Page 50
4.11 WITHDRAWAL OF APPROVAL
A lender’s approval to participate in the SFHGLP does not expire if the lender is an active program participant who is complying with Agency guidelines, continues to meet the criteria of Form RD 3555-16, Agreement for Participation in Single Family Housing Guaranteed/Insured Loan Programs of the United States Government, and remains an eligible lender with Fannie Mae, Freddie Mac, HUD, VA, or other lender approval criteria explained in Section 3.2 of Chapter 3 of this Handbook. The Agency will perform a review on a two year basis to recertify the lender’s on-going eligibility. When the Agency withdraws approval, the Agency retains the right to pursue debarment and other legal actions, as appropriate.
A. Criteria to Withdraw Approval
A lender’s approval may be withdrawn when the lender is neither servicing loans guaranteed under the program, does not hold SFHGLP loans, nor has originated a SFHGLP loan in the previous 24 months. Updated training to ensure a lender’s continued knowledge of the program may be required when lenders originated a small number of loans in the previous 24 months.
The Agency will withdraw a lender’s approval if the lender experiences uncorrected performance problems. The Agency will notify the lender in writing of the reasons for the termination and of its appeal rights as described in Appendix 3 of this Handbook. If a lender chooses to stop participating in the SFHGLP, the lender should notify the Agency in writing.
B. Sale of Loans upon Termination
Upon the Agency’s termination of a lender’s approval, any SFHGLP loans held by the lender must be sold within six months to an Agency-approved lender. Failure to sell the loans can result in the Agency withdrawing its guarantee from the loans. If poor loan quality prevents the sale, the lender may continue to hold the SFHGLP loans in its portfolio; however, it must contract with an Agency-approved lender to conduct all
(03-09-16) SPECIAL PN 4-8 Revised (08-05-25) PN 649 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
Page 51
servicing activities and give proper notifications to the Agency.