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14.4 AGENCY ACTIONS – SHORTAGE OF FUNDS
The following actions will be taken by the Agency when program funding is limited:
A. Agency Actions When Funds Are Not Available
The National Office will keep lenders and Agency staff apprised of the potential for a shortage of available funds. If funds become limited, the Agency will allocate funds in accordance with the percentage obligated in the prior year under a Continuing Resolution or based on the basic allocation formula in RD Instruction 1940-L for the current fiscal year.
Agency staff will place the request on a waiting list and notify the lender that a delay is expected. Applicants who qualify for a preference as a first-time homebuyer or as a veteran will be placed on the waiting list above those without such a preference, in the order received. All other applicants will be placed on the waiting list in date-order below those who qualify for preferences.
Loan guarantee requests will remain on the waiting list until funds become available or the lender withdraws the request, whichever is first.
If the request is received after funds are exhausted, the Agency will notify the lender that the loan guarantee request may be deferred until the following fiscal year. Approval officials will keep lenders aware of actions to be taken. If there is a possibility that funds will soon be available, the request for guarantee may be reviewed. The lender should be notified if the Agency cannot honor normal turn-around times. Complete applications will be reviewed and funded (as appropriate) on a “first-come first-served” basis. Incomplete applications will be returned and may be resubmitted. Lenders should be advised of the reason the application is being returned, and what is required to complete the application. The approving office is responsible for keeping the lender abreast of the status of the applications submitted and any availability of funds.
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B. Agency Actions When Funds Are Not Available – Conditional Commitments
Subject to Availability of Funds
When funds are not available, the National Office may authorize issuing Conditional Commitments “subject to receipt of congressionally appropriated funds.” In such cases, when in the best interest of the Government, the Agency will continue to issue Conditional Commitments.
When issuing Conditional Commitments that are contingent upon the availability of congressionally appropriated funds, Agency personnel will include a specific condition stating that the funds are currently unavailable and outlining the expected actions from lenders during the interim period. The National Office will provide the authorized statement for commitments subject to funding, which will be included in the Conditional Commitment generated by the system. Subsequently, once a Conditional Commitment is initially issued with the “subject to availability of funds” language, it will be reissued to the lender after funds have been obtained and obligated, with the “subject to availability of funds” language removed from the Conditional Commitment.
Lenders may close these loans provided they fulfill all the conditions stated on the Conditional Commitment. The Agency will not be able to issue a Loan Note Guarantee until funding becomes available. When funding becomes available, the lender must make a certification there has been no adverse change in the borrower’s financial condition since issuance of the Conditional Commitment. A lender must certify to the Agency, using the process provided on Form RD 3555-18, Conditional Commitment for Single Family Housing Loan Guarantee, that there have been no adverse changes in the borrower’s financial condition since the Conditional Commitment was issued by the Agency. The lender will assume all risk of loss until funds become available and the Agency issues the Loan Note Guarantee.