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1.11 UNAUTHORIZED ASSISTANCE
Unauthorized assistance occurs when a borrower is not eligible for all or part of the financial assistance received in the form of a loan guarantee. Loans made to unqualified borrowers or made for an ineligible purpose are considered unauthorized assistance. The form of unauthorized assistance can differ based upon false information or inaccurate information.
Unauthorized assistance may be identified through audits, reviews by the Agency or its agents, or as reported by lenders. Chapter 16, Attachment 16-B provides guidance for submitting lender self-reports. The significance of the unauthorized assistance will determine the Agency’s response in accordance with Section 3555.257 of 7 CFR Part 3555.
When the Agency becomes aware of unauthorized assistance due to false information provided by the applicant, the lender may be required to accelerate the loan request.
(03-09-16) SPECIAL PN 1-9 Revised (06-24-22) PN 563
Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract. USDA may not cite, use, or rely on any guidance that is not available through their guidance portal, except to establish historical facts.
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Failure of the lender to accelerate the loan may result in reduction of a loss claim and/or voiding the guarantee. Based upon the severity, the Agency may pursue criminal and civil false claim actions, suspension and/or debarment, or other appropriate actions.
The Agency will document the findings surrounding the unauthorized assistance in detail and provide a solution on disposition of the case.