i.e., no more than 60 days old as of date of 

application) – only for employment which is not seasonal in nature. Seasonal employment is verified

using the last two years of complete tax returns with W- 2s and applicable schedules. (HB-1, 4.3)

D1 LO Oral Verification of Employment – if applicable (HB-1, 3.15 A.3.)

D1 LO RD 1910-5, Request for Verification of Employment – if paystubs are not available

(HB-1, 4.3)

If no response in 14 days, call employer to follow up and document the discussion.

D1 LO Other Income documentation (HB-1, 4.3, 4.5):

Public Assistance Self-employment income

Child Support/Alimony Social Security/VA Bene

Unemployment Benefits Pensions/Annuities

Other

Last two Federal Income Taxes including all applicable W-2s, Wage and Tax Statement, 

IRS Form 1099-MISC Miscellaneous Income and schedules.

Tax transcripts directly requested and obtained by applicant using IRS Form 4506-T, 

Request for Transcript of Tax Return, if additional income validation was needed.

D1 LO RD 3550-4, Employment and Asset Certification

D1 LO Separation/Divorce/Paternity/Property Settlement Agreement, if applicable

Deductions

D2 LO Deduction documentation (HB-1, 4.4):

Child Care Full-time Student status

Elderly/Disabled (RD 1944-4,if 

applicable) Minor Dependent

Medical Expenses Other

Disability Assistance Expenses
HB-1-3550

Attachment 3-G 

Page 3 of 9

Assets

D3 LO Most recent bank account statements covering at least two-month period- statements must include

the transaction history, review any recurring deposits or debits and obtain explanation for large 

deposits (HB-1, 4.5)

D3 LO 1944-62, Request for Verification of Deposit – if statements are not available or the accuracy of 

the applicant’s self-certification or statements are questioned (HB-1, 4.3)

D3 LO 3550-2, Request for Verification of Gift/Gift Letter, if applicable (HB-1, 4.3)

D3 LO Land and Other Real Estate, if applicable (HB-1, 4.5, Exhibit 4-3)

D3 LO Most recent retirement fund statements covering at least a two-month period (HB-1, 4.6, 4.7)

D3 LO Other Assets(HB-1, 4.5, Exhibit 4-3)

Credit

D4 LO Tri-Merge Credit Report (TMCR) documentation (HB-1,4.12):

(Credit Score Disclosure provided in the standardized application package. Do not upload into ECF.)

Fee Received. Enter date in UniFi (Stage Updating screen).

Process the credit report fee using the Electronic Fee Service (DLOS, Ch 5) or 3550-17, Funds 

Transmittal report (if cashier’s check or money order)

Report Ordered (upon selection for processing)

Report Received

Credit score: Applicant Co-applicant

D4 LO Creditscore islessthan 640 or applicant haslessthantwo creditscores(HB-1, 4.12 & 4.13):

Nontraditional credit verifications (HB-1,4.12.C)

RD 410-8, Applicant Reference Letter– if applicable

RD 1944-60, Landlord’s Verification

Credit Letter of Explanation, if applicable (HB-1, 3.7, 4.12)

RD 1944-61, Credit History Worksheet (completed by LO,signed by LAO) LAO is 

responsible for reviewing/approving any credit exceptions.

D4 LO Community property states non-purchasing spouse’s credit report containing Equifax, 

Experian, and TransUnion information. Include obligations in total debt ratio.

NP SPOUSE’S CREDIT IS NEVER CONSIDERED A REASON TO DENY A LOAN 

APPLICATION (HB-1, 4.12D)

 D4 LO Student loan / Income Based Repayment (IBR) documentation (HB-1, 4.22)

ELIGIBILITY PROCESSING

D5 LO Attachment 4-A, Worksheet for Computing Income (HB-1,4.2)

D5 LO RD-3550-30, Verification of Debt Proposed for Refinancing, for non-Agency debt (HB-1, 6.5)

D5 LO Document Applicant has adequate funds for closing cost/down payment- if applicable

D5 LAO Loan eligibility narrative completed/signed by Loan Approval Official (LAO) (including but not 

limited to income, creditworthiness (including DNP), repayment ability, and payment shock (if 

applicable))

D5 LAO RD 1944-59, Certificate of Eligibility (COE) if a property has not been selected.Valid for time 

period(s) specified in HB-1, 4.25. (Prepared by LO, Signed by LAO)

LO Withdraw the application if no property isidentified after applicable time period

C LO Verify completion of a Homeownership Education Course (Cert of Completion) (HB-1, 3.4)

F LAO If applicant is not eligible,send HB Letter 15 (3550), StandardizedAdverse Decision Letter

with review and appeal rights (Must be signed by LAO) (HB-1, 1.9)

C LAO Document eligibility on originally submitted RD 410-4, item 17.

D5 LO Update UniFi/Stage Updating, save and digitally sign Eligibility Summary

D5 LO Form RD 3550-23, Applicant Orientation Guide (HB-1,4.26).

C LO If circumstances occur, issue revised Loan Estimate or Closing Disclosure within 3 business 

days of receiving new information, but no later than 7 days prior to loan consummation.

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-G 

Page 4 of 9

D5 LAO HB Letter 1 (3550) Moderate Income Options

D5 LAO HB Letter 3 (3550) WaitingPeriod (Issued by LO, signed by LAO)

D5 LAO HB Letter 4 (3550) Funds Not Available – Certificate of Eligibility and/or Property Identified

D5 LAO HB Letter 16 (3550) Eligibility of Self Help Applicants

PROPERTY ELIGIBILITY

County:

Maximum Loan Limit: $

J LO/LAO Packaging Phase 2: Property Submittal Cover Letter (if applicable) 

E LO Within 3 business days of receipt of a sales contract, send the following documents if they 

were not previously sent under the Application Processing section of this checklist. (HB-1,3.7)

HB Letter 5 (3550), Cover Letter for Initial Disclosures Package

CFPB’s “Your home loan toolkit: A step-by-step guide”

CFPB’s LoanEstimate

Attachment 3-I, Settlement Service Providers List & MortgageApp. Related

Disclosures

E LO Sales Contract or Form RD 3550-34, Option to Purchase RealProperty, (HB-1, 5.1) Review 

all pages of and attachments to Purchase Agreement:

Legal Description:

E LAO HB Letter 10 (3550) Status of Offer to Buy Single Family Housing REO Property

LO Discuss closing date - with seller, buyer, and real estate agent if it appears RD is unable to close 

loan by Purchase Agreement possession date

E LO Verify eligibility of subject property (identified for purchase) (HB-1, 5.1)

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

E LAO Attachment 9-C, Condominium Questionnaire, as applicable

E LO Verify the subject property’s address using the USDA address verification site and print to 

PDF to upload to ECF. Result code must be 1 or 2; or researched, verified, and documented 

if not. Enter verified address in UniFi. (HB-1, 5.1)

https://eligibility.sc.egov.usda.gov/eligibility/addressVerification

E LO Recalculate Eligibility Summary with actual loan amounts, if different from original, save 

and digitally sign, upload to ECF.

E LO Appraisal or document Statement of Value if appraisal is not required (HB-1,5.16)

E LAO RD 1922-15, Administrative Appraisal Review for Single Family Housing -within 7 days of 

appraisal (HB-1, 5.19);

Reviewed and Accepted (initial and date)

E LO Notify Applicant of appraisal results and provide a copy of the appraisal. If making an adverse 

decision on the appraisal, send either HB Letter 17 or HB Letter 18, as applicable, along with a 

copy of the appraisal.

E LO Lead Based Paint (LBP) Compliance Key and Print Out (houses built prior to 1978)

https://leadpaint.sc.egov.usda.gov/LBPWeb/lbpQuestionaire

LO Lead pamphlet provided to applicant.

E LO/LAO RD Instruction 1970-B, Exhibit D “Categorical Exclusion” (must be completed prior to 

obligation of funds or Issuance of a Conditional Commitment, as applicable) or

RD Instruction 1970-C, Exhibit E “Guide for Reviewing Environmental Assessments” as 

applicable (RD Instruction 1970 series “Environmental” & HB-1, 5.8)

LO determines the level of environmental review and LAO final determination of impact.
HB-1-3550

Attachment 3-G 

Page 5 of 9

E LO FEMA’s Standard Flood Hazard Determination (https://www.floodcert.com/)

(HB-1, 5.7 and 5.8)

E LO RD 3550-6, Notice of Special Flood Hazards, Flood Insurance Purchase Requirements (HB1, 5.8) and Availability of Federal Disaster Relief Assistance, as applicable (HB-1, 5.8 D and 

7.12 B)

E LO/LAO FEMA Elevation Certificate or other forms of documentation (HB-1, 5.8 and 1970-F)

E LAO Eightstep decision making process has been completed (HB-1 5.7 and 1970-F)

E LO Dwelling served by public utilities or meets on-site water and waste systems(HB-1, 5.7 D and 

5.8 B)

E LO Whole House Inspection for an existing property which certifiesthe following items(7CFR 

3550.57 & HB-1, 5.7)

Septic Well Heating/Cooling

Plumbing Electrical

Other – StructuralSoundness

Termite/Other Wood Destroying Pests

E LO Documentation for repairs completed prior to closing

E LO Bids & Cost Estimate including Contractor’s License (if appliable) for repairs completed after 

closing

E LO Survey (if applicable) (HB-1, 5.7)

NEW CONSTRUCTION

E1 LO RD 1924-2, Description of Materials (must be approved by RD, Buyer&Builder)

E1 LO RD 1924-25, Plan Certification

E1 LO House Plans/Drawings and Plot Plans (must be approved by RD, Buyer &Builder)

Manufactured Home built to HUD code - verify dealer/contractor has been approved

E2 LAO Proof of construction quality for a new dwelling (new construction or dwelling less than one 

year old that has never been occupied) to determine permitted loan-to- value (HB-1, 6.7 B.)

E1 LAO RD 1944-36, Application for Conditional Commitment with fee. Refundfee if Conditional

Commitment cannot be issued, order appraisal (now fee cannot be refunded), return fee to 

Contractor at closing. (HB-1, 9.2)

(01-23-03) SPECIAL PN

Revised (11-18-22) PN 571
HB-1-3550

Attachment 3-G 

Page 6 of 9

UNDERWRITING/LOAN APPROVAL

D1 LO Reverify income - if expected to be over 120 days old by closing date (unless the type of income only 

requires an annual verification source) (HB-1, 4.3)

F LO Update Eligibility Summary with correct information,save, digitally sign, and date – must be 

in file at rejection/approval (HB-1, 6.17)

F LAO Executed Form RD 1940-10 partial or full deobligation (if applicable)

F LO Direct-US Findings Report

D5 LAO Loan eligibility narrative updated to include underwriting details/signed by LAO (including but 

not limited to income, creditworthiness (including DNP), repayment ability, and payment shock (if 

applicable))

LO Verify UniFi Program Type Code (must match income type)

C LO Check Department of the Treasury’s DNP Portal for each applicant within 5 business days prior 

to obligation/approval, retain copy in ECF (label as ‘Obligation/approval’ in ECF Title field)

(https://fiscal.treasury.gov/DNP/)

F LO Validate the interest rate and obligate through LoanServ (HB-1,8.6 E, 8.7)

F LO Update LoanServ screens before uploading file; check Display History Screen for correct loan 

amount.

F LAO If denying property, send HB Letter 15, Standardized Adverse Decision Letter with review 

and appeal rights (HB-1, 1.9 & 8.2) and

D5 LAO Reissue Certificate of Eligibility for applicant to select another property.

LO If other funding isinvolved, review lender terms and feesto determine if acceptable (HB-1, 

10.9)

F LAO RD 3550-7, Funding Commitment and Notification of Loan Closing- issuedday of 

approval/obligation in LoanServ (if not signed and returned in 15 days, must de- obligate) (HB-1,

8.2) along with a copy of the appraisal, unless obligated subject to an appraisal.

F LO RD 1940-41, Truth in Lending Statement – if applicable for an unsecured loan (HB- 1, 3.8B)

F LO If changed circumstances occur, issue revised Loan Estimate or Closing Disclosure within 3

business days of receiving new information, but no later than 7 days prior to loan 

consummation.

 Loan should be approved/rejected within 30 days after completed docket(HB-1,8.2)

 Make sure loan does not exceed applicable area loan limits (HB-1,6.6)

 Verify loan-to-value ratio for existing dwellings does not exceed 100% (HB-1, 6.7)

 Loan terms cannot exceed maximum allowed (HB-1, 6.8) or approval authorities(1901-A)

 Attachment 8-B, Unliquidated Obligation Review (HB-1, 8.3 D)

CLOSING

Closing Date:

Consummation Date:

IMPORTANT NOTE: Loan consummation may not occur until 3 business days after the Closing Disclosure is received by the

applicant. With the mailbox rule, this means there is generally a 7 business day waiting period before closing if the Closing 

Disclosure was not provided in person.

LO Reverify Employment,Income and Eligibility (HB-1, 4.3 & 8.6.C)

D1 LO Date of income verification source: (must not be more than 120 days by the closingdate 

unless the type of income only requires an annual verification source)

D1 LO Date of Oral VOE: (if applicable complete 10 days before closing)

D4 LO Date of TMCR: (if more than nine months old at time of approval or closing, Loan 

Originator must obtain an updated TMCR at no cost to the applicant)

G LO Update UniFi with correct information and save the Eligibility Summary, digitallysign and 

date-must be in file at loan closing (HB-1, 8.6.D)

D5 LAO Loan eligibility narrative updated to include final closing details/signed by LAO (including but 

not limited to income, creditworthiness (including DNP), repayment ability, and payment shock (if 

applicable))

F LO Interest Rate: ______ (note rate used for the promissory note must be the lower of the 

applicable interest rate in effect at loan approval or loan closing)
HB-1-3550

Attachment 3-G 

Page 7 of 9

G LO/LAO RD 1927-4, Transmittal of Title Information (HB-1, 8.4)

G LO RD 1927-9, Preliminary Title Opinion (if using attorney)(HB-1,8.4)

G LO Title Insurance Binder/Preliminary Title Opinion -Review and verify legal description is 

correct (if exceptions noted affect the security value, loan cannot be closed).

G LO Closing Disclosure provided to applicant (after it was reviewed for compliance with tolerance 

limits) (HB-1, 8.5)

Provided in person

Provided by mail

G LO/LAO RD 3550-25, Loan Closing Instructions and Loan Closing Statement (HB-1,8.11 & 1927-B)

LO Re-verify closing agent’s account numbers

G LO RHCDS/MISC/CLOSING SELECT/ADD AGENT screen

G LO/LAO Check Department of the Treasury’s DNP Portal for each applicant within 5 business days 

prior to disbursement of funds. (Label as ‘Applicant’ using ECF Title field)

(https://fiscal.treasury.gov/DNP/)

G LO/LAO Check Department of the Treasury’s DNP Portal for the closing agent within 5 business days 

prior to the disbursement of funds. (Label as ‘Closing Agency’ using ECF Title field)

(https://fiscal.treasury.gov/DNP/)

G LO Hazard/Flood Insurance Binder & Receipt for 1styear premium (HB-1, Att 7-C)

G LAO RD 3550-15, Tax Information (HB-1, 7.10), Calculate RE taxes that should be paid at 

closing (60 days of due date); instruct Title Agent to collect prorated taxes from Seller (refer

to Purchase Agreement) (HB-1,7.4)

G LO RD 3550-9, Initial Escrow Account Disclosure Statement (HB-1, 7.5)

G LO RD 3550-17, Funds Transmittal Report for tax service & appraisal fees, escrow funds, etc. 

(copy in Collections Operational File) (1951-B, if applicable)

G LO RD 3550-19, Transmittal-Closing Documents & Attachments – as applicable (HB-1, 8.11)

G LO RD 410-4, Uniform Residential Loan Application PRINTED FROM UniFi

E2 LO Check Department of the Treasury’s DNP Portal for each contractor with a total contract 

greater than or equal to $25,000 within 5 business days prior to disbursement of funds. (RD 

Instruction 1940.602(b), specifically 2 CFR §180.220(b)(1)) – (Label as Contractor using ECF

Title field) ( https://fiscal.treasury.gov/DNP/ )

G LO RD 1927-5, Affidavit Regarding Work of Improvement (if required by State Supplement) send 

blank to closing (1927-B, 1927.58)

G LO RD 1940-16, Promissory Note (original in safe) (HB-1, 8.9 andFMI)

G LO RD 1940-43, Notice of Right to Cancel - ifsecured and non-purchase (HB-1, 8.6)

G LO RD 1944-14, Payment Assistance/Deferred Mortgage Assistance Agreement or RD 1944-6, 

Interest Credit Agreement (as applicable)

G LO RD 1955-49, Quitclaim Deed or Warranty Deed (as applicable)

G LO RD 3550-10, Condominium Rider (if applicable)

G LO RD 3550-11, Planned Unit Development Rider (ifapplicable)

G LO Attachment 5-C and lease approval for tribal trust and other lease agreements (if applicable)

G LO RD 3550-12, Subsidy Repayment Agreement (original in safe attached to note)

(HB- 1, Att. 8-A)

G LO RD 3550-14, Real Estate Mortgage or Deed of Trust for (State) - sendblank

G LO RD 1927-8, Agreement with Prior Lienholder - if leveraged loan (HB-1, 8.6)

G LO/LAO RD 3550-22, Assumption Agreement Single Family Housing - if applicable (LO or LAO prepare, 

LAO signs to execute; Original attached to original note in safe) (HB-1, 8.6)

G LO/LAO RD 3550-16, Release from Personal Liability - if applicable (HB-1, 8.6)

G LO RD 3550-29, Document Errors and Omissions Agreement (HB-1. Attachment. 8-A)

G LO Lease Approval (Tribal Trust & Other Lease Agreements)

G LAO Obtain copies of all other funding sources including: promissory notes, grant agreements 

and/or security instruments (HB-1, 10.10)

LO First Payment Coupon

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
HB-1-3550

Attachment 3-G 

Page 8 of 9

POST CLOSING

LO Verify closing documents uploaded to ECF (using New Loans classification) or emailed to the 

Servicing Office in required time frame (HB-1, 8.11)

Verify proper lienposition.

G LO Post 1-month follow-up for recorded Real Estate Mortgage.

H LO Post follow-up for Title Insurance Policy (60 days) or Final Title Opinion (14 days). (If not 

received, contact closing agent by mail with a copy of the letter to the insurance company.)

H LO Activate loan/payment assistance in LoanServ WITHIN 2 BUSINESS DAYS OF CLOSING

(OR 4 BUSINESS DAYS IF THE BORROWER HAS RESCISSION RIGHTS.

LO Review final Loan estimate & Closing Disclosure for tolerance violations. Cure violation

within 60 days of closing.

H LO Send Compensation for Construction Defects letter, if new construction (Guide Letter 1924-1)

G LAO RD 3550-25 – Loan Approval Official approves after all forms are returned, reviewed, and 

correct (HB-1, 8.11)

H LO Delinquent/Lienholder Screen – complete LoanServ screen for each leveraged partner

CONSTRUCTION CONTRACT

E2 LO RD 1924-6, Construction Contract (HB-1, 5.23)

E2 LO “400 Series” (400-1, 400-3, 400-6, and posters), as applicable (HB-1, 5.23)

E2 LO Send Exhibit C, RD Instruction 1901-E within 10 days(HB-1, 5.23)

DOL web site (https://www.dol.gov/agencies/ofccp/contact/regional-offices)

(ECF “400 Series” Label using ECF Title field)

E2 LO RD 1924-16, Record of Pre-Construction Conference or other documentation

(HB-1, 5.23)

E2 LO Builder’s Risk Insurance policy

E2 LO RD 1924-1, DevelopmentPlan

E2 LO RD 402-1, Deposit Agreement & RD 402-2, Statement of Deposits and Withdrawals

E2 LAO RD 1924-7, Contract Change Order and updated RD 1924-25, Plan Certification, if applicable

E2 LO Process partial contractor payment draws (based on 60% of work in place) (HB-1, 5.24 C)

E2 LO Check Department of the Treasury’s DNP Portal for each contractor with a total contract >

$25,000 within 5 business days prior to disbursement of funds when using multiple draws in 

LoanServ (Label as Contractor (Date of Draw) using ECF Title field) (RD Instruction 

1940.602(b), specifically 2 CFR §180.220(b)(1)) (Note: Checks for SBA draws only required 

for first disbursement to each contractor)(https://fiscal.treasury.gov/DNP/)

E2 LO Check Department of the Treasury’s DNP Portal for each borrower within 5 business days 

prior to disbursement of funds when using multiple draws in LoanServ (Label as ‘Borrower

(Date of Draw)’ using ECF Title field) (https://fiscal.treasury.gov/DNP/)

E2 LO RD 1924-12, Inspection Report or Third Party Inspection, Minimum of:

Footer

Rough-in

Final

E2 LO RD 1924-9, Certificate of Contractor’s Release & RD 1924-10, Release by Claimants, if 

applicable

E2 LO RD 1924-19, Builder’s Warranty or 10-year warranty per RD Instruction 1924-A HB-1, 6.7 B.

(NOTE: If 10-year warranty, must have policy or binder before final payment to builder)
HB-1-3550

Attachment 3-G 

Page 9 of 9

POST CONSTRUCTION COMPLETION

D1 / 

D3

LO 60 days prior to anticipated final inspection, notify borrower to update income and asset 

information in order to calculate payment assistance (HB-1, 8.13 B)

G LO Check Department of the Treasury’s DNP Portal for each contractor with a total contract >

$25,000 within 5 business days prior to final disbursement of funds. (RD Instruction 

1940.602(b), specifically 2 CFR §180.220(b)(1)) (Note: Checks for SBA draws only required 

for first disbursement to each contractor) (https://fiscal.treasury.gov/DNP/)

E2 LO Order final draw for contractor final payment (HB-1, 5.25)

G LO Check Department of the Treasury’s DNP Portal for each borrower within 5 business days 

prior to final disbursement of funds. (https://fiscal.treasury.gov/DNP/)

E2 Advance any remaining funds from loan (HB-1, 5.25)

• Deposit final draw in SBA (to be used for authorized loan purpose) or make check

payable to RD and Borrower and submit to Servicing Office to apply as a principal 

reduction. (DO NOT PROCESS A PARTIAL DEOBLIGATION)

• For self-help transaction – deposit final draw in custodial account or supervised 

bank account (as applicable)

G LO Escrow Deposit: Order check (if included in loan) OR collect from borrower and submit to 

Servicing Office (HB, 7.6 & Att 7-A)

H LO Verify correct address of subject property is listed in LoanServ for new construction –

address must receive a code 1 or 2 to be valid or must research and document discrepancy 

(HB-1, 5.1) (https://eligibility.sc.egov.usda.gov/eligibility/addressVerification)

H LO Convert and activate loan on the first of the month following the final inspection

H LO Post Conversion of new loan closing in LoanServ (print screen) and Warranty Follow-ups

G LO Modify Promissory Note and have borrower(s) initial changes(or mail copy with revisions) 

(HB-1, 8.13 A)

LO Submit copies to the Servicing Office

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595
ATTACHMENT 3-H 

CREDIT SCOREDISCLOSURE

In accordance with the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) and in 

connection with your application for a Rural Development Single Family Housing (hereafter 

referred to as “the Agency”) home loan, the Agency, upon request, must disclose to you the 

score that a credit bureau distributes to users and will be used by the Agency in connection with 

your home loan as well as the key factors affecting your credit scores.

While the Agency does not consider credit scores in determining adverse credit decisions, we

may use them to presume acceptable credit in lieu of other credit underwriting practices.

Credit scores assist lenders in evaluating your credit history in a more expedient and objective 

manner. Your credit scores are found on your tri-merge credit report, a copy of which will be 

provided to you upon request. The range of possible scores is from 300 to 850. The Agency 

may also obtain and consider other credit scores in making its decision on your application.

In addition to the credit scores, your credit report lists the key factors related to why your 

scores were less than the maximum possible score. Please keep in mind that the factors are only 

indicators of why you received less than the maximum score possible. The listing of these 

factors does not by itself indicate that you would not be approved for the loan you have 

requested. Rural Development considers many factors in addition to your credit scores in 

making a decision on your application. If your application is not approved, you will receive a 

separate notice stating the specific reason(s) for that action which may or may not relate to 

your credit scores.

The Agency did not calculate your credit scores or develop the scoring models. If you have any 

questions about your credit scores or the information in the tri-merge credit report from which 

the scores were computed, you can contact the credit bureau at the address listed below.

Equifax Mortgage Solutions

4300 Westown Parkway, Suite 200 

West Des Moines, IA 50266 

(800) 333-0037

(01-23-03) SPECIAL PN

Revised (12-12-19) PN 532

HB-1-3550

Attachment 3-H 

Page 1 of 2
NOTICE TO HOME LOAN APPLICANT

Pursuant to FACT Act, Section 212.

In connection with your application for a home loan, Rural Development must disclose to you 

the score that a credit bureau distributed to the Agency and was used in connection with your 

home loan, as well as key factors affecting your tri-merge credit score.

The credit score is a computer-generated summary calculated at the time of the request and 

based on the information a credit bureau has on file. The scores are based on data about your 

credit history and payment patterns. Credit scores are important because they are used to 

assist the Agency in determining whether you will obtain a loan. Credit scores can change over 

time, depending on your conduct, how your credit history and payment patterns change, and 

how credit scoring technologies change.

Because the score is based on information in your tri-merge credit history, it is very important 

that you review the credit-related information to make sure it is accurate. Credit records may 

vary from one company to another.

If you have any questions, about your score or the credit information that is furnished to you, 

contact the credit bureau at the address and telephone number provided with this notice. The 

credit bureaus play no part in the decision to take any action on the loan application and are 

unable to provide you with specific reasons for the decision on the loan application.

If you have any questions concerning the terms of the loan, contact Rural Development.

THIS DISCLOSURE HAS BEEN PROVIDED TO THE APPLICANT(S) PURSUANT TO SECTION 212 OF 

THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003. I UNDERSTAND THAT I MAY 

RECEIVE A COPY OF MY TRI-MERGE CREDIT REPORT BY MAKING A WRITTEN REQUEST TO THE 

RURAL DEVELOPMENT OFFICE HANDLING MY LOAN APPLICATION.

HB-1-3550

Attachment 3-H

Page 2 of 2
ATTACHMENT 3-I 

SETTLEMENT SERVICE PROVIDERS AND MORTGAGE LOAN

APPLICATION RELATED DISCLOSURES

Applicant(s) Name: 

Subject Property Address: 

Account Number: 

List of Settlement Service Providers

Date: 

The “Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act and the 

Truth In Lending Act” (TRID) rule requires that if a lender permits an applicant to shop for third 

party settlement services, the lender must provide to the applicant with a written list of settlement 

services providers at the time the Loan Estimate is issued. Settlement service provider (also referred 

to as “service provider”) means any individual or business providing services in connection with a 

prospective or actual settlement of a mortgage loan. The lender’s list of settlement service providers 

is only required for settlement services listed on the Loan Estimate, page 2, Subheading C - “Services 

You Can Shop For”, and may include, but are not limited to, the following fees:

• Pest inspection fee

• Home inspection fee

• Survey fee

• Title services

In accordance with the TRID regulation, Rural Development (also referred to as “the Agency”) 

hereby provides you with a list of settlement service providers that have recently provided services to 

Agency’s customers. This list should assist you in identifying settlement service providers for 

services covered under the “Services You Can Shop For” section of the Loan Estimate. Rural 

Development does not require that you select the settlement service providers from this list; 

furthermore, you may choose a qualified provider that is not listed on this document. Please note that 

the settlement service providers on this list are not endorsed by or affiliated with Rural Development 

and selecting a settlement service provider from this list does not affect the final credit decision on 

your loan application. Settlement services may take days or weeks to complete, therefore we strongly 

recommend that you select your settlement services providers as soon as possible or your settlement 

may be delayed. Once you have selected your service providers, you must contact your local Rural 

Development office to inform them about your selections.

(01-23-03) SPECIAL PN

Revised (4-27-16) PN 485

HB-1-3550

Attachment 3-I 

Page 1 of 2
If you select a service provider that is not on the Agency’s list, you must provide our staff with the 

service provider’s name, address and phone number. Settlement service providers and Rural 

Development staff work closely together to ensure that loan requirements are met in a timely manner 

before the closing date.

New Construction Homes / Construction Loans Disclosure

If you are buying a new construction home and settlement of your loan is expected to occur more 

than 60 calendar days from the time the initial Loan Estimate is issued, the Agency has the right to 

issue a revised Loan Estimate at any time up until 60 calendar days prior to loan 

closing/consummation.

Notification of Right To Receive a Copy of the Appraisal

In accordance with the Equal Credit Opportunity Act (ECOA) of 1974 (Regulation B) and in 

connection with your loan application, Rural Development must inform you of your right to receive a 

copy of the appraisal of the property you wish to purchase. Unless otherwise noted in the program’s 

regulation, Rural Development will order an appraisal to determine the value of the property you are 

interested in purchasing and charge you a fee for the appraisal. The Agency will promptly give you a 

copy of the appraisal received regardless of the Agency’s loan decision. You should expect to 

receive a copy of the appraisal after your loan has been evaluated by the Loan Approval Official but 

no later than three business days before loan closing.

If you have any questions concerning the terms of the loan, contact Rural Development.

THIS DISCLOSURE HAS BEEN PROVIDED TO THE APPLICANT(S) ALONG WITH THE LOAN 

ESTIMATE AND PURSUANT TO THE INTEGRATED MORTGAGE DISCLOSURES UNDER THE REAL 

ESTATE SETTLEMENT PROCEDURES ACT AND THE TRUTH IN LENDING ACT RULE. THE AGENCY 

MAY ISSUE A LOAN ESTIMATE IF APPLICABLE CHANGED CIRCUMSTANCES OCCUR. THIS IS NOT 

A LOAN / FUNDING COMMITMENT.

HB-1-3550

Attachment 3-I

Page 2 of 2
ATTACHMENT 3-J 

CHECKLIST OF ITEMS TO ACCOMPANY THE

UNIFORM RESIDENTIAL LOANAPPLICATION

You, as the applicant, need to simultaneously submit the applicable items below when 

applying for a loan. Copies of the verification documents should be submitted. If any item, 

information, and/or signature is missing, you will be contacted and asked to provide the missing 

pieces. If the missing pieces are not provided within 15 days of the request, your 

incomplete application will be withdrawn from consideration. To avoid any delay or 

withdrawal, verify that your loan application is fully complete prior to submission.

□ This checklist with the applicable and included items checked.

□ Form RD 410-4, Uniform Residential Loan Application: You must complete all sections (be 

sure to provide all applicable information, details, and data) and sign/date pages 5 and 8. 

https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/RD410-4.PDF

□ Verification of identity: You must provide a copy of your Government-issued picture 

identification (ID) along with evidence of age. Standard verifications are a driver’s license or a 

passport. Contact us if you do not have these standard verifications to discuss possible 

alternatives.

□ Verification of taxpayer ID number: You must provide verification of your full taxpayer ID 

number (i.e. no numbers are hidden or suppressed) using evidence such as your pay stubs or tax 

returns. A copy of your social security card is only needed if you do not have any other evidence 

of your full taxpayer ID number. 

□ $30 credit report fee (non-refundable): If the applicant and co-applicant currently reside at separate 

addresses, the fee is $30 for each applicant. Remove any credit freeze at the time of application 

submission and keep it lifted until such time as the Agency pulls a credit report. Indicate an option for 

payment of the credit report fee:

□ Option 1: I hereby authorize a $ withdrawal from my bank account for the credit report 

fee. Enclose a copy of a voided check, savings account deposit slip, or other document from an 

American Bankers Association (ABA) bank (we cannot process withdrawals from a foreign bank). 

The document provided must be an official ABA bank validated record and clearly identify 

the ABA routing number and account number. The Agency will use the ABA routing number 

and account number to collect payment through the Automated Clearing Housing System (ACH). 

By indicating an amount above and providing a copy of a voided check, deposit slip, or other bank 

document with the ABA routing number and account number, you are authorizing the deduction 

from the account by electronic means. Option one is the preferred method as it provides faster 

processing.

□ Option 2: Mail a check, cashier’s check or money order that is signed, dated, and made payable to 

USDA Rural Development. 

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-J 

Page 1 of 4
□ If you have late payments, collections, judgments, or other derogatory items in your credit 

history, provide a written explanation for each credit blemish. If you are unsure what your credit 

history looks like, obtain a free credit report by calling 1-877-322-8228 or logging into 

https://www.annualcreditreport.com. By law, you are entitled to receive one free credit file 

disclosure every 12 months from each of the nationwide consumer credit reporting companies – 

Equifax, Experian and TransUnion. This free report cannot replace the credit report that the 

Agency will obtain to determine eligibility.

□ Form RD 3550-1, Authorization to Release Information: Each adult member of the household 

must sign/date a separate release form. 

https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3550-1.PDF

□ Form RD 3550-4, Employment and Asset Certification: You must check the appropriate blocks, 

account for the household members’ employment and nonretirement assets as instructed, and 

sign/date the certification. 

https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3550-4.PDF

□ Your last two signed Federal Income Tax Returns with all applicable tax return schedules. Also 

provide:

□ All W-2s, 1099s, and other forms attached to the returns.

□ If filed electronically, include a copy of the signature page with the Self-Select PIN, 

confirmation that the return was accepted, or evidence that it was filed by an authorized 

E-File provider.

□ Last four consecutive weeks of pay stubs for all employed adult household members. 

□ If you have an employment history of less than two years or employment gaps in excess 

of 30 days within the last two years, you should provide a letter of explanation. 

Notice to Customers: If applicants send the Agency a check, it will be converted into an Electronic 

Funds Transfer (EFT). This means the Agency will copy the check and use the account information 

on it to electronically debit the applicant’s account for the amount of the check. The debit from the 

applicant’s account will usually occur within 24 hours and will be shown on the applicant’s regular 

account statement. Applicants will not receive their original check back.

The Agency will destroy the original check but will keep an image of it. If the EFT cannot be 

processed for technical reasons, applicants authorize the Agency to process a paper copy of the 

image in place of the original check.

If the withdrawal cannot be completed because of insufficient funds, the Agency may try to make 

the transfer up to two additional times and the Agency will charge a one-time fee of $15, which 

will also be collected by EFT or ACH.

HB-1-3550

Attachment 3-J 

Page 2 of 4
□ Recent benefit statements for regular unearned income for all household members who 

receive:

□ Social Security/Supplemental Security Income

□ Public assistance

□ Retirement income

□ Other

□ Last 12-month payment history of alimony and/or child support received by all adult 

household members as provided by the court appointed entity responsible for handling 

payments. If this is not available, provide a copy of the separation agreement or divorce decree. 

While you can choose to have this income excluded from your repayment income, it must be 

reported to determine if your household’s adjusted income is within the program’s income limit.

□ Two most recent brokerage or bank statements for all household members (excluding 

tax advantaged plans for education, health/medical, and retirement). If you are obtaining 

this information online, provide the statements as opposed to providing the online 

transaction histories.

□ For a household member who is a full-time student and 18 years of age or older, a copy of 

their school transcript.

□ Written evidence of childcare expenses for dependents 12 years of age or younger.

□ If you are 62 years of age or older, are disabled, or have a disabled household member, provide 

evidence of unreimbursed annual medical expenses if you wish to be considered for a deduction 

to household income.

□ List your personal email address(es) below if you authorize the Agency to contact you via 

email. The Agency password protects emails containing personal identifiable information.

□ While you are strongly discouraged from identifying a property or entering into a purchase 

agreement until you receive a Certificate of Eligibility from Rural Development, enter the 

county you are interested in purchasing a home in below.

□ If you have already entered into a purchase agreement (which again is strongly discouraged), 

provide a copy of the agreement.

(01-23-03) SPECIAL PN

Revised (10-19-23) PN 595

HB-1-3550

Attachment 3-J

Page 3 of 4
HB-1-3550

Attachment 3-J 

Page 4 of 4

□ If you are experiencing any of the following housing-related hardships, please check all that apply and 

provide a brief explanation below:

□ Current dwelling lacks complete plumbing and/or adequate heating, is dilapidated or 

structurally unsound, has an overcrowding situation, or is otherwise uninhabitable, unsafe, or poses a 

health or environmental threat to the occupant or others. 

□ Current homeowner in danger of losing a property through foreclosure due to 

circumstances beyond your control.

□ Other housing-related hardship.

_________________________________________________________________________________________

_________________________________________________________________________________________

Applicants who are first-time homebuyers are strongly encouraged to complete a 

homeownership education training as early in the application process as possible since the 

training covers the following important topics: preparing for homeownership (readiness to go 

from rental to homeownership), budgeting (pre- and post-purchase), credit counseling, 

shopping for a home, obtaining a mortgage, loan closing, and life as a homeowner. There is 

generally an out-of- pocket fee for the training, which can be reimbursed should the loan 

request be approved and closed. Attached is a list of Agency-approved education providers. 

You will be expected to successfully complete this training prior to entering into a contract to 

purchase or construct a home for maximum benefit.