HB-1-3560

SECTION 1: INTRODUCTION TO THE 

LOAN ORIGINATION HANDBOOK

1.1 ABOUT THIS HANDBOOK

This handbook provides Multi-Family Housing Staff with the guidance needed to 

originate loans and grants efficiently and effectively. Its goal is to help Loan Originators and 

Loan Approval Officials in Field Offices process applications smoothly, while making sure that 

the applicable legal and administrative requirements are met.

The handbook describes the Agency’s loan processing policies and establishes its 

procedures for originating:

• Section 515 Multi-Family Housing projects:

◊ Rural rental housing (including congregate housing and group homes); and

◊ Rural cooperative housing.

• Section 514/516 Farm Labor Housing projects:

◊ Off-farm labor housing; and

◊ On-farm labor housing.

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

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

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

amend such laws, Executive Orders, and regulations.

1.2 COMPANION MULTI-FAMILY HOUSING HANDBOOKS

This handbook is the first in a series of three handbooks that describe the requirements 

and procedures for the Multi-Family Housing direct loan and grant programs. The two 

companion handbooks are:

• HB-2-3560: Asset Management. This handbook covers the requirements and 

procedures regarding the ongoing management of Multi-Family Housing projects and 

the Agency’s oversight of borrower performance.

• HB-3-3560: Project Servicing. This handbook addresses the requirements and 

procedures for servicing loan accounts, allowable servicing actions borrowers can 

request, project preservation, prepayment, and Agency actions in the event of 

compliance violations or project default.

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CHAPTER 1: INTRODUCTION
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1.3 USING THIS HANDBOOK

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

easily. Several graphic tools and conventions have been used to make information easier to find 

and understand.

A. Citations and Text Boxes

 Regulatory citations. The regulation for Multi-Family Housing programs is 

provided in 7 CFR Part 3560. The text of that regulation is included in Appendix 1. 

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

references in paragraph headings to this regulation appear in italicized brackets, for 

example [7 CFR 3560.51]. Other regulations or RD Instructions are simply 

referenced.

 Form references. Agency forms and Agency guide, form, and system letters are 

shown in italics. All forms referenced in this handbook can be found in Appendix 3 

and all letters can be found in Appendix 4.

 Examples and exhibits. Text boxes labeled as examples provide a specific 

illustration of a concept described in the text. Exhibits illustrate key points and are 

numbered in sequence, using the chapter number and a sequence number; for 

example, Exhibit 3-1 is the first exhibit in Chapter 3.

B. Attachments and Appendices

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

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

sequence, using the chapter number and a sequence letter; for example, Attachment 

4-A is the first attachment in Chapter 4.

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

reference materials that relate to multiple chapters.

C. Terminology

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

handbook uses certain standard terminology to provide consistency.

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

Housing Service (RHS) within the U.S. Department of Agriculture (USDA) that is 

responsible for the administration of the Multi-Family Housing programs.

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

Agency assistance through a Multi-Family Housing program in the form of a loan or 

a grant.
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 Loan Approval Official. “Loan Approval Official” is used whenever someone other 

than the Loan Originator must approve an action. Unless otherwise specified, each 

State Director may determine which actions may be approved at the Field Office and 

which must be approved at the State Office.

 Loan Origination Office. Because the number of offices and the nature of the work 

conducted in each office may vary from state to state, the term “Loan Origination 

Office” is used throughout this handbook to refer to the office that is originating or 

servicing the loan.

 Loan Originator. “Loan Originator” refers to a person who is working directly with 

an applicant and conducting the basic underwriting analysis.

 Loan Processing Staff. This term is used as a general reference to Agency Field 

Office Staff that process loan and grant applications.

 Loan/Grant Applicant. The term “applicant” refers to one or more individuals who 

have applied for Agency assistance.

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SECTION 2: OVERVIEW OF THE 

MULTI-FAMILY HOUSING PROGRAMS

1.4 GOALS OF RHS MULTI-FAMILY HOUSING PROGRAMS

The purpose of the Multi-Family Housing programs is to provide adequate, affordable, 

decent, safe, and sanitary rental units for very low-, low-, and moderate-income households in 

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

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

streamlined service. The Agency will administer its programs fairly and in 

accordance with both the letter and the spirit of all equal opportunity and fair housing 

legislation and applicable Executive Orders.

• Partnerships. Working with its partners, such as borrowers, property management 

agents, tenants, other lenders, nonprofit organizations, and State and local agencies, 

can enhance the Agency’s ability to better serve eligible households.

• Effective use of resources. As publicly funded initiatives, the Multi-Family Housing 

programs must use tax dollars efficiently. The Agency aims to minimize 

administrative costs, underwrite loans responsibly, and leverage funding with private 

sources of credit to the extent possible.

1.5 SECTION 515 PROGRAM—OVERVIEW

The Section 515 direct loan program [7 CFR Part 3560] provides financing to support

the development of rental units in rural areas that need housing affordable to very low-, low-, and 

moderate-income households, and where this housing is unlikely to be provided through other 

means.

Section 515 loans can be used to build, acquire and rehabilitate, or improve dwellings in 

rural areas. The term for an initial Section 515 loan is 30 years with a 50-year amortization 

period. However, the term for subsequent loans and loans for special types of properties, such as 

manufactured housing, may be made for a shorter term based on the project’s expected useful 

life.

Each loan is made at a note rate established by the Agency as prescribed in

RD Instruction 440.1. Borrowers approved for initial and/or subsequent loans receive interest 

credit, which reduces the effective interest rate for the Agency’s financing, thereby lowering the 

property’s rents. In return for this below-market rate financing, the borrower agrees to lease the 

project’s rental units to income-eligible households at rents approved by the Agency. Borrowers 

operate on a nonprofit or limited-profit basis.
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1.6 SECTION 514 PROGRAM—OVERVIEW

Section 514/516 direct loan and grant programs provide funds to support the development 

of adequate, affordable housing for farmworkers that is unlikely to be provided through other 

means.

A. Section 514 Loans and Section 516 Grants for Off-Farm Housing

Section 514 loans and Section 516 grants can be used for the same purposes as 

Section 515 loans to finance rental housing for farmworkers. Unlike Section 515 

projects, off-farm labor housing projects may be built outside rural areas, as long as the 

project addresses a need for affordable housing for farmworkers. These projects are 

eligible for financing at terms comparable to Section 515 loans, a grant to cover a share 

of the development cost, or a loan/grant combination finance package. The maximum 

term for an Off-Farm Labor Housing loan is 33 years, and the effective interest rate is

1 percent. For Off-Farm Labor Housing grants, the grant period of performance is five 

(5) years, which starts on the date the agreement is executed by the Agency and the 

grantee and ends five (5) years from the date the grant agreement is executed by the 

Agency and the grantee. The grant agreement will remain in effect for as long as there is 

a need for the housing, as determined by the Agency. Tenants not only must be income

eligible, but also receive priority based on the proportion of their income received from 

farm work.

B. Section 514 Loans for On-Farm Housing

Section 514 loans can also be used to finance the development of adequate housing 

for farm workers involved in a specific farm operation—On-Farm Labor Housing 

projects. These projects are treated as part of the farming operation, and the occupants do 

not pay shelter cost (rent & utilities) unless the shelter cost is approved by the Agency.
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SECTION 3: GENERAL PROGRAM REQUIREMENTS

1.7 CIVIL RIGHTS [7 CFR 3560.2]

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

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

The civil rights compliance requirements for the Agency are contained in RD Instruction 1901-E. 

Exhibit 1-1 lists the applicable Federal laws and Executive Orders and highlights key aspects of 

their requirements.

Exhibit 1-1

Major Civil Rights Laws Affecting the Multi-Family Housing 

Loan and Grant Programs

 Equal Credit Opportunity Act (ECOA). Prohibits discrimination in the extension of credit 

on the basis of race, color, religion, national origin, sex, marital status, age, income from 

public assistance, and exercise of rights under the Consumer Credit Protection Act.

 Title VI of the Civil Rights Act of 1964. Prohibits discrimination in a federally assisted 

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

 Title VIII of the Civil Rights Act of 1968 (also known as the Fair Housing Act of 1988, as 

amended). Prohibits discrimination in the sale, rental, or financing of housing on the basis of 

race, color, religion, sex, national origin, familial status, or disability.

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

assisted program on the basis of disability.

 Age Discrimination Act of 1975. Prohibits discrimination in a federally assisted program on 

the basis of age.

 Title IX of the Education Amendments of 1972. Prohibits discrimination on the basis of 

sex in education programs and activities receiving Federal financial assistance from Rural 

Development.

 Executive Order 11063, as Amended by Executive Order 12259. Prohibits discrimination 

in housing or residential property financing to any federally assisted activity against 

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

 Executive Order 11246. Prohibits discrimination in employment by construction 

contractors (and subcontractors) receiving federally assisted construction contracts in excess 

of $10,000. Provides for equal employment opportunity without regard to race, color, 

religion, sex, and national origin.

 Executive Order 12898. Requires each Federal Agency to make achieving environmental 

justice a part of its mission by identifying and addressing disproportionately high and adverse 

human health or environmental effects of its programs, policies, and activities on minority 

and low-income populations.
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A. Nondiscrimination

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

provided under the Section 515 and 514/516 programs to any person based upon race, 

color, national origin, sex, religion, familial status, age, physical or mental disability, or 

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

the Consumer Credit Protection Act (15 U.S.C. 1601). Discrimination in employment 

practices is also prohibited. These same requirements also apply to program participants. 

Agency oversight of borrower compliance with civil rights laws is covered in HB-2-

3560. Complaints filed by tenants will be handled by the Agency in accordance with RD 

Instruction 2000-GGG and Attachment 1-A.

Effective management and 

consistent procedures are good 

business practices that help ensure 

that all applicants are treated fairly. 

Poor program implementation, 

whether or not discrimination is 

intended, has possible civil rights 

consequences.

B. Reasonable Accommodations for Persons with Disabilities

In addition to avoiding discrimination, the Agency and loan and grant recipients must 

make reasonable accommodations to permit persons with disabilities to apply for and 

benefit from Agency programs. Reasonable accommodations may include providing 

modifications to the dwellings and facilities so that they are physically accessible.

Reasonable accommodations may also include effective communication and outreach 

tools so that all applicants can obtain program information (e.g., a Telecommunications 

Device for the Deaf [TDD]).

C. Limited English Proficiency [7 CFR 3560.2]

Borrowers and grantees must take reasonable steps to ensure that Limited English 

Proficiency (LEP) persons receive the language assistance necessary to afford them 

meaningful access to USDA programs and activities, free of charge. Failure to ensure 

that LEP persons can effectively participate in or benefit from Federally assisted 

programs and activities may violate the prohibition under Title VI of the Civil Rights Act 

of 1964 (42 U.S.C. 2000d). USDA has issued guidance to clarify the responsibilities of 

recipients and subrecipients who receive financial assistance from USDA and assist them 

in fulfilling their responsibilities to LEP persons under Title VI of the Civil Rights Act, as 

amended, and implementing regulations.

D. Civil Rights Impact Analysis

Agency employees will conduct civil rights impact analyses in accordance with RD 

Instruction 2006-P to determine whether proposed policy actions, if approved and 

implemented, will negatively and disproportionately affect employees, program

Key Civil RightsIssues 

for Loan Origination

 Access

 Consistency and fairness of treatment

 Disparate impacts — intended or unintended

 Record keeping
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beneficiaries, or applicants for employment or program benefits due to race, national 

origin, or other protected basis.

1.8 REVIEWS AND APPEALS [7 CFR 3560.9]

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

known as adverse decisions. Adverse decisions must be based upon regulations that are 

published in the Code of Federal Regulations (CFR). For the direct Multi-Family Housing 

programs, any adverse decisions must be based upon 7 CFR Part 3560 and not the administrative 

guidance contained in this handbook. Adverse decisions include: (1) administrative actions taken

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

specified in statutes or regulations or within a reasonable time if no deadline is specified.

Appendix 2 of this handbook contains 7 CFR Part 11, which is the regulation of the National 

Appeals Division (NAD) and provides procedures that both Agency officials and program 

participants must follow when an appeal is made. Handbook Letter 101 (3560), Standardized 

Adverse Decision Letter, will be used for all adverse decisions unless another format is 

prescribed in this handbook.

A. Informing Program Participants of Their Rights

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

participant, the official must inform the participant in writing that an informal review

with the person who made the decision may be requested. If the decision is appealable, 

the participant will also be informed of their rights to seek mediation or Alternative 

Dispute Resolution (ADR) and to request a hearing with NAD; Attachment 1-B is used 

for this purpose. If the decision cannot be appealed, participants will be informed of their 

rights to have NAD review the accuracy of the Agency’s finding that the decision cannot 

be appealed; Attachment 1-C is used for this purpose. Mediation or ADR is not 

applicable for decisions that cannot be appealed.
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Letters notifying participants of adverse decisions must contain the required 

information regarding an informal meeting, rights to mediation or ADR, rights to a NAD 

appeal, and civil rights. Attachment 1-A includes only the specific civil rights language 

that must be contained in any adverse decision letter. Attachments 1-B through 1-I 

contain, as necessary, the civil rights language and include information on requesting an

informal review, rights to mediation or ADR, and rights to a NAD appeal. The 

Attachments are all titled to assist Field Office Staff in selecting the correct Attachment 

for the decision being made. The Attachments do not need to be used when an RD Form, 

Handbook Letter, or other document already includes the appropriate participant rights.

B. Adverse Decisions That Cannot Be Appealed

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

participant is still provided the opportunity for an informal review; however, rights to a 

NAD appeal and rights to mediation or ADR are not offered. Participants will be 

informed through the use of Attachment 1-C that they may request an informal review 

and write to NAD for a review of the accuracy of the Agency’s determination that the 

case cannot be appealed. Decisions that cannot be appealed include:

 Decisions made by parties outside the Agency, even when these decisions are 

used as a basis for Agency decisions (such as when an applicant disagrees with a 

private lender’s decision not to provide credit for a leveraged loan);

 An official’s refusal to request an administrative waiver under the provisions of 

Paragraph 1.11 of this handbook, or a waiver authorized by any applicable 

regulation;

 Denials of credit due to lack of funds; and

 Rural area designations.

When one or more of the reasons for an adverse decision are reasons that cannot be 

appealed, the adverse decision cannot be appealed. In these cases, the letter containing 

the adverse decision will include only the items that cannot be appealed as the reason 

why the decision cannot be appealed. If other reasons also exist for the adverse decision, 

they will be listed separately in the decision letter as other reasons the assistance could 

not be granted.

C. Informal Review

Participants who want to request an informal review with the person who made the 

decision must do so within 15 days of the date of the Agency’s letter notifying the 

participant of the adverse decision. The participant must make a request for an informal 

review in writing, and the request will be retained in the participant’s case file. The 

informal review can be conducted, at the discretion of the Agency, by telephone or 

through a face-to-face meeting. The informal review can also be conducted by a
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representative of the person who made the decision. The purpose of the informal review 

is to further explain the Agency’s reasons for the adverse decision, listen to why the 

participant feels the decision may be incorrect, and obtain any further information from 

the participant to support their request. The review must be completed within 45 days of 

the request, and the participant is notified in writing of the results. The State Director 

may require that the decision be reviewed by the next-level supervisor or other 

designated Rural Development Staff before the participant is notified of the decision.

Attachment 1-D will be used if the adverse decision is not reversed as a result of the 

informal review. If the decision is reversed, a letter will be sent to the participant 

notifying them of the decision and next steps.

Participants may skip an informal review and, if applicable, request mediation, ADR, 

or a NAD appeal. In doing so, participants automatically waive their rights to an informal 

review.

D. Mediation or ADR

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

given the opportunity to seek mediation or ADR prior to having a hearing with NAD. The 

purpose of mediation or ADR is to resolve disputes through the use of a neutral mediator. 

State Directors may wish to consider issuing a State Supplement, outlining the 

coordination required between the Field Office and State Office on handling mediation 

and ADR requests.

Participants may skip mediation or ADR and request a NAD appeal. In doing so, they 

automatically waive their rights to mediation or ADR.

1. Requests for Mediation or ADR

After receiving Attachment 1-B or 1-D, a program participant may request mediation 

or ADR services. Upon receipt of the program participant’s request for mediation or 

ADR, Attachment 1-E, 1-G, or 1-H is sent to the participant to start the process. The 

Attachment used depends upon whether the State in which the action applies is covered 

by a USDA-sponsored mediation program. These Attachments are generally sent by the 

State Director since costs are involved; however, they can be sent directly by the Field 

Office at the discretion of the State Director.
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2. Cost of Mediation or ADR

There are generally costs associated with participation in mediation or ADR. When 

there are costs, they will be shared equally between the Agency and the program 

participant, if Agency funds are available. Where Agency funds are not available, the 

Agency will participate in mediation or ADR if requested by the program participant; 

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

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

Director will ensure that all participants requesting mediation or ADR in their state are 

treated consistently and pay the same percentage of the cost toward this service. The 

State Director may also consent to pay a larger percentage (up to 100 percent) of the cost 

of mediation or ADR for participants with incomes below the poverty level. The Agency 

will notify the mediation or ADR sources of how the cost of such service will be paid.

Attachments 1-E, 1-F, 1-G, and 1-H include language to meet this requirement.

3. Mediation in States with a USDA-Sponsored Mediation Program

Many states have a USDA-sponsored mediation program. These programs are 

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

from the Farm Service Agency (FSA). If a program participant is unsure if a USDAsponsored mediation program exists in their state, they should contact their state Director. 

In states with a USDA-sponsored mediation program, program participants who are 

provided appeal rights will generally be referred to the USDA-sponsored mediation 

program. ADR is not applicable in these States. Attachment 1-E may be sent to the 

program participant to acknowledge their request, and Attachment 1-F may be used to 

refer the case to the USDA-sponsored mediation program. In states where alternative 

mediation sources are readily available at a lower cost than the USDA-sponsored 

mediation program, the State will follow the guidance for states without a USDAsponsored mediation program and include the USDA-sponsored mediation program on 

the list of acceptable providers.

4. Mediation or ADR in States without a USDA-Sponsored Mediation Program

In States without a USDA-sponsored mediation program, Agency officials are 

responsible for maintaining a list of mediators or ADR providers. The State Office will 

generally maintain this list as program participants are referred to the State Director to 

initiate mediation or ADR. FSA can generally provide a list of acceptable mediation or 

ADR sources in a state. Other contacts include the American Association of Arbitrators 

(AAA) or State bar association. When making contacts with these sources, the Agency 

must request the services of a mediator and not an arbitrator. (A mediator resolves 

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

disputes through hearing both parties and then rendering a binding decision and should 

not be used.) The list of mediators will contain the approximate cost of each service 

provider, if known. States may handle the list of mediation and ADR sources as follows:
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• The state may select a mediator or ADR provider from the list, provided there is not a 

significant variation in the cost of service providers. The list will be maintained 

alphabetically and sources selected in sequential order. Attachment 1-G may be sent 

to the program participant to acknowledge their request for mediation or ADR, and 

Attachment 1-F may be used to refer the case to the provider. States will need to 

maintain documentation to ensure that mediators and ADR providers receive an equal 

number of referrals. If there is a significant variation in cost among service providers, 

this option will not be used.

• The state may provide the list of mediators or ADR providers to the participant and 

request the participant to select the source or provide the name of another acceptable 

source of mediation or ADR. The list will contain the approximate cost of each 

service provider, if known. Attachment 1-H is used for this purpose and provides the 

participant with 10 days to select a service provider. After selection, Attachment 1-F 

will be used to refer the case to the mediator or ADR provider. If the program 

participant does not provide the name of a mediator or ADR provider within 10 days, 

their request for mediation or ADR will be considered withdrawn. Withdrawal or 

cancellation of mediation or ADR does not extinguish the participant’s right to an 

appeal with NAD.

5. Timing of Mediation or ADR

Mediation or ADR must be completed within 45 days after the case is referred to the 

mediation or ADR source, unless the complexity of the case warrants a longer time frame 

and all parties agree to a specific time frame. A mediator or ADR provider will generally 

conduct a teleconference between the parties prior to accepting a case to determine if the 

case can be mediated. The Agency encourages the use of a premediation conference since 

many adverse decisions in the Multi-Family Housing program may not lend themselves

to mediation. Regardless, the Agency will not refuse to participate in mediation or ADR 

if requested to do so by the program participant.

Mediation or ADR occurs prior to having a hearing with NAD. Requests for 

mediation or ADR made prior to filing an appeal with NAD stop the clock on the 30-day

period during which a participant may appeal to NAD. After mediation or ADR has 

concluded, any days that remain from the 30-day period are available to the participant to 

request an appeal to NAD. Attachment 1-I is used for this purpose. The person 

completing Attachment 1-I will need to determine the number of days the participant 

took to request mediation or ADR. Hearing dates for participants who request mediation 

or ADR after filing an appeal must be selected within 45 days of the conclusion of 

mediation or ADR. Participants may also request mediation or ADR after filing an appeal 

with NAD, but prior to the hearing.
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E. Appeal

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

NAD within 30 days of receiving notice of an adverse decision. The request must be 

signed by the participant and include: (1) a copy of the adverse decision to be appealed; 

and (2) a brief statement describing why the participant believes the decision is wrong.

Upon receiving a notice from NAD that an appeal has been filed, the Field Office will 

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

Part 3560 to support the adverse decision, and any other pertinent information. A copy 

will also be provided to the program participant.

In accordance with NAD regulations, the program participant has the right to a faceto-face hearing in the participant’s state of residence. The program participant also has

the right to request that the hearing be handled by teleconference. An adverse decision 

made by the Agency may result in an appeal hearing and require a face-to-face hearing.

In these cases, the Appeal Coordinator may request the State Director to provide Field 

Office Staff to attend the hearing and represent the Agency. The Appeal Coordinator will 

provide sufficient documentation and phone resources to the person selected by the State 

Director to adequately represent the Agency in the case.

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

determination. If NAD reverses the Agency’s decision, the next loan processing action 

that would have occurred if no adverse decision had been made must be taken within 30

days after the effective date of the notice from NAD, unless the Agency requests a review 

of the case by the Director of NAD. See Appendix 2 for more guidance on Director 

Reviews and other information regarding appeals.

1.9 CONFLICT OF INTEREST [7 CFR 3560.10]

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

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

interest requirements are described in RD Instruction 1900-D. To reduce the potential for 

conflicts of interest, all processing, approval, servicing, or review activity must be conducted by 

Agency employees who:

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

known relative of the recipient;

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

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

conduct the activity; and

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

Applicants must disclose any known relationship or association with Agency 

employees when they apply.

B. Agency Employee Disclosure

Agency employees must disclose any known relationship or association with a 

recipient, regardless of whether the relationship is known to others. Loan Originators 

should notify a supervisor after the application is accepted but before any eligibility 

determination is made.

1.10 OTHER FEDERAL REQUIREMENTS

A. Environmental Requirements [7 CFR 3560.3 and 3560.4]

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

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

Originators and the Loan Approval Official are responsible for effectively integrating 

Agency environmental policies and procedures with loan and grant origination and 

servicing activities. It is particularly important for Loan Servicers to be aware of 

environmental requirements concerning sites, especially during the liquidation process, 

when the Agency needs to ensure that it will not acquire property with an environmental 

liability. The Loan Servicer should also be aware of mitigation measures contained in the 

Agency’s environmental review. Where mitigation measures require an on-going effort 

of owner and management (such as maintaining the condition of a historic building or not 

building on portions of the site) these should be a part of servicing. Agency 

environmental policies and procedures can be found in RD Instruction 1940-G, 

Environmental Program and historic preservation requirements can be found in RD 

Instruction 1940-G and 1901-F. Agency-assisted properties also must meet current 

Agency guidance on lead-based paint requirements and 1904-G.

B. Construction Standards

Sites and dwellings developed or rehabilitated with Section 515 or Section 514/516 

funds must meet the construction standards described or referenced in RD Instructions 

1924-A and 1924-C. Existing dwellings financed by the Agency must be decent, safe, 

and sanitary and must meet all applicable State and local codes.

C. Lobbying Restrictions

RD Instruction 1940-Q prohibits applicants and recipients of Agency assistance from 

using appropriated funds for lobbying the Federal Government in connection with a 

specific award. This Instruction also requires that entities that request or receive loans or 

grants must disclose the expenditure of any funds, other than appropriated funds, for 

lobbying activities using Exhibit A-1 from RD Instruction 1940-Q.
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D. Administrative Requirements

Agency employees must comply with Agency and departmental administrative 

requirements.

1. Procurement

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

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

policies and procedures of RD Instruction 2024-A.

2. File Management

Files and other Agency records must be maintained in accordance with

RD Instruction 2033-A. Additional information is provided in Chapter 9 of HB-2-3560.

3. Handling Funds

Project funds must be handled in accordance with RD Instruction 1902-A.

1.11 EXCEPTION AUTHORITY [7 CFR 3560.8]

Exceptions to any requirement of this handbook or 7 CFR Part 3560 may be approved in 

individual cases by the Administrator if application of the requirement or failure to take action 

would adversely affect the Government’s interest or conflict with the objectives and spirit of the 

authorizing statute. Any exception must be consistent with the authorizing statute and other 

applicable laws.

Requests for exceptions are submitted to the Administrator, through the Deputy 

Administrator, Multi-Family Housing, and may be initiated by the State Director; the Director, 

Multi-Family Housing Processing Division; or the Director, Multi-Family Housing Portfolio 

Management Division.

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

exception. At a minimum the request must include:

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

effect on the Government’s interest;

• A discussion of proposed alternatives considered; and

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

exception is granted.

Requests to the Administrator for exceptions regarding architectural, environmental, or 

civil rights issues will include the review and comments of the appropriate National Office Staff.

1-16
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-A

Page 1 of 1

ATTACHMENT 1-A

EQUAL CREDIT OPPORTUNITY ACT (ECOA)

The Federal ECOA prohibits creditors from discriminating against credit applicants on 

the basis of race, color, religion, national origin, sex, martial status, age (provided the applicant 

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

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

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

compliance with this law concerning this assistance 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 of conditions of such a transaction, race, color, religion, sex, disability, familial status, or 

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

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

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

Housing and Urban Development, Washington, D.C. 20410 or call (800) 669-9777.
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HB-1-3560

Attachment 1-B 

Page 1 of 3

ATTACHMENT 1-B

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 ADR

You have the right to request mediation or other forms of 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.

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

Attachment 1-B 

Page 2 of 3

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.

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 NAD; however, an 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.

Rural Development State Director address:

Option 3 - Request an Appeal

You may request an appeal hearing by the 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:

NAD Assistant Director address:

Your request for an 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
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-B 

Page 3 of 3

request must also be sent to the Rural Development State Director at the address listed under 

Option 2.

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 nonconfidential 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 ECOA prohibits creditors from discriminating against credit applicants on the basis 

of race, color, religion, national origin, sex, marital status, age (provided the applicant has the 

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

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

right under the Consumer Credit Protection Act. The Federal agency that administers compliance 

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

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

Commission, Washington, D.C. 20580

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

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

status, or national origin. The federal agency that is responsible for enforcing this law is the U. S. 

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

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

Housing and Urban Development, Washington, D.C. 20410 or call (800) 669-9777.
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HB-1-3560

Attachment 1-C 

Page 1 of 2

(02-24-05) SPECIAL PN

ATTACHMENT 1-C

ATTACHMENT TO LETTER NOTIFYING CUSTOMERS OF AN

ADVERSE DECISION THAT CANNOT BE APPEALED

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

will terminate or reduce the assistance you are currently receiving.

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

explanation, you may write this office to request 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.

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

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

be appealed under our regulations. You may, however, write the Assistant Director with the 

NAD for a review of the accuracy of our finding that the decision cannot be appealed. Your 

request must be made no later than 30 days from the date you receive the attached letter.

NAD Assistant Director address:

The Federal ECOA prohibits creditors from discriminating against credit applicants on the basis 

of race, color, religion, national origin, sex, marital status, age (provided the applicant has the 

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

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

right under the Consumer Credit Protection Act. The Federal agency that administers compliance 

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

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

Commission, Washington, D.C. 20580.

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

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

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

Department of Housing and Urban Development. If a person believes that they have been
HB-1-3560

Attachment 1-C 

Page 2 of 2

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.
HB-1-3560

Attachment 1-D

Page 1 of 3

(02-24-05) SPECIAL PN

ATTACHMENT 1-D

ATTACHMENT TO LETTER NOTIFYING CUSTOMERS OF 

UNFAVORABLE DECISION REACHED AS A RESULT OF AN INFORMAL 

REVIEW

We appreciated the opportunity to review the facts relative to your request for assistance. We 

regret that the decision in the attached letter did not grant the assistance you requested or will 

terminate or reduce the assistance you are currently receiving. If you believe that facts used in 

this case are in error, you may pursue any or all of the following two options.

Option 1 - Mediation or ADR

You have the right to request mediation or other forms of 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 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 this 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 2). 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 2.

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 NAD; however, an 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.
HB-1-3560

Attachment 1-D 

Page 2 of 3

Rural Development State Director address:

Option 2 - Request an Appeal

You may request an appeal hearing by the NAD rather than an informal review or mediation. 

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:

NAD Assistant Director address:

The request for an 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 listed under 

Option 1.

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 nonconfidential 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.
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-D

Page 3 of 3

The Federal ECOA prohibits creditors from discriminating against credit applicants on the basis 

of race, color, religion, national origin, sex, marital status, age (provided the applicant has the 

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

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

right under the Consumer Credit Protection Act. The Federal agency that administers compliance 

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

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

Commission, Washington, D.C. 20580

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

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

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

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

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

Housing and Urban Development, Washington, D.C. 20410 or call (800) 669-9777.
HB-1-3560

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HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-E 

Page 1 of 2

ATTACHMENT 1-E

ATTACHMENT FOR NOTIFYING CUSTOMERS THAT REQUEST 

MEDIATION IN STATES WITH A USDA-SPONSORED MEDIATION 

PROGRAM

This replies to your request for mediation or alternative dispute resolution services. The state in 

which you requested assistance has an impartial USDA-sponsored mediation program available. 

Your request for mediation has been sent to:

You will be contacted directly by the USDA-sponsored mediation program to determine if they 

can mediate the issues in your case.

As indicated in our adverse decision letter, there may be a cost for mediation services. The cost 

estimated for this service is:

$ You will be advised directly by the USDA-sponsored mediation program of 

the full cost of mediation. This is only an estimate and may vary depending on the issues 

and complexity of the case. If you decide not to pursue mediation, you must immediately 

contact this office and the USDA-sponsored program to cancel your request

Rural Development will:

Contribute 50 percent towards the cost. The balance of the cast will have to be 

paid from your own resources.

Cannot contribute towards the cost as the Agency does not have financial 

resources for these services. You must pay the full cost of mediation from your own 

personal resources.

Contribute towards the cost. The balance of the cost will have to be paid

from your own personal resources.

When mediation is concluded, you will be notified of the results and the number of days 

remaining to request an appeal, if applicable. If you request mediation prior to filing for an 

appeal, the number of days you will have to request an appeal will be 30 days from the adverse
HB-1-3560

Attachment 1-E 

Page 2 of 2

decision minus the number of days you took to request mediation. Mediation does not take the 

place of, or limit your rights to, an appeal to the NAD; however, an NAD appeal hearing would 

take place after mediation.

Remember, if you decide not to pursue mediation, you must immediately contact this office and 

the USDA-sponsored mediation program to cancel your request. You will be responsible for any 

costs incurred by the mediation or ADR source up until the time of your cancellation. Canceling 

your request for mediation does not affect your rights to seek an appeal with the NAD as 

discussed in our original decision letter.
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-F

Page 1 of 2

ATTACHMENT 1-F

ATTACHMENT FOR REQUESTING MEDIATION OR ALTERNATIVE 

DISPUTE RESOLUTION (ADR) SERVICES

TO:

FROM:

SUBJECT: Request for Mediation or ADR Services 

CUSTOMER:

The above-subject Rural Development customer has received an adverse decision from our 

Agency and has requested mediation or ADR services. Attached is a copy of the adverse decision 

letter and the customer’s request for your service.

Informal Review:

The customer was provided with the opportunity for an informal review with the Agency; 

however, chose not to exercise this option.

An informal review was conducted; however, the Agency did not reverse its decision.

This case is under the jurisdiction of our State Office.

Payment for Service:

The customer and Agency will split the cost of this service 50/50.

The customer will pay the full cost of mediation or ADR.

The Agency will pay towards mediation or ADR. The customer will pay the 

balance.

If the Agency is paying for any portion of the cost of this service, the bill for the Agency’s 

portion should be submitted to this office. The customer is solely responsible for their portion of 

the cost of this service and should be billed directly.
HB-1-3560

Attachment 1-F 

Page 2 of 2

Jurisdiction of case:

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

office for further information on the case:

The adverse decision in this case was made by the [insert appropriate name] . You 

may contact the Appeals Coordinator for further information on the case and to arrange for 

mediation or ADR:

USDA, Rural Development

Appeals Coordinator 

ATTN: 

, 

( ) - , extension 

Mediation or ADR must be completed within 45 days; unless the complexity of the case requires 

a longer time frame and all parties agree to a specific time frame. We also request a 

teleconference prior to your acceptance of this case to determine if the adverse decision lends 

itself to mediation or ADR.
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-G

Page 1 of 2

ATTACHMENT 1-G

ATTACHMENT FOR NOTIFYING CUSTOMERS THAT REQUEST 

MEDIATION OR ALTERNATIVE DISPUTE RESOLUTION (ADR) OF

SERVICE PROVIDER

This replies to your request for mediation or alternative dispute resolution services. Your request 

has been sent to:

You will be contacted directly by the above to determine if they can mediate the issues in your 

case.

As indicated in our adverse decision letter, there may be a cost for these services. The estimated 

cost for this service is:

$ You will be advised directly by the mediation or ADR source of the full 

cost of this service. This is only an estimate and may vary depending upon the issues and 

complexity of the case. If you decide not to pursue mediation or ADR, you must 

immediately contact this office and the above-mentioned mediation or ADR provider.

Rural Development will:

Contribute 50 percent towards the cost. The balance of the cost will have to be 

paid from your own resources.

Cannot contribute towards the cost as the Agency does not have the financial 

resources. You must pay the full cost from your own personal resources.

Contribute towards the cost. The balance of the cost will have to be paid 

from your own personal resources.

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 date 

you received notice of 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 

NAD; however, an NAD appeal hearing would take place after mediation or ADR.

Remember, if you decide not to pursue mediation or ADR, you must immediately contact this 

office and the mediation or ADR provider to cancel your request. You will be responsible for
HB-1-3560

Attachment 1-G 

Page 2 of 2

any costs incurred by the mediation or ADR source up until the time of your cancellation. 

Canceling your request for mediation does not affect your rights to seek an appeal with the NAD 

as discussed in our original decision letter.
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-H

Page 1 of 2

ATTACHMENT 1-H

ATTACHMENT FOR NOTIFYING CUSTOMERS THAT REQUEST 

MEDIATION OR ALTERNATIVE DISPUTE RESOLUTION (ADR) OF 

POTENTIAL SERVICE PROVIDERS

This replies to your request for mediation or ADR services. Attached you will find a list of 

mediation and ADR providers. You will need to select one of the sources from the list, or you 

may provide the name of another independent mediation or ADR source. You must provide this 

office, in writing, with the name of the provider within 10 days. Rural Development will then 

contact the source and provide photocopies of the adverse decision letter and any other relevant 

information. We will also request that the mediation or ADR provider conduct a teleconference 

between the parties.

If we do not receive your selection of a mediator or ADR provider within 10 days, we will 

consider such inaction to be your notice to cancel your request for mediation or ADR. You may 

continue to pursue an appeal to the NAD as outlined in our original adverse decision letter.

As indicated in our original adverse decision letter, there may be a cost for these services. The 

estimated cost for this service is:

$ You will be advised directly by the mediation or ADR source of the full 

cost of this service. This is only an estimate and may vary depending upon the issues and 

complexity of the case. If you decide not to pursue mediation or ADR, you must 

immediately contact this office and the above-mentioned mediation or ADR provider.

Rural Development will:

Contribute 50 percent towards the cost. The balance of the cost will have to be 

paid from your own resources.

Cannot contribute towards the cost as the Agency does not have the financial 

resources. You must pay the full cost from your own personal resources.

Contribute towards the cost. The balance of the cost will have to be paid 

from your own personal resources.

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 date 

you received notice of 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 

NAD; however, an NAD appeal hearing would take place after mediation or ADR.
HB-1-3560

Attachment 1-H 

Page 2 of 2

Remember, if you decide not to pursue mediation or ADR, you must immediately contact this 

office to cancel your request. Canceling your request for mediation does not affect your rights to 

seek an appeal with the NAD as discussed in our original decision letter.
HB-1-3560

(02-24-05) SPECIAL PN

Attachment 1-I 

Page 1 of 2

ATTACHMENT 1-I

ATTACHMENT FOR NOTIFYING CUSTOMERS THAT MEDIATION OR 

ALTERNATIVE DISPUTE RESOLUTION (ADR) DID NOT RESULT IN 

RESOLUTION OF ISSUES

We regret that we are unable to grant the assistance you requested or will terminate or reduce the 

assistance you requested. Mediation or ADR did not result in resolution of the issues.

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

appeal by the NAD. There is no cost for an appeal. The number of days in which you have to 

request an appeal depends upon whether you previously requested an appeal to NAD prior to 

entering into mediation or ADR. Please follow the guidance in the paragraph indicated with an 

“X”.

You requested an appeal hearing to NAD prior to entering into mediation or ADR. You must 

write to the Assistant Director of NAD at the following address to schedule the appeal hearing:

NAD Assistant Director address:

You did not request an appeal hearing to NAD prior to entering into mediation or ADR. You 

must write to the Assistant Director of NAD at the following address. Your request must be 

postmarked within days from receipt of this letter. This represents the difference between 

30 days and the number of days you took after the adverse decision to request mediation or

ADR. Use the NAD Assistant Director address is listed above.

Information regarding appeals

You have the right to an appeal hearing within 45 days of NAD’s 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 nonconfidential 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,
HB-1-3560

Attachment 1-I 

Page 2 of 2

any written statements or evidence you may provide, and any additional information the Hearing 

Officer thinks necessary.

The Federal ECOA prohibits creditors from discriminating against credit applicants on the basis 

of race, color, religion, national origin, sex, marital status, age (provided the applicant has the 

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

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

right under the Consumer Credit Protection Act. The Federal agency that administers compliance 

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

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

Commission, Washington, D.C. 20580

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

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

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

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

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

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

cc: NAD Assistant Director