§ 3555.51 Lender eligibility. A lender must meet the requirements described in this section to be approved for participation in the SFHGLP. ( a ) *Ability to underwrite and service loans.* The lender must have a demonstrated ability to underwrite and service single-family home loans. A lender will be considered to have such a demonstrated ability if it qualifies as one of the following: ( 1 ) A State Housing Agency;
( 2 ) A lender approved as a supervised or nonsupervised mortgagee by HUD with direct endorsement authority for submission of applications for Federal Housing Mortgage Insurance;
( 3 ) A supervised or nonsupervised mortgagee with authority to close VA-guaranteed loans on the automatic basis;
( 4 ) A lender approved by Fannie Mae for single-family loans;
( 5 ) A lender approved by Freddie Mac for single-family loans;
( 6 ) A Farm Credit System institution that provides documentation of its ability to underwrite and service single-family loans. Lenders who are a Farm Credit System lender with direct lending authority meet demonstrated ability;
( 7 ) A lender participating in other Rural Development or Farm Service Agency guaranteed loan programs that provide documentation of its ability to underwrite and service single family loans. Documentation criteria for other Rural Development or Farm Service Agency guarantee loan programs require an active lender agreement; or
( 8 ) A Federally supervised lender that provides documentation of its ability to originate, underwrite, and service single-family loans. Acceptable sources of supervision include: ( i ) Being a member of the Federal Reserve System.
( ii ) The Federal Deposit Insurance Corporation (FDIC).
( iii ) The National Credit Union Administration (NCUA).
( iv ) The Office of the Comptroller of the Currency (OCC).
( v ) The Federal Housing Finance Board regulating lenders within the Federal Home-Loan Bank (FHLB) system.
( 9 ) If lenders cannot meet the requirements under paragraphs (a)(1) through (8) of this section, they may demonstrate its ability to originate and underwrite loans by submitting appropriate documentation, examples of which include, but are not limited to: ( i ) A summary of residential mortgage lending activity.
( ii ) Written criteria outlining the lender's policy and procedures for originating, underwriting and closing residential mortgage loans.
( iii ) Evidence of an experienced loan underwriter on staff.
( iv ) Certification the lender will contract with an Agency-approved lender meeting the criteria to participate in the program as a servicer.
( 10 ) A lender that proposes to service loans that cannot meet paragraphs (a)(1) through (8) of this section must demonstrate its ability by submitting appropriate documentation, examples of which include but are not limited to: ( i ) Evidence of a written plan when contracting for escrow services.
( ii ) Evidence the lender has serviced single-family residential mortgage loans in the year prior to request lender approval to participate in the SFHGLP.
( 11 ) The financial requirements for non-supervised lenders not covered in paragraph (a)(8), must have: ( i ) A minimum adjusted net worth of $250,000, or $50,000 in working capital plus one percent of the total volume in excess of $25 million in guaranteed loans originated, serviced, or purchased during the lender's prior fiscal year, up to a maximum required adjusted net worth of $2.5 million, and
( ii ) One or more lines of credit with a minimum aggregate of one million dollars.
( b ) *SFHGLP participation requirements.* Lenders and their agents must comply with the following requirements: ( 1 ) Keep up to date, and comply with, all Agency regulations and handbooks, including all amendments and revisions of program requirements and policies. Lenders must also comply with all other applicable federal, state, and local laws, rules, and requirements, including those under the purview of the Consumer Financial Protection Bureau, such as the Real Estate Settlement Procedures Act and the Truth in Lending Act. Lenders who originate a minimal number loans, as determined by the Agency, in a 24 month time frame may be required to take updated training to ensure a lender's continued knowledge of the program;
( 2 ) Regularly check Rural Development's Web site for new issuances related to the program;
( 3 ) Underwrite loans according to Rural Development regulations and process and approve loans in accordance with program instructions;
( 4 ) Review loan applications for accuracy and completeness,
( 5 ) Ensure that applicant income limits are not exceeded;
( 6 ) Ensure that borrowers have adequate loan repayment ability and acceptable credit histories;
( 7 ) Ensure that loss claims include only supportable costs;
( 8 ) Cooperate fully with Agency reporting and monitoring requirements;
( 9 ) Comply with limitations on loan purposes, loan limitations, interest rates, and loan terms;
( 10 ) Inform Rural Development immediately after the sale, transfer, or change of servicers of any Agency guaranteed loan;
( 11 ) Maintain reasonable and prudent business practices consistent with generally accepted mortgage industry standards, such as maintaining fidelity bonding;
( 12 ) Remain responsible for servicing even if servicing has been contracted to a third party;
( 13 ) Use Rural Development, HUD, Fannie Mae, or Freddie Mac forms, unless otherwise approved by Rural Development;
( 14 ) Maintain eligibility under paragraph (a) of this section;
( 15 ) Notify Rural Development if there are any material changes in organization or practices;
( 16 ) Be neither debarred nor suspended from participation in Federal programs, not debarred, suspended or sanctioned under state licensing and certification laws and regulation;
( 17 ) Notify Rural Development in the event of its bankruptcy or insolvency;
( 18 ) Remain free from default and delinquency on any debt owed to the Federal government;
( 19 ) Allow Rural Development or its representative access to the lender's records, including, but not limited to, records necessary for on-site and desk reviews of the lender's operation and the operations of any of its agents to verify compliance with Agency regulations and guidelines;
( 20 ) Maintain adequate operational quality control and reporting procedures to prevent mortgage fraud;
( 21 ) Maintain complete loan files with all required documentation that is accessible by the Agency upon request for review; and
( 22 ) Execute a lender's agreement provided by Rural Development.
( 23 ) Provide documentation as required by the Agency to be reviewed every two years for lender participation and,
( 24 ) Provide evidence that principal officers have a minimum of two years of experience in originating or servicing guaranteed mortgage loans as recommended in OMB Circular A-129.
[78 FR 73941, Dec. 9, 2013, as amended at 84 FR 70886, Dec. 26, 2019; 87 FR 53371, Aug. 31, 2022]