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Appendix 4 

APPENDIX 4 

HANDBOOK LETTERS REFERENCED IN THIS HANDBOOK 

Handbook Letter 101 (3560), Standardized Adverse Decision Letter 

Handbook Letter 102 (3560), Letter of Conditions, Loan Approval, or Obligation of 

Funds

Handbook Letter 103 (3560), Cover Letter to the Initial Application Package 

Handbook Letter 104 (3560), Letter To Interim Lender

Handbook Letter 105 (3560), Notice To Proceed 

Handbook Letter 106 (3560), Notice of Pre-application Review Action 

Handbook Letter 107 (3560), A Letter Informing the Applicant of the Lack of Funds 

Handbook Letter 108 (3560), Letter Denying Funding due to Ineligibility 

Handbook Letter 109 (3560), Letter Informing of National Office Review 

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 Handbook Letter 101 (3560) 

REFERENCE: HB-1-3560 Chapter 1 

PURPOSE: Standardized Adverse Decision Letter 

RURAL DEVELOPMENT 

[LOCATION] 

 

 [insert date] 

Dear [insert name]: 

After careful consideration, we [insert were unable to take favorable action on your 

application/request for Rural Development services or are canceling/reducing the 

assistance you are presently receiving]. The specific reasons for our decision are: 

[Insert the adverse decision and all of the specific reasons for the adverse action] 

If you have any questions concerning the decision or the facts used in making our 

decision and desire further explanation you may call or write to our office at the above 

address and telephone number within 15 calendar days of the date of this letter. You 

should present any new information or evidence along with possible alternatives for our 

consideration. You may also have the right to appeal this decision to a hearing officer in 

lieu of, or in addition to, a meeting with this office. 

If you do not wish a meeting, and as outlined above wish to appeal, a request for a 

hearing must be sent to the National Appeals Division, USDA, [Include appropriate NAD 

address], postmarked no later than 30 days from the date of this letter. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against 

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

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

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

assistance program. Department of Agriculture regulations provide that no agency, 

officer, or employee of the United States Department of Agriculture shall exclude from 

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

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

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

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

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

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

any of these reasons, that person can write the Secretary of Agriculture, Washington, 
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Appendix 4 

D.C. 20250. Applicants also cannot be denied a loan because the applicant has in good 

faith exercised his or her rights under the Consumer Credit Protection Act. If an 

applicant believes he or she was denied a loan for this reason, the applicant should 

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

Sincerely, 

___________________________ 

(Decision Maker) 

___________________________ 

(Title) 

Attachment – Appeal Rights 

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ATTACHMENT TO LETTER NOTIFYING CUSTOMERS OF AN ADVERSE 

DECISION THAT IS APPEALABLE 

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

requested or will terminate or reduce the assistance you are currently receiving. If you 

believe this decision or the facts used in this case are in error, you may pursue any or all 

of the following three options. 

Option 1 - Informal Review 

If you have questions concerning this decision or the facts used making it and desire 

further explanation, you may write this office to request an informal review. There is no 

cost for an informal review. This written request must be received no later than 15 

calendar days from the date of the attached letter. You must present any new 

information, evidence, and possible alternatives along with your request. You may also 

have a representative or legal counsel participate in the process, at your cost. The 

informal review may be conducted by telephone or in person, at the discretion of the 

Agency. Please include a daytime phone number in your request to arrange for the 

review. You may skip this step in the informal process and select one of the following 

two options. If you do, you will automatically waive your right to an informal review. 

Option 2 - Mediation or Alternative Dispute Resolution (ADR) 

You have the right to request mediation or other forms of alternative dispute resolution 

(ADR) for the issues that are available for mediation. You will have to pay for at least 

50 percent of the cost of mediation or ADR. Rural Development will pay for the other 

50 percent of the cost, provided the Agency has sufficient resources from its appropriated 

funds. If the Agency does not have sufficient resources, you will be advised how much, 

if any, the Agency can contribute to the cost of mediation or ADR. If you need the 

information to assist you in deciding whether to seek mediation or ADR, you may contact 

the Rural Development State Director listed below. 

If you elect to seek mediation or ADR, your written request for this service must be sent 

to the Rural Development State Director listed below and must be postmarked no later 

than 30 days from the date of the attached letter. The Rural Development State Director 

will advise you of the estimated cost of mediation or ADR, the extent to which the 

Agency can contribute to the cost, and the process and procedures for this service. In 

States with a USDA-sponsored mediation program, you will generally be referred to such 

service. In States without a USDA-sponsored mediation program, you will be provided 

with the name or names of mediators. You will be advised directly by the mediation or 

ADR source if they can mediate your case. Once you request mediation or ADR, it stops 

the running of the 30-day period in which you may request an appeal (described in 

Option 3). If mediation or ADR does not result in resolution of these issues, you have 

the right to continue with a request for an appeal hearing as set forth in Option 3. 
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Appendix 4 

When mediation or ADR is concluded, you will be notified of the result and the number 

of days remaining to request an appeal, if applicable. If you request mediation or ADR 

prior to filing for an appeal, the number of days you will have to request an appeal will be 

30 days from the adverse decision minus the number of days you took to request 

mediation. Mediation or ADR does not take the place of, or limit your rights to, an 

appeal to the National Appeals Division (NAD); however, a NAD appeal hearing would 

take place after mediation or ADR. You may skip mediation or ADR and request an 

appeal hearing. However, in doing so, you will automatically waive your rights to an 

informal meeting, mediation, or ADR. 

[Insert Rural Development State Director address] 

Option 3 - Request an Appeal

You may request an appeal hearing by the National Appeals Division (NAD) rather than 

an informal review, mediation, or ADR. There is no cost for an appeal. Your request 

for an appeal must be made no later than 30 days from the date you receive the attached 

letter. You must write the Assistant Director, NAD, for your region at the following 

address: 

[Insert NAD Assistant Director address] 

The request for a NAD hearing must state the reasons why you believe the decision is 

wrong, be personally signed by you, and must include a copy of the attached letter. A 

copy of your request must also be sent to the Rural Development State Director at the 

address specified above. 

You have the right to an appeal hearing within 45 days of the receipt of your request. 

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

office hours in the 10 days following the receipt of your request for a hearing to examine 

or copy relevant non-confidential material in your file. Photocopies will be provided to 

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

you and review your file. 

The NAD Hearing Officer will contact you regarding a time and place for the hearing. 

You may also request a teleconference hearing in lieu of the face-to-face hearing. At any 

time before the scheduled hearing you may also request that the Hearing Officer make a 

decision without a hearing. If you do, the Hearing Officer’s decision will be based on the 

Rural Development file, any written statements or evidence you may provide and any 

additional information the Hearing Officer thinks necessary. 

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against 

credit applicants based on race, color, religion, national origin, sex, marital status, age 

(provided that the applicant has the capacity to enter into a binding contract), or because 

all or part of the applicant’s income derives from any public assistance program; or 

because the applicant has in good faith exercised any right under the Consumer Credit 

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Protection Act. The federal agency that administers compliance with this law concerning 

this creditor is the Federal Trade Commission. If a person believes he or she was denied 

assistance in violation of this law, they should contact the Federal Trade Commission, 

Washington, D.C. 20580 

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

terms and conditions of such a transaction because of race, color, religion, sex, disability, 

familiar status, or national origin. The federal agency that is responsible for enforcing 

this law is the U.S. Department of Housing and Urban Development. If a person believes 

that they have been discriminated against in violation of this law, they should contact the 

U.S. Department of Housing and Urban Development, Washington, D.C. 20410 or call 

(800) 669-9777. 

 
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Appendix 4 

Handbook Letter 102 (3560) 

REFERENCE: HB-1-3560 Chapters 3, 4, 5 and 8 

PURPOSE: Letter of Conditions, Loan Approval, or Obligation of Funds

RURAL DEVELOPMENT 

[LOCATION] 

Date: [insert today’s date] 

SUBJECT: Loan Approval Conditions for [insert name of applicant] 

[insert name of project] 

 [insert number of units - Type (E or F) - number of RA units] 

 [insert location of project] 

 TO: [insert Owner/Managing General Partner] 

[insert Address] 

Dear [insert name of applicant]:

This letter establishes conditions under which USDA – Rural Development will approve 

a Rural Rental Housing loan for the subject applicant in the amount of $[insert amount], 

in participation with funds provided by [insert source of leveraged funds, such as State 

HFA], subject to the following: 

The conditions indicated in Part I must be met before the start of construction or closing 

of the interim loan, whichever occurs first. The conditions indicated in Part II must be 

met as indicated in the condition itself prior to project completion and closing of the 

USDA-Rural Development loan. In all cases, “the applicant” means [insert name of 

applicant]. 

PART I - APPROVAL: 

(1) The applicant must contribute 5 percent towards the project as initial equity. The 

amount of the required contribution is $[insert amount] and must be in the form of 

cash and/or land. 

The above contribution must be made at or before closing of the interim financing 

loan. This amount represents the applicant's initial investment on which the 8 

percent return to owner will be allowed. 

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(2) This project will be funded utilizing interim financing for construction in 

accordance with 7 CFR 3560.71(b). The applicant will be advised of the 

procedure and furnished with the appropriate forms. No loan funds will be 

disbursed until the applicant's full required contribution has been expended. 

 (3) The applicant will provide a detailed list of all materials and equipment needed to 

be funded by the initial operating capital in accordance with 7 CFR 3560.64. The 

initial 2 percent operating capital of $[insert amount] plus any additional amount 

needed for the items above, must be provided in cash. Evidence of deposit to the 

general operating account must be furnished to the State Office prior to the start 

of construction. 

(4) Organizational documents, including any amendments, must meet USDA–Rural 

Development requirements and be approved by the Office of General Counsel 

before the loan is closed. 

(5) Competitive bidding for this project is waived in accordance with RD Instruction 

1924-A, § 1924.13 (e) (1) (vii) (A). 

(6) Authorization is hereby granted to pay debts for items of expense incurred after 

the application was filed pursuant to 7 CFR 3560.53. 

(7) The applicant's final plans and specifications must be reviewed by the State 

Architect before final acceptance is made by the State Office. No work shall be 

authorized before final acceptance is made. 

(8) The State Office will arrange a pre-construction conference before any work starts 

on the project. 

 

(9) A 100 percent Performance Bond and 100 percent Payment Bond is required for 

this project, unless waived in writing by the interim lender. The applicant will 

submit either a copy of the bond or the waiver by the interim lender with each 

copy of the Construction Contract submitted for approval. 

(10) Prior to the start of construction, the applicant, contractor and any subcontractor, 

material supplier or equipment lessor sharing an identity of interest must submit 

the accounting system that the applicant, contractor, subcontractor, material 

supplier or equipment lessor and/or the CPA or LPA proposes to set up and use in 

maintaining a running record of the actual cost. In order to be acceptable, it must 

allow for a trade-item basis comparison of the actual cost as compared to the 

estimated cost submitted in accordance with § 1924.13 (e) (1) (iv) of RD 

Instruction 1924-A, i.e., the accounting system trade-item basis must be consistent 

with Form RD 1924-13, Estimate and Certificate of Actual Costs. 

(11) The Construction Contract with appropriate attachments (including the bonds or 

waiver) between the borrower and the contractor for development of a Rural 
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Rental Housing project must be approved by USDA-Rural Development before 

the start of construction. Four copies with original signatures must be submitted 

to the State Office for review. 

(12) Construction Contracts of more than $10,000 will be subject to the provisions of 

RD Instruction 1901-E, § 1901.205, Nondiscrimination in Construction Financed 

with RD Loan. This will be discussed at the pre-construction conference. 

Contractors with 100 or more employees, and those with 50 or more employees 

should complete Forms SF-100, Equal Employment Opportunity Employer 

Information Report EEO-1 or AD-425, Contractor’s Affirmative Action Plan for 

Equal Employment Opportunity, respectively, and attach same to the Construction 

Contract. 

(13) A USDA- Rural Development official will sign Form RD 400-3, Notice to 

Contractors and Applicants, and provide copies at the pre-construction 

conference. USDA-Rural Development Officials will also make sure that the 

“Equal Employment Opportunity is the Law” sign is posted at the project site. 

(14) The applicant's architect must mail a copy of the project inspection report to the 

USDA-Rural Development State Office immediately after each inspection. 

(15) All construction will be in accordance with the conditions set forth in RD 

Instruction 1924-A. 

(16) The applicant must provide USDA-Rural Development with evidence that they 

have met the Historic Preservation requirements. Favorable comments of the 

State Historic Preservation Officer must be obtained. 

NOTE: If cultural resources are encountered during construction, 

construction will temporarily cease and the USDA-Rural Development State 

Office and the Division of Historic Preservation & Archeology will be 

notified. 

(17) Form RD 3560-34, Loan Agreement, will be executed by the applicant. Three 

copies are enclosed with this memorandum. All three copies are to be dated and 

signed by the applicant as soon as possible. The original and one copy are to be 

returned to the USDA-Rural Development State Office after signing. These must 

be returned prior to the start of construction. This loan is subject to restrictiveuse provisions for the life of the loan. The restrictive-use provisions and 

prepayment restriction will be included in the Promissory Note and/or Deed 

of Trust at the time of the USDA-Rural Development loan closing.

(18) The applicant will execute Form RD 400-1, Equal Opportunity Agreement, and 

Form RD 400-4, Assurance Agreement, as part of the pre-construction 

conference. 

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(19) The applicant and any Identity of Interest (IOI) entity principals must complete 

the IOI Form RD 3560-30 and Form RD 3560-31 and submit to the USDA-Rural 

Development State Office. 

(20) Form SF 424.2, Application for Federal Assistance, must be revised and initialed 

by the applicant to reflect the proper funding and development cost for the project 

(if necessary). 

(21) Form RD 1924-13, Estimate and Certificate of Actual Cost, must be revised to 

reflect the proper development cost for the project (if necessary). 

(22) Form RD 3560-7, Multiple Family Housing Project Budget/Utility Allowance, 

must be revised to reflect the correct debt repayment, interest rate, reserve 

requirement, and return to owner (if necessary). 

(23) Applicant to provide USDA-Rural Development with a current financial 

statement, including a separate statement for any general partner and certificate of 

appropriate net worth for limited partners in accordance with 7 CFR 3560.55 and 

Chapter 4 of the Loan Origination Handbook. 

(24) Form HUD 935.2, Affirmative Fair Housing Marketing Plan, must be completed 

in its entirety by the applicant and then, along with necessary attachments, be 

submitted to the USDA-Rural Development State Office for approval. When 

approved, the “Plan” must be posted in any and all rental offices serving the 

project. The participant must maintain records reflecting their efforts in fulfilling 

the requirements and objectives of the “Plan” and such records will be made 

available to USDA-Rural Development for review. 

(25) Both the applicant and the general contractor must execute a “Certification for 

Contract, Grant and Loans” (separate certificates) per RD Instruction 1940-Q. 
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Appendix 4 

PART II - CLOSING CONDITIONS

(1) An updated American Land Title Association (ALTA) Preliminary Title Report 

must be provided by the applicant to the USDA-Rural Development State Office, 

prior to submission to OGC for closing instructions. 

(2) Public liability and property damage insurance in a minimum amount 

recommended, in writing, by the applicant's attorney must be approved by the 

USDA-Rural Development State Office, prior to loan closing, and letter and 

evidence of coverage must be provided. 

(3) Worker's Compensation: The applicant will be required to carry workers 

compensation insurance for all its employees in accordance with the applicable 

state laws. 

(4) Fidelity Coverage: Any personnel entrusted with the receipt, custody, and 

disbursement of any project monies, securities, or property will be covered. The 

type of coverage policy and minimum amount of coverage will be in accordance 

with 7 CFR 3560.62(d) and 7 CFR 3560.105. Fidelity coverage must be obtained 

before any interim financing funds or loan funds are made available. 

(5) Fire insurance, including extended coverage, on buildings included as security for 

the loan will be required in an amount not less than the “Total Estimated 

Reproduction Cost New of Improvements” on page 5 of RD Form 1922-7, 

Appraisal Report for Multi-Unit Housing. Evidence of the first year paid 

premium must be provided to USDA-Rural Development prior to or at closing. 

(6) The loan is to be closed in accordance with RD Instruction 1927-B and 

supplemental instructions issued by the Regional Attorney. An ALTA Loan 

Policy of Title Insurance will be required. 

(7) A Mortgage or Deed of Trust will be taken on the security property. Exceptions 

to the Preliminary Title Report will be handled in accordance with RD Instruction 

1927-B. 

(8) A Financing Statement and Security Agreement will also be taken as security for 

the loan in accordance with 7 CFR 3560.61. OGC will provide necessary forms 

and instructions as part of their issuance of loan closing instructions. 

(9) When it has been determined that loan closing conditions can be met, the 

following actions will be taken: 

a. The State Office will prepare Form RD 1927-15, Loan Closing 

Instructions and Statement, and Form RD 3560-52, Promissory Note, for 

this loan prior to submission to OGC for closing instructions, if needed. 

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Appendix 4 

To facilitate review by the Regional Attorney, the following items should 

be filed at the top of their respective positions: 

Position 2: Forms RD 3560-51, Multi-Family Housing Obligation and 

Fund Analysis, and RD 3560-52, Promissory Note (A separate Promissory 

Note is required for the initial and each subsequent loan.) 

Position 5: Current Preliminary Title Report, Executed RD Form 3560-33 

or 3560-34, Loan Agreement, and the organizational documents. Any 

changes previously required in the organizational documents by USDARural Development must be completed. Certified copies of the 

amendments must be provided by the applicant. 

b. The State Office will proceed to order a loan check so that it is available 

when the loan is ready for closing. 

c. Before closing, USDA-Rural Development will be provided with Form 

RD 1924-9, Certificate of Contractor's Release, and Form 1924-10, 

Release by Claimants, executed by all persons who furnished materials or 

labor in connection with the contract. If such statements cannot be 

obtained, the loan may be closed in accordance with § 1924.6(a) (12) (vi) 

(C) of RD Instruction 1924-A. 

(10) The USDA-Rural Development State Office will schedule a pre-occupancy 

conference with the applicant to discuss advertisement of available units, 

affirmative marketing practices, management and tenancy documents and 

requirements after occupancy, in accordance with 7 CFR part 3560, subpart C. 

The steps necessary to close the USDA-Rural Development loan (pre-closing 

conference) will also be discussed at the time of the pre-occupancy conference. 

(11) The following materials will be given to and discussed with the borrower and 

management agent (if applicable) at the pre-occupancy conference: 

 (a) Asset Management Handbook. 

 (b) Booklets entitled, Audit Program and Audit Program Addendum No. 1. 

(c) Forms and FMI’s: 3560-7, 3560-10, 3560-29, 3560-8. 

(d) Fair Housing and “....and Justice for All” Posters 

(12) The applicant will provide USDA-Rural Development with an initial operating 

budget indicating the interim year of operation and first full year of operation 

prior to occupancy. The budget must show enough income to pay all expenses 

and deposit the required amount in reserve, and must be approved by the State 

Office. 

(13) Initial rents cannot exceed those shown in the approved budget required in 

preceding paragraph. 
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Appendix 4 

(14) Form RD 3560-7, Multiple Family Housing Project Budget/Utility Allowance

must be completed and executed in duplicate by the applicant, or agent, and 

submitted to the USDA-Rural Development State Office for approval. This 

should be done at least 60-90 days prior to occupancy and must include the 

required backup data. 

(15) The applicant's tenant lease, application for admission, management agreement, if 

applicable, and statement of policy regarding occupancy and tenant selection must 

be acceptable to USDA-Rural Development prior to rent-up. The Management 

Plan is required prior to the start of construction or loan closing, whichever first 

occurs. Written approval by the USDA-Rural Development Servicing Official is 

required. These documents must fully meet the requirements of 7 CFR part 3560, 

subparts C and D, and be approved by the State Office prior to any rent-up 

activity. 

(16) When the project is nearing completion, the applicant will provide the State 

Office with the original certification of actual cost of construction prepared by a 

Licensed Public Accountant or Certified Public Accountant. Forms and 

instructions may be obtained from the USDA-Rural Development State Office. 

These should be requested in time for the pre-occupancy conference. 

(17) The applicant's architect shall certify that the contractor has completed the work 

in accordance with USDA-Rural Development approved plans, specifications, and 

special or general conditions. This certification shall be issued at time of final 

inspection. 

(18) The Form RD 1924-19, Builder's Warranty, must be executed by the contractor 

and owner at time of final inspection. Occupancy is not permitted prior to the 

USDA-Rural Development final inspection. 

(19) Form RD 3560-9, Interest Credit and Rental Assistance Agreement, will be

prepared and executed at loan closing. Interest Credit Plan II will be used for this 

project. When the closing information is input into the AMAS system, the M4Z, 

“Daily Interest Subsidy” will also be entered. 

(20) Form RD 3560-27, Rental Assistance Agreement, must be completed, dated and 

executed in triplicate at the same time as Form RD 3560-9. 

(21) It is recommended that the site manager be duly certified by an acceptable 

certification program. A copy of the site manager's certificate may be provided 

for inclusion in the USDA-Rural Development servicing file.

(22) Evidence of Affirmative Fair Housing Marketing activity must be provided to and 

found acceptable by the MFH Loan Specialist. 

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(23) A satisfactory laundry lease, if applicable, is to be provided to the State Office. 

(24) Applicant must certify as to the availability or non-availability of other 

government assistance immediately prior to loan closing. If other government 

assistance becomes available prior to loan closing, the loan amount will be 

decreased. 

(25) At loan closing, the USDA-Rural Development State Office will send the final 

terms of funding to the state housing finance agency or other tax credit allocating 

agency, and request a copy of Form(s) IRS 8609, Low-Income Housing Credit 

Allocation Certification. 

(26) Prior to closing, each loan approval and closing condition will be initialed and 

dated upon completion. Under no circumstances will USDA-Rural Development 

close this loan if any approval or closing condition is not fully satisfied or you 

have not received a written waiver of that requirement from the State Office. 

Immediately after closing, we will conduct a post-closing review to verify that the 

loan has been properly closed in accordance with the escrow instructions given 

the title company. This includes the proper completion, recordation and 

disbursement of forms. 

[insert name of MFH Specialist] 

MFH Specialist 

 Loan Closing Certification 

 Date Closed: [insert date closed] 

 

 Name and Address of Title Company 

 _________________________________ 

 _________________________________ 

 _________________________________ 

 ________________________________ 

 Signature of MFH Specialist 
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Appendix 4 

Handbook Letter 103 (3560) 

REFERENCE: HB-1-3560 Chapter 4 

PURPOSE: Cover Letter to the Initial Application Package 

RURAL RENTAL HOUSING INITIAL LOAN APPLICATION PACKAGE 

Date: [insert today’s date] 

TO: RURAL DEVELOPMENT 

 [INSERT ADDRESS] 

 

RE: [insert name of applicant] 

 [insert name of project] 

 [insert location] 

The following checked items, assembled in the order shown, are submitted for [insert 

name of applicant] for the purpose of obtaining a rural housing loan for the purpose of 

[insert constructing or rehabilitating/repairing] multi-family rental housing located at 

[insert location/address]. 

Forms to be Included 

 Form SF 424, Application for Federal Assistance, (include for construction) provides 

summary information about the project and the applicant, when completed. 

 Form RD 1924-13, Estimate and Certificate of Actual Costs, provides detailed cost 

estimates that the Loan Originator will review to judge reasonableness. 

 Form RD 1940-20, Request for Environmental Information, requests the applicant to 

provide specific environmental information about the proposed project. Instructions 

to the applicant are part of the form. The form will be used by the Agency to 

complete an environmental review of the proposed project. 
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Appendix 4 

 Form RD 3560-7, Multiple Family Housing Project Budget/Utility Allowance,

provides a schedule of proposed rents and utilities and anticipated operating and 

maintenance costs. The form will be used by the Loan Originator to conduct the 

project feasibility analysis and to determine whether the utility allowance is accurate. 

 Form RD 3560-25, Initial Request for Rental Assistance or Operating Assistance,

must be completed by the applicant if rental assistance is required for the project. 

 Form RD 1944-37, Previous Participation Certification, describes an applicant’s 

prior involvement with Federal assistance. 

 Form RD 410-9, Statement Required by the Privacy Act, (for individuals only), and 

Form RD 410-7, Notification to Applicant on Use of Financial Information from 

Financial Institution (for individuals only), will allow the Agency to verify 

information provided by the loan Applicant. 

Required Applicant/Project Information 

I. To establish applicant eligibility: 

A. Current (within 6 months) financial statements with the following paragraph 

certified by someone with the legal authority to do so: 

“I/we certify the above is a true and accurate reflection of my/our financial 

condition as of the date stated herein. This statement is given for the purpose of 

inducing the United States of America to make a loan or to enable the United 

States of America to make a determination of continued eligibility of the 

applicant for a loan as requested in the loan application of which this statement 

is a part.” 

B. Check for $28 from individual applicants and $40 from organizational applicants 

made out to United States Department of Agriculture. This will be used to pay for 

credit reports obtained by the Agency. 

C. Statements signed by applicants that they will pay any cost overruns. 

D. Proposed limited partnership agreement and certificates of limited partners, if 

applicable. (Agency requirements should be contained in one section of the 

agreement and their location identified by the applicants or their attorney in a 

cover sheet.) 

E. If a nonprofit organization: 

1. Tax-exempt ruling from the IRS designating them as a 501(c)(3) or 501(c)(4) 

organization. If the designation is pending, a copy of the designation request 

must be submitted. 

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Appendix 4 

2. Purpose statement, including the provision of low income housing. 

3. Evidence of organization under state and local law, or copies of pending 

applications. 

4. List of Board of Directors. 

F. If a limited liability company, proposed operating agreement and the authorized 

agent who has the authority to complete the loan application and loan closing 

documents. 

G. If a trust, organizational documents and attorney opinion letter that the trust is 

validly formed and identifying the authorized representative to act on the trust’s 

behalf. 

II. To establish project feasibility: 

A. Market feasibility documentation: Either a market study or a market survey, as 

appropriate. 

B. Type of project and structures proposed (total number of units by bedroom size, 

size of each unit type, size and type of other facilities). 

C. Schematic drawings: 

1. Site plan, including contour lines; 

2. Floor plan of each living unit type and other spaces, such as laundry facilities, 

community rooms, stairwells, etc.; 

3. Building exterior elevations; 

4. Typical building exterior wall section; and 

5. Plot plan. 

D. Description and justification of related facilities, schedule of separate charges for 

related facilities. 

E. Type and method of construction (owner builder, negotiated bid, or contractor 

method). 

F. Estimated costs (loan applicant completes Form 1924-13. 

G. Statement of proposed management. 
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Appendix 4 

H. Congregate services package/plan (if applicable). 

I. Statement of support from other Government services providers to the project 

(congregate only). 

J. Response to the Uniform Relocation Assistance Act (if applicable). 

III. To establish project financing: 

A. Statement of budget and cash flow (applicant completes Form RD 3560-7), 

including type of utilities and utility allowance, if applicable and contribution to 

reserves. 

B. Life cycle cost analysis.

C. Congregate services charges (if applicable). 

D. Status of efforts to obtain leveraged funds. 

E. Proposed construction financing (interim or multiple advance; if interim

financing, letter of interest from intended lender). 

IV. To understand environmental and site information: 

A. Environmental information (applicant completes Form RD 1940-20). 

B. Evidence of compliance with Executive Order 12372 (if applicable) Form SF 424

is sent to a clearinghouse for intergovernmental review. 

C. Phase I due diligence (Environmental Site Assessment; see Chapter 3). 

D. Map showing location of support services. 

E. Evidence of submission of project description to SHPO with request for 

comments. 

Comments regarding relevant offsite conditions: 

[insert any pertinent comments] 

 (02-24-05) SPECIAL PN
HB-1-3560

Appendix 4 

Handbook Letter 104 (3560) 

REFERENCE: HB-1-3560 Chapter 5 

PURPOSE: Letter To Interim Lender 

RURAL DEVELOPMENT 

[LOCATION] 

[insert name of interim lender] 

[insert address of interim lender] 

Dear [insert name of interim lender]: 

[use this paragraph for organizations] 

Reference is made to a request from the [insert applicant name] through [insert name of 

general partner or principal, and title] for interim financing from your firm to construct a 

housing facility at the interest rate, terms, and conditions agreed upon as reflected in the 

attached letter. 

[use this paragraph for individuals] 

Reference is made to a request from [insert name of individual] for interim financing 

from your firm to construct a rental housing facility at the interest rate, terms, and 

conditions agreed upon as reflected in the attached letter. 

This letter will confirm certain understandings on behalf of the Rural Development. 

Final drawings, specifications, and all other contract documents have been prepared and 

approved, and the applicant is prepared to start construction. The applicant and Rural 

Development have determined that the conditions of loan closing can be met. Rural 

Development funds have been obligated for the project. 

Rural Development has required the applicant to deposit $[insert amount] with your firm

to be used before any interim loan funds or other loan or grant funds. You may first 

advance the applicant funds on deposit, and then advance the proceeds of the interim loan 

or other loan and grant funds in accordance with the terms and conditions stated in your 

attached letter, to pay for construction and other authorized and legally eligible expenses 

incurred by the applicant. It is understood, however, that advances of both the applicant's 

funds and the interim loan funds will be made only upon presentation of proper 

 (02-24-05) SPECIAL PN
HB-1-3560

Appendix 4 

statements and partial payment estimates proposed by the builder and approved for 

payment by the consulting architect, applicant, and Rural Development official. 

We have scheduled the Rural Development loan to be closed when construction is 

substantially complete in accordance with the Rural Development-approved contract 

documents, drawings, and specifications, and the applicant provides evidence and a 

signed certification indicating that there are no unpaid obligations outstanding in 

connection with the project. At that time, funds not exceeding the Rural Development 

loan amount will be available to pay off the loan advances your lending institution has 

made for authorized approved purposes, including accrued interest on the Rural 

Development loan to the date of closing. 

Rural Development cannot provide you with an unconditional letter of commitment 

guaranteeing Rural Development loan closing. Factors such as noncompletion, default, 

unacceptable workmanship, and marked deviation from approved drawings and 

specifications could prevent the Rural Development loan from being closed. 

These problems can be minimized by making a thorough review of the contract 

documents and drawings and specifications, evaluating the qualifications and past 

performance of the builder, and obtaining an adequate corporate surety bond 

guaranteeing both payment and performance. If the builder is unable to provide a surety 

bond, we suggest that you consider making advances for partial payments to the builder 

based upon no less than 60 percent and no more than 90 percent of the value of 

acceptable work in place, less the aggregate of previous payments. 

The following are additional safeguards to help ensure Rural Development loan closing: 

1. We invite you or your representatives to accompany Rural Development 

personnel during construction inspections so that at least three or four joint 

inspections can be made at critical points during construction, including the final 

inspection, to help ensure that construction is proceeding in accordance with the 

Rural Development-approved drawings and specifications. 

2. Rural Development will maintain its commitment in the amount of the obligated 

loan funds for a reasonable period of time after the expiration of any specified 

completion dates, provided work on the project is progressing satisfactorily and 

any identified problems have been resolved. 

3. Rural Development will not arbitrarily abandon your lending institution in the 

event of default. If the contractor defaults, Rural Development will attempt to 

provide financial assistance to the applicant in accordance with our administrative 

procedures and lending requirements if a new contractor can complete the project 

for a total cost within the security value of the project. If this is not possible, or if 

the Rural Development loan applicant becomes unable or unwilling to continue 

with the project, Rural Development will attempt to provide financial assistance 

to any eligible applicant to purchase the completed project from your lending 

institution (subject to the availability of funds, our administrative procedures, and 

our lending requirements). 
HB-1-3560

Appendix 4 

4. Rural Development is aware that circumstances such as subsurface ground 

conditions and change orders necessitated by required changes in the work to be 

performed may cause cost increases after Rural Development loan approval and 

the obligation of Rural Development loan funds. When justified, Rural 

Development may make subsequent loans to help cover the eligible costs, 

provided additional loan funds are available, the change orders were approved by 

Rural Development, the increased costs are legitimate and are for authorized loan 

purposes, and the total cost of the project is within its security value. 

Your assistance to the applicant is appreciated. 

Sincerely, 

_______________ 

State Director 

 (02-24-05) SPECIAL PN
HB-1-3560

Appendix 4 

Handbook Letter 105 (3560) 

REFERENCE: HB-1-3560 Chapter 7 

PURPOSE: Notice To Proceed 

[insert date] 

[insert name of borrower] 

[insert address of borrower] 

RE: [insert name of project] 

 [insert location of project] 

Dear [insert name of borrower]: 

Pursuant to the terms of the Contract Documents and Loan Commitment dated [insert 

date], you are hereby authorized to commence work necessary to complete the project. 

Accordingly, this letter will serve as your formal “Notice to Proceed.” 

It is expected that construction shall be completed within [insert the number of days]

consecutive calendar days. The construction period shall commence on [insert start date] 

and will conclude on [insert finish date]. It is the responsibility of the Contractor to meet 

the schedule as set forth and in accordance with the terms and conditions of the Contract. 

[Insert name of agency official] will serve as the Agency’s Contract 

Representative for this project. Please return this “Notice to Proceed” signed and dated 

where indicated, by an authorized official of your organization. 

If clarification is required, do not hesitate to contact [name of contact] by phone at [insert 

phone number]. 

Sincerely, 

[insert name of Agency Official] 

RECEIPT IS ACKNOWLEDGED: 

By Borrower: ____________________________ ______________ 

 [signature of authorized official] [date] 

By Contractor: ____________________________ ______________ 

 [signature of authorized official] [date] 
HB-1-3560

Appendix 4 

Handbook Letter 106 (3560) 

REFERENCE: HB-1-3560 Chapters 4 and 12 

PURPOSE: Notice of Pre-application Review Action 

RURAL DEVELOPMENT 

[LOCATION] 

Date: [insert today’s date] 

[Insert Applicant’s Name] 

[Insert Applicant’s Address] 

SUBJECT: Notice of Pre-application Review Action [Proposal Name, Location] 

We reviewed your pre-application for Section 515 Rural Rental Housing assistance and 

determined that your proposal is eligible for funding by this agency. Your proposal 

received [insert number of priority points] priority points and was selected for further 

processing under the National NOFA. 

Therefore, a formal application, meeting the requirements of Chapter 5 of the HB-1-

3560, must be filed with our office by [insert date 30 days from date of this notice]. A 

“Rural Rental Housing Application Package” is enclosed to assist you in this effort. The 

loan request may not exceed $[insert request limit] and [insert limit of number of units] 

Rental Assistance units. 

Please see the attachment to this notice for conditions under which further processing will 

continue. 

Within one week of receiving this notice, you are instructed to contact [the individual 

named below] to set up a meeting. At this meeting, you will be given additional guidance 

and copies of appropriate exhibits and forms that are needed in order to complete the 

final application process. Any outstanding issues will also be addressed at this time. The 

Agency may, at its discretion, choose to hold a telephone conference for this purpose as a 

substitute for an in-person meeting. 

You may contact me by telephone at [insert telephone number] with any questions 

concerning this notice or the application process. 

[insert name of MFH Loan Specialist] 

Attachment 

 (0 (02-2-24-24-0505) SPECIA ) SPECIAL PNL PN
HB-1-3560

Appendix 4 

ATTACHMENT TO NOTICE OF PRE-APPLICATION REVIEW 

INVITING A FORMAL APPLICATION 

1) The action taken herein is based upon representations made in your pre-application. 

Any changes therein, including but not limited to changes in complex cost, size, or 

scope of complex, rental rates or subsidy costs to USDA-Rural Development, affect 

this decision and must be reported to and approved by Rural Development in writing. 

Any changes not approved by Rural Development will be cause for Rural 

Development to discontinue processing your request for services. All applicants 

requesting changes will be required to give full justification for each change and, if 

Rural Development approval is not given, written reasons will be given with a 30-day 

negotiation period to resolve the differences. 

2) This action should not be misconstrued as a reservation of funds, the availability of 

those funds, or loan approval. 

3) Loan processing will continue based upon a loan not to exceed the amount specified in 

this notice. 

4) If a complete application has not been submitted to Rural Development by the date 

specified in this notice, we reserve the right to discontinue processing your loan 

request with 30 days written notice. If a longer timeframe to develop your application 

is necessary, you should submit a request in writing with specific reasons why a longer 

timeframe is required with a projected date to accomplish such action. Failure to 

submit a complete application, or request a longer timeframe, will be considered a lack 

of interest on your part and a request to withdraw the pre-application. 

5) You are advised against taking any actions or incurring any obligations that would 

either limit the range of alternatives to be considered or have an adverse affect on the 

environment. Satisfactory completion of the environmental review process must occur 

prior to loan approval. The issuance of this review action does not constitute site 

approval. 
HB-1-3560

Appendix 4 

Handbook Letter 107 (3560) 

REFERENCE: HB-1-3560 Chapters 4 and 12 

PURPOSE: A Letter Informing the Applicant of the Lack of Funds 

RURAL DEVELOPMENT 

[LOCATION] 

Date: [insert today’s date] 

[Insert Applicant’s Name] 

[Insert Applicant’s Address] 

Your application for Rural Development services as been favorably considered by the 

[insert office location] Loan Committee. This favorable consideration does not 

necessarily mean a loan will be made to you. You are cautioned not to make purchases, 

option real estate, or make commitments in anticipation of receiving a loan because of

this favorable action. 

Funds for making [insert type of loan] are temporarily exhausted. Your application will 

be held for consideration until funds are available. You will be notified by letter at that 

time. 

Please advise us promptly if there are sufficient changes that would affect your eligibility 

or if you are no longer interested in obtaining the assistance for which you originally 

applied. 

Sincerely, 

[Name of decision maker] 

[Title] 

 (02-24-05) SPECIAL PN
HB-1-3560

Appendix 4 

Handbook Letter 108 (3560) 

REFERENCE: HB-1-3560 Chapters 4 and 12 

PURPOSE: Letter Denying Funding due to Ineligibility 

[insert date] 

[insert name of applicant] 

[insert address of applicant] 

Dear [insert name of applicant]: 

Thank you for your interest in the Rural Rental Housing Loan program. After a thorough 

review of your [insert either initial or final] application, it has been determined that your 

proposal does not meet the criteria of the National NOFA and therefore, is ineligible for 

the Rural Development Housing loan for which you have applied. Our determination is 

based on the following: 

 

[insert list of specific reason(s) for the ineligibility] 

Should you have any questions or wish to further discuss this matter, you may contact 

[insert name of Specialist] by phone at [insert phone number of Specialist]. 

Sincerely, 

[insert name of MFH Program Director] 
HB-1-3560

Appendix 4 

Handbook Letter 109 (3560) 

REFERENCE: HB-1-3560 Chapter 4 

PURPOSE: Letter Informing of National Office Review 

[insert date] 

[insert name of applicant] 

[insert address of applicant] 

SUBJECT: Notice of National Office Review

 [insert proposal name and location] 

Dear [insert name of applicant]:

This letter is to inform you that your initial application has been submitted to the National 

Office for comprehensive review due to special circumstances involving your project 

type. We are currently awaiting a response from the National Office. Once the National 

Office has completed its review, you will be advised of the results. 

You may contact me at [insert phone number of Specialist] with any questions 

concerning this notice or the application process. 

Sincerely, 

[insert name of MFH Loan Specialist] 

 (02-24-05) SPECIAL PN