Rule2026-05387
Single Family Housing Guaranteed Loan Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 19, 2026
Effective
June 17, 2026
Issuing agencies
Agriculture DepartmentRural Housing Service
Abstract
The Rural Housing Service (RHS or Agency), a Rural Development (RD) Agency within the United States Department of Agriculture (USDA), is amending its regulations to grant Delegated Lenders participating in the Single-Family Housing Guaranteed Loan Program (SFHGLP) the authority to make loans and obtain Loan Note Guarantees after closing using automated loan underwriting and closing systems.
Full Text
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<title>Federal Register, Volume 91 Issue 53 (Thursday, March 19, 2026)</title>
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[Federal Register Volume 91, Number 53 (Thursday, March 19, 2026)]
[Rules and Regulations]
[Pages 13211-13217]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05387]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 91, No. 53 / Thursday, March 19, 2026 / Rules
and Regulations
[[Page 13211]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3555
[Docket Number RHS-21-SFH-0017]
RIN 0575-AD08
Single Family Housing Guaranteed Loan Program
AGENCY: Rural Housing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Housing Service (RHS or Agency), a Rural Development
(RD) Agency within the United States Department of Agriculture (USDA),
is amending its regulations to grant Delegated Lenders participating in
the Single-Family Housing Guaranteed Loan Program (SFHGLP) the
authority to make loans and obtain Loan Note Guarantees after closing
using automated loan underwriting and closing systems.
DATES: Effective date: This Final rule is effective June 17, 2026.
Implementation will occur on September 28, 2028. The Agency will
publish a notice in the Federal Register prior to implementation.
FOR FURTHER INFORMATION CONTACT: Sara Thieleke, Deputy Director, Single
Family Housing Guaranteed Loan Division, Rural Development, U.S.
Department of Agriculture, STOP 0784, South Agriculture Building, 1400
Independence Avenue SW, Washington, DC 20250-0784. Telephone: (314)
457-5242; or email: <a href="/cdn-cgi/l/email-protection#01726073602f756968646d646a6441747265602f666e77"><span class="__cf_email__" data-cfemail="73001201125d071b1a161f16181633060017125d141c05">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Abbreviations
CFR Code of Federal Regulations
DA Delegated Authority
FHA Federal Housing Administration
FR Federal Register
OMB Office of Management and Budget
RHS Rural Housing Service
Sec. Section
SFHGLP Single Family Housing Guaranteed Loan Program
UMRA Unfunded Mandates Reform Act of 1995
U.S.C. United States Code
USDA U.S. Department of Agriculture
VA Department of Veterans Affairs
Background
The RHS administers the Single-Family Housing Guaranteed Loan
Program (SFHGLP) that provides a 90 percent Loan Note Guarantee to
approved lenders in order to reduce the lender's risk of extending
loans to low- and moderate-income households in rural areas. The RHS is
issuing a Final rule to amend the SFHGLP regulation, 7 CFR part 3555,
by adding Sec. 3555.55 which provides the requirements for delegated
approval authority.
The changes being implemented through the Final rule will
accelerate approval processing timeframes to the benefit of applicants,
Delegated Lenders, and the Agency. Lenders meeting the defined criteria
will be able to apply for delegated lender status that allows the
Delegated Lender to approve SFHGLP loans and obtain Loan Note
Guarantees with limited-to-no Agency involvement.
The updates align the SFHGLP with other Federal Agencies that have
already moved to the delegated process to leverage the processing power
and expertise of private-sector lenders.
Discussion of Public Comments
The Rural Housing Service (RHS) published a proposed rule on August
4, 2022, (87 FR 47646) to amend the current regulations for the Single-
Family Housing Guaranteed Loan Program (SFHGLP) regulation found in 7
CFR part 3555. The Agency received comments from 41 respondents, of
which one was not applicable to the contents of the rule. Of the
comments received, 30 were from mortgage lenders, one was from a public
assistance agency, and ten were from other members of the public.
The following is a summary of the relevant comments:
Public Comment: Twenty-seven respondents replied that they were in
favor of the proposed rule, many indicating that the time savings and
efficiencies that will be realized with delegated authority will result
in faster and better service to customers, will even the playing field
for homebuyers utilizing the SFHGLP, and will align the program with
other Agencies, including FHA and VA.
Agency's Response: The Agency appreciates the support and has
determined no action is required.
Public Comment: One respondent replied in favor of the proposed
rule as long as it is exercised with due diligence with consequences in
place for lenders violating program requirements.
Agency Response: The Agency appreciates the support of the proposed
rule. As part of the rule, the Agency has incorporated a Lender
Oversight process specifically for Delegated Lenders to monitor
adherence to Agency loan program requirements found in 7 CFR part 3555.
This includes reviews of multiple elements of the mortgage origination
and servicing processes based on the review of a representative sample
of loans, financial requirements, and portfolio performance, among
other requirements. In addition to scheduled reviews, the Agency will
conduct continuous monitoring of lender performance and adherence to
the requirements for Delegated Authority outlined in 7 CFR part 3555.
Public Comment: Two respondents replied that it is important to
maintain the ability to submit files to the Agency for review on a
case-by-case basis, such as when there is a unique situation or
circumstance.
Agency Response: The Agency appreciates the commenters' suggestion
and anticipates allowing Delegated Lenders to submit files to the
Agency for review and approval, in some circumstances.
Public Comment: Two respondents replied that in order to alleviate
the responsibility of the Delegated Lender to ensure loans meet the
guidelines of 7 CFR part 3555, the Agency should consider solely
delegating the initial loan approval and issuance of the Conditional
Commitment to Delegated Lenders and retain the responsibility for
issuance of the Loan Note Guarantee.
Agency Response: The Agency appreciates the commenters' suggestion.
Approved lenders and their agents are required by 7 CFR part 3555,
Section 3555.51(b) to underwrite loans according to RD regulations,
which includes reviewing loan applications for accuracy and
completeness; ensuring the applicable income limits are not exceeded;
ensuring adequate repayment ability and credit history; and ensuring
the loan complies with limitations on
[[Page 13212]]
loan purposes, loan limitations, interest rates, and loan terms. Thus,
the approved lender is responsible for ensuring compliance with 7 CFR
part 3555 whether they utilize delegated authority or continue with the
current process. Furthermore, delegated authority will not be mandated.
Any lender who does not wish to participate in delegated authority may
continue to operate as they do today.
Public Comment: One respondent replied they would not like
Delegated Lenders to have the responsibility for issuing Loan Note
Guarantees due to already excessive workload and the possibility of
errors.
Agency Response: The Agency appreciates the commenter's concern.
The Agency intends for the process of obtaining a Loan Note Guarantee
to be entirely electronic, with minimal work required by the Delegated
Lender. However, delegated authority will not be mandated. Any lender
who does not wish to participate in delegated authority may continue to
operate as they do today.
Public Comment: One respondent replied that due to the specific
income calculations involved, delegated authority may be difficult
without oversight to catch errors in a timely manner.
Agency Response: The Agency appreciates the commenter's response.
Approved lenders and their agents are required by 7 CFR 3555.51(b) to
underwrite loans according to RD regulations, which includes ensuring
the applicable income limits are not exceeded and there is adequate
repayment ability. The approved lender is responsible for ensuring
compliance with 7 CFR part 3555 whether they utilize delegated
authority or continue with the current process. To monitor compliance,
the Agency has incorporated a Lender Oversight process specifically for
Delegated Lenders to verify adherence to Agency loan program
requirements found in 7 CFR part 3555.
Public Comment: One respondent replied that this lending should
only be available for buying existing homes or homes damaged by fire or
flood. No taxpayer money should be used to build new homes as rural
areas do not want growth.
Agency Response: The Agency appreciates the commenter's response.
This rule addresses the processing of loan applications and is not
amending the current loan purposes that are eligible under the SFHGLP.
The Agency has determined no action is required.
Public Comment: One respondent replied with concerns that the
Agency would be unable to ensure Delegated Lenders are only assisting
low- and moderate-income households in rural areas.
Agency Response: The Agency appreciates the commenter's response.
Approved lenders and their agents are required by 7 CFR 3555.51(b) to
underwrite loans according to RD regulations, which includes ensuring
the applicable income limits are not exceeded, and the loan complies
with all loan limitations, including being located in an eligible rural
area. Delegated Lenders will be required to use the Agency's automated
underwriting system for supported loan types, which identifies if the
income exceeds the maximum income limit, or if the property is not
located in an eligible rural area. In addition, the Agency has
incorporated a Lender Oversight process specifically for Delegated
Lenders to monitor adherence to Agency loan program requirements found
in 7 CFR part 3555. The Agency has determined no action is required.
Public Comment: One respondent replied with concerns of predatory
lending practices due to the lack of accountability and oversight under
delegated authority.
Agency Response: The Agency appreciates the commenter's response.
As part of the rule, the Agency has incorporated a Lender Oversight
process specifically for Delegated Lenders to monitor adherence to
Agency loan program requirements found in 7 CFR part 3555. This
includes reviews of multiple elements of the mortgage origination and
servicing processes based on the review of a representative sample of
loans, financial requirements, and portfolio performance, among other
requirements. If a lender fails to meet the established standards, the
Agency may revoke their Delegated Lender status.
Public Comment: One respondent expressed support of the proposal
but expressed encouragement that the Agency remain engaged with
industry stakeholders throughout the development and implementation of
these changes.
Agency Response: The Agency appreciates the commenter's suggestion
and agrees that collaboration with industry stakeholders throughout the
planning and implementation process will be critical to the success of
this initiative.
Public Comment: One respondent expressed support of the proposal
and provided additional responses to the questions posed in the
proposed rule. The respondent indicated a three-year rollout would be
appropriate assuming it is expanded each year to include additional
lenders and recommended the Agency retain the current process for loan
application review and approval as an option. The respondent
recommended the Agency could include a specific loan volume requirement
for participation in delegated authority, such as 25 percent of the
lender's portfolio being USDA loans, or a set number (such as ten
closed loans in the past two years). The respondent agreed with the
identified alternatives and benefits, as well as stated that
implementation would unquestionably result in a cost savings to
lenders, both directly and indirectly. The respondent also agreed the
post-closing review sample size and timeframe were reasonable, and
indicated they were unaware of any additional implementation costs not
already considered.
Agency Response: The Agency appreciates the commenter's response
and has incorporated the feedback, including the proposed roll-out
period; cost savings; and review requirements, into the Final Rule.
Public Comment: One respondent expressed support of the proposal
and provided additional responses to the questions posed in the
proposed rule. The respondent indicated the proposed three-year rollout
seemed excessive as lenders selected for early implementation would
have a competitive advantage. The respondent indicated that financial
eligibility of the lender should be considered as part of the approval
process, and there is not a need to maintain manual underwriting under
the current process. In consideration of the alternatives cited, the
respondent indicated full delegation is needed and although there will
be cost savings with delegated authority, it is difficult to quantify.
The respondent agreed with the two-year lender review timeframe,
however, did not agree with the 2 percent sample size being used across
the board and indicated it should be determined based on the loan
volume of the lender. The respondent identified that a lender loan loss
reserve increase may result in additional costs to the lender, due to
additional risk.
Agency Response: The Agency appreciates the commenter's response.
While we understand the concerns, the Agency believes a three-year
rollout is necessary to exercise control over the number of loans
guaranteed by Delegated Lenders during the implementation period to
provide the opportunity to review processes and analyze the performance
and compliance of loans generated under delegated authority. An
expedited
[[Page 13213]]
rollout will be considered, if feasible. The Agency appreciates the
recommendation on the lender oversight sample size, which has been
considered in the development of the Final rule. The Agency
acknowledges the respondent's concern that delegated authority may
result in a lender loan loss reserve increase. However, one of the
approval criteria for Delegated Lenders includes reaching higher
performance metrics than average, while also relying on lenders to make
sound underwriting decisions. As a result, we do not anticipate loans
processed under delegated authority to have significant additional risk
to lenders than those utilizing the current process. Furthermore,
delegated authority will not be mandated. Any lender who does not wish
to participate in delegated authority may continue to operate as they
do today.
Summary of Rule Changes
Upon implementation of the Final rule, loan approval and issuance
of the Loan Note Guarantee will be delegated to the Delegated Lender.
Delegated Lenders will be required to use Agency automated loan
underwriting and closing systems to originate, process, close, and
service loan applications in accordance with the published regulations
and handbook guidance. In this respect, the Delegated Lender will act
as the Agency and will require limited-to-no Agency involvement in the
pre-closing loan approval process and post-closing issuance of the Loan
Note Guarantee. The Delegated Lender will approve the loan in the
Agency's automated system for all supported loan types. With delegated
authority, Conditional Commitments will not be required, and the
provisions of Sec. 3555.107(f) for issuance of the Conditional
Commitment will not be applicable. After loan closing, Delegated
Lenders will continue to adhere to the proper loan closing procedures
under Sec. 3555.107(i) and (j) for issuance of the Loan Note
Guarantee. The Agency will remove Sec. 3555.107(i)(5) which provides
lenders a self-certification option in lieu of submitting full
documentation. Delegated Lenders will retrieve the Loan Note Guarantee
from the Agency's automated system, which will have the same force and
effect as a Loan Note Guarantee issued directly by the Agency. The Loan
Note Guarantee will be supported by the full faith and credit of the
United States, as provided in Sec. 3555.108, regardless of whether the
Loan Note Guarantee is obtained by a Delegated Lender through the
Agency's automated system, or from the Agency directly. Therefore,
unless provided otherwise or inapplicable, the Delegated Lender will be
responsible for ensuring that both the applicant and the property meet
the eligibility requirements and certification for the loan guarantee
under subparts C, D, and E of 7 CFR part 3555 and the environmental
requirements in Sec. 3555.5.
The Agency is modifying the procedures for Delegated Lenders as
follows:
Environmental Reviews--SFHGLP loans are generally considered to
meet the requirements for a categorical exclusion from the
environmental review process described in 7 CFR 3555.5 and 7 CFR part
1970, absent any extraordinary circumstances. If there is an
extraordinary circumstance, the Delegated Lender must notify the Agency
to decide the appropriate course of action.
Appraisal Reviews--Agency administrative appraisal reviews under
Sec. 3555.107(d)(4) are inapplicable to loans approved via delegated
authority. Delegated Lenders are responsible for ensuring that
appraisal reports meet all requirements under Sec. 3555.107(d).
Application priority processing--The requirements under Sec.
3555.107(a) for prioritizing applications do not apply to Delegated
Lenders.
When a conflict of interest is disclosed by either the borrower or
a RD employee, as described in Sec. 3555.8, the Delegated Lender is
required to document the disclosure in the permanent loan file. A
Delegated Lender remains responsible for documenting any conflict of
interest. However, since Delegated Lenders will process pre-closing and
post-closing activities with limited-to-no Agency assistance,
reassignment of the application as described in Sec. 3555.8(d) is not
necessary.
Upon implementation, the Agency will be able to deliver the program
more efficiently with fewer FTEs. The changes, which align Agency
processes with industry standards, will streamline processes, and
provide faster and better service to low- and moderate-income
borrowers, resulting in earlier home move-in dates.
RHS will delegate pre-closing loan approval and post-closing
guarantee issuance authority to Delegated Lenders that meet specific
requirements for portfolio performance and underwriting capability. The
Agency is not changing basic lender eligibility requirements, as
outlined in 7 CFR 3555.51, ``Lender Eligibility,'' but rather adding a
section to define a Delegated Lender as an entity with delegated
authority (DA) approval.
RHS will add Sec. 3555.55, ``Delegated Lenders,'' to delegate the
authority to approve and execute loan guarantees with limited-to-no
involvement of Agency staff. Paragraphs (a) and (b) outline
requirements for lenders to qualify for Delegated Lender status, which
include meeting the general lender eligibility requirements in Sec.
3555.51, participation in the SFHGLP for at least the previous two
years, and higher than average performance standards in delinquency,
default, and loss claim rates for that two-year period prior to
approval, among other requirements. Delegated Lenders need to maintain
general lender eligibility under Sec. 3555.51 as well as the higher
performance metrics in delinquency, loss claim, and default rates,
among other requirements, to retain delegated lender status, which will
be evaluated at least every two years. The Agency may adjust, modify,
or cancel the delegated lender program based on overall program
considerations such as budget, program performance, and program
integrity. In the event that modifications are made to the performance
metrics for new Delegated Lenders, existing Delegated Lenders will
retain their status, and the Agency will provide a reasonable timeframe
to meet the new performance metrics in order to continue retaining
delegated lender status. The Agency will be performing a controlled
rollout for the delegated authority of Delegated Lenders to foster a
smooth implementation. The rollout will be phased-in to allow the
Agency some control over the number of loans guaranteed by Delegated
Lenders over a period of at least three years after implementation of
the Final rule. The Agency will then evaluate the performance of the
process, the efficiency of the process, and make any necessary
adjustments to the process. The Agency will continue to phase in new
lenders as the process is refined. The number of lenders approved for
delegated lender status will be contingent on the progress of the
Agency's systems modifications, staff reductions, portfolio
performance, and the timeliness of implementing enhanced lender
oversight and monitoring. Full implementation is expected by the end of
the third year of the implementation period.
Paragraphs (a) and (b) outline the conditions under which a
lender's delegated status may be removed. As stated in paragraph (a),
the Agency has the right to suspend or terminate any lender's delegated
status for reasons including, but not limited to, approving loans that
do not meet Agency loan program guidelines; providing data to the
Agency's automated underwriting
[[Page 13214]]
system which is not supported by documentation retained by the lender;
maintaining a portfolio that does not meet the established delinquency,
loss claim, and default rate performance metrics, among other
requirements; and an inability to meet the criteria described in Sec.
3555.51, ``Lender Eligibility.''
The Agency will enhance its current lender monitoring and oversight
for Delegated Lenders from two perspectives: (1) Continue to monitor
Performance--regular collection and analysis of loan level data and
performance, and (2) Increase Lender Oversight--on-site and off-site
reviews.
(1) Monitoring Performance
Loan level data is collected from lenders each month through the
Electronic Status Reporting system. This data is compiled, reviewed,
and monitored by the Agency every month to determine portfolio
performance as well as risks and trends in delinquency, default, and
loss claim rates. This loan level data will be collected and analyzed
for Delegated Lenders to provide the Agency with information regarding
the performance of Delegated Lenders.
(2) Lender Oversight (LO) Reviews
The Agency's Quality Assurance and Lender Oversight Division will
institute a regular LO process specifically for Delegated Lenders to
monitor adherence to Agency loan program requirements found in 7 CFR
part 3555 and continuing eligibility for the program. The process
consists of reviews of multiple elements of the mortgage origination
and servicing processes based on the review of a representative sample
of loans, financial requirements, and portfolio performance, among
other requirements. A report will be provided, and findings and
observations will be recorded and reported back to the lender or
servicer, along with any suggestions for improvement. If necessary, the
lender will have the opportunity to incorporate a Corrective Action
Plan (CAP) to resolve any deficiencies, and will be counseled, offered
training, and given the opportunity to improve. Recurring findings
identified through the LO process may result in additional reviews and
may adversely affect a lender's delegated lender status.
To bolster the Agency's efforts to perform robust monitoring and
lender oversight across the program (not just for Delegated Lenders),
this Final rule also eliminates the self-certification option at Sec.
3555.107(i)(5). The Agency is unaware of any lenders using the option
to self-certify instead of submitting complete loan closing
documentation. Furthermore, the Agency has determined that such option
would be inappropriate in balancing the streamlining of the program
with risk mitigation and is eliminating the option so that the Agency
would have easier and direct access to loan documents.
Sec. 3555.55(f) will provide the Agency with the authority to
revoke the Delegated Lender status of those lenders that fail to meet
the delegated lender criteria. This revocation is distinct from
termination of the program as an approved lender under Sec. 3555.52.
However, if the Agency pursues termination of a Delegated Lender's
participation under Sec. 3555.52, the Agency need not separately
pursue a separate revocation of Delegated Lender status, as termination
from the program would automatically revoke delegated lender status.
Taken together, this Final rule continues the Agency's efforts to
streamline and improve delivery of the SFHGLP while providing measures
to mitigate risk. Agency approval of a lender for Delegated Authority
does not create or imply a warranty or endorsement by the Agency of the
approved lender, or its employees, nor does it represent a warranty of
any service provided by the lender or any employee of the lender.
Statutory Authority
Section 201 of the Housing Opportunity Through Modernization Act of
2016 (Pub. L. 114-201) (42 U.S.C. 1472(h)(18)) authorizes the Secretary
to delegate loan approval authority to certain preferred lenders, and
Section 510(k) of Title V of the Housing Act of 1949 (42 U.S.C.
1480(k)), as amended, authorizes the Secretary of the Department of
Agriculture to promulgate rules and regulations as deemed necessary to
carry out the purpose of that title.
Executive Orders 12866 and 13563
Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the costs and benefits of available regulatory alternatives and, if a
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
This Final rule has been designated a ``significant regulatory
action,'' under section 3(f) of Executive Order 12866. Accordingly, the
rule has been reviewed by the Office of Management and Budget (OMB).
In accordance with Executive Order 12866, a Regulatory Impact
Analysis (RIA) was completed, outlining the costs and benefits of
implementing this program in rural America. For a complete analysis,
please see the RIA on <a href="https://www.regulations.gov">https://www.regulations.gov</a> using docket number
RHS-21-SFH-0017.
Executive Order 14192, Unleashing Prosperity Through Deregulation
This Final rule is an Executive Order 14192 deregulatory action.
Details on the estimated cost savings of this proposed action can be
found in the accompanying RIA.
Executive Order 12988, Civil Justice Reform
This Final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. Except where specified, all state and local laws
and regulations that are in direct conflict with this rule will be
preempted. Federal funds carry federal requirements. No person is
required to apply for funding under SFHGLP, but if they do apply and
are selected for funding, they must comply with the requirements
applicable to recipients of SFHGLP federal financial assistance,
including all applicable nondiscrimination federal laws and
regulations. This Final rule is not retroactive. It will not affect
agreements entered into prior to the effective date of the rule. Before
any judicial action may be brought regarding the provisions of this
rule, the administrative appeal provisions of 7 CFR part 11 must be
exhausted.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for federal agencies to assess the
effect of their regulatory actions on state, local, and tribal
governments, and the private sector. Under section 202 of the UMRA, the
Agency generally must prepare a written statement, including a cost-
benefit analysis, for proposed and Final rules with ``federal
mandates'' that may result in expenditures to state, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of the UMRA generally requires the Agency to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome
[[Page 13215]]
alternative that achieves the objectives of the rule.
This Final rule contains no federal mandates (under the regulatory
provisions of Title II of the UMRA) for state, local, and tribal
governments, or the private sector. Therefore, this rule is not subject
to the requirements of sections 202 and 205 of the UMRA.
National Environmental Policy Act
In accordance with the National Environmental Policy Act of 1969,
Public Law 91-190, this Final rule has been reviewed in accordance with
7 CFR part 1b (``National Environmental Policy Act''). The Agency has
determined that: (i) this action meets the criteria established in 7
CFR; (ii) no extraordinary circumstances exist. Therefore, the Agency
has determined that the action does not have a significant effect on
the human environment, and therefore, neither an Environmental
Assessment nor an Environmental Impact Statement is required.
Executive Order 13132, Federalism
The policies contained in this Final rule do not have any
substantial direct effect on the states, the relationship between the
national government and the states, or the distribution of power and
responsibilities among the various levels of government. This Final
rule does not impose substantial direct compliance costs on state and
local governments. Therefore, consultation with the states is not
required.
Regulatory Flexibility Act
Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C.
605(b), the Agency certifies that this Final rule will not have a
significant economic impact on a substantial number of small entities.
The North American Industry Classification System (NAICS) classifies
small lenders in the following categories:
------------------------------------------------------------------------
NAICS U.S. industry Size standards in
NAICS code title millions of dollars
------------------------------------------------------------------------
522120........................ Savings $600 in assets.
Institutions.
522130........................ Credit Unions...... $600 in assets.
522190........................ Other Depository $600 in assets.
Credit
Intermediation.
522292........................ Real Estate Credit. $41.5.
522310........................ Mortgage and $8.0.
Nonmortgage Loan
Brokers.
------------------------------------------------------------------------
This Final rule affects lenders that utilize the SFHGLP and any
potential lenders that may utilize the program in the future. There are
approximately 1,873 lenders currently approved to utilize the SFHGLP.
The Agency does not maintain data that identifies the number of
approved lenders that would be considered small lenders, as defined
above. However, it is estimated that less than 3 percent of approved
SFHGLP lenders meet the criteria of a small lender.
The Final rule is an enhancement to the SFHGLP, providing an
opportunity for participating lenders to obtain delegated loan approval
authority. Applying to become a Delegated Lender is optional. Small
lenders, as described above, will be afforded the same opportunities to
become a Delegated Lender as large lenders. Lenders who choose not to
pursue delegated authority will continue to operate as they do today.
All lenders are required to maintain a permanent loan file on each
individual guaranteed borrower. This will remain a requirement for
lenders utilizing delegating authority, as well as those who do not.
This is typical for any mortgage loan product and is an action that is
completed in a lenders' normal course of business. This requirement is
consistent with standard mortgage industry practices and represents no
additional burden of recordkeeping placed upon the lender or public.
The qualifying factors involved in becoming a Delegated Lender will
be based on a lender's loan performance using the same criteria
regardless of the size of the lender. There are no costs assessed to
lenders to apply for delegated authority, to continue participation in
the program, or to receive Agency training.
The undersigned has determined and certified by signature on this
document, that this rule will not have a significant economic impact on
a substantial number of small entities, since this rulemaking action
does not involve a new or expanded program, nor does it require any
more action on the part of a small business than would be required of a
large entity.
Executive Order 12372, Intergovernmental Review of Federal Programs
This program is not subject to the requirements of Executive Order
12372, ``Intergovernmental Review of Federal Programs,'' as implemented
under USDA's regulations at 7 CFR part 3015.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
This proposed rule has been reviewed in accordance with the
requirements of Executive Order 13175, ``Consultation and Coordination
with Indian Tribal Governments.'' Executive Order 13175 requires
Federal agencies to consult and coordinate with tribes on a government-
to-government basis on policies that have tribal implications,
including regulations, legislative comments or proposed legislation,
and other policy statements or actions that have substantial direct
effects on one or more Indian tribes, on the relationship between the
Federal Government and Indian tribes or on the distribution of power
and responsibilities between the Federal Government and Indian tribes.
The Agency has determined that this proposed rule does not, to our
knowledge, have tribal implications that require formal tribal
consultation under Executive Order 13175. If a Tribe requests
consultation, the Rural Housing Service will work with the Office of
Tribal Relations to ensure meaningful consultation is provided where
changes, additions and modifications identified herein are not
expressly mandated by Congress.
Civil Rights Impact Analysis
RD has reviewed this Final rule in accordance with USDA Regulation
4300-4, ``Civil Rights Impact Analysis,'' to identify any major civil
rights impacts the rule might have on program participants on the basis
of age, race, color, national origin, sex, disability, or marital or
familial status. Based on the review and analysis of the rule and all
available data, issuance of this Final rule is not likely to negatively
impact low- and moderate-income populations, minority populations,
women, Indian tribes or persons with disability, by virtue of their
age, race, color, national origin, sex, disability, or marital or
familial status.
Programs Affected
The program affected by this Final rule is listed in the Assistance
Listing
[[Page 13216]]
(AL) (formerly Catalog of Federal Domestic Assistance) Number 10.410,
Very Low to Moderate Income Housing Loans and Loan Guarantees (Section
502 Rural Housing Loans).
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501, et seq.), the information collection activities associated with
this rule are covered under OMB Control Number 0575-0179. This Final
rule contains no new reporting or recordkeeping requirements that would
require approval under the Paperwork Reduction Act of 1995. Agency
forms currently required will be eliminated for Delegated Lenders. As a
result, the Agency anticipates a reduction in recordkeeping
requirements upon implementation of this rule.
E-Government Act Compliance
RD is committed to the E-Government Act, which requires Government
agencies in general to provide the public the option of submitting
information or transacting business electronically to the maximum
extent possible.
USDA Non-Discrimination Policy
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
offices, employees, and institutions participating in or administering
USDA programs are prohibited from discriminating based on race, color,
national origin, religion, sex, disability, age, marital status,
family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, staff office or the Federal Relay
Service at (800) 877-8339.To file a program discrimination complaint, a
complainant should complete a Form AD-3027, USDA Program Discrimination
Complaint Form, found online at <a href="https://www.usda.gov/sites/default/files/documents/ad-3027.pdf">https://www.usda.gov/sites/default/files/documents/ad-3027.pdf</a>, from any USDA office, by calling (866)
632-9992, or by writing a letter addressed to USDA. The letter must
contain the complainant's name, address, telephone number, and a
written description of the alleged discriminatory action in sufficient
detail to inform the Assistant Secretary for Civil Rights about the
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by
(1) Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; or
(2) Fax: (202) 690-7442; or
(3) Email: <a href="/cdn-cgi/l/email-protection#87d7f5e8e0f5e6eaa9cee9f3e6ece2c7f2f4e3e6a9e0e8f1"><span class="__cf_email__" data-cfemail="7d2d0f121a0f1c10533413091c16183d080e191c531a120b">[email protected]</span></a>.
USDA is an equal opportunity provider, employer, and lender.
List of Subjects in 7 CFR Part 3555
Administrative practice and procedure, Conflict of interest,
Credit, Environmental impact statements, Fair housing, Flood insurance,
Home improvement, Housing loan programs, Housing and community
development, Low- and moderate-income housing, Manufactured homes,
Mortgages, Reporting and recordkeeping requirements, Rural areas.
For the reasons discussed in the preamble, the Agency is amending 7
CFR part 3555 as follows:
PART 3555--GUARANTEED RURAL HOUSING PROGRAM
0
1. The authority citation for part 3555 continues to read as follows:
Authority: 5 U.S.C. 301; 42 U.S.C. 1471 et seq.
Subpart A--General
0
2. Amend Sec. 3555.10 by adding the definition of ``Delegated Lender''
in alphabetical order to read as follows:
Sec. 3555.10 Definitions and abbreviations.
* * * * *
Delegated Lender. An entity that meets the requirements under Sec.
3555.51 and has been delegated authority by the Agency to underwrite
and approve loans that meet the requirements of this part without prior
review and approval by Agency staff, unless provided otherwise in this
part.
* * * * *
Subpart B--Lender Participation
0
3. Add Sec. 3555.55 to read as follows:
Sec. 3555.55 Delegated Lenders.
(a) General requirements. The Agency may approve certain lenders
for Delegated Lender status as defined in Sec. 3555.10. The Delegated
Lender assumes the responsibility for meeting all loan requirements on
behalf of the Agency for the purposes of pre-closing loan processing,
loan approval, and post-closing issuance of loan guarantee under
subparts C, D, and E of this part with the following exceptions and
clarifications:
(1) Application priority processing procedures under Sec.
3555.107(a) are not applicable to applications processed by Delegated
Lenders.
(2) Delegated Lenders must ensure appraisals meet the requirements
under Sec. 3555.107(d); however, loans made by Delegated Lenders are
not subject to Agency administrative appraisal reviews prior to loan
approval under Sec. 3555.107(d)(4).
(3) The requirements relating to Conditional Commitments under
Sec. 3555.107(f) is not applicable to those lenders approved by the
Agency as Delegated Lenders under the provisions of this subpart.
(b) Modifications. The following regulatory provisions in subpart A
of this part are not applicable to Delegated Lenders or are modified as
described in paragraphs (b)(1) and (2) of this section:
(1) Applications processed by Delegated Lenders with a conflict of
interest under Sec. 3555.8 are not subject to the requirements under
Sec. 3555.8(d). The other paragraphs of Sec. 3555.8 still apply.
(2) Environmental reviews will be completed under Sec. 3555.5 and
7 CFR part 1970 prior to loan approval. SFHGLP loans are generally
considered to meet the requirements for a categorical exclusion from
the environmental review process described in the cited authorities,
absent any extraordinary circumstances. If there is an extraordinary
circumstance, the Delegated Lender must notify the Agency to decide the
appropriate course of action.
(c) Eligibility. Lenders must be approved to participate in the
SFHGLP as provided in Sec. 3555.51 and meet the following
requirements:
(1) Have participated in the SFHGLP for at least the previous two
years;
(2) Met the performance standards established by the Agency for
delinquency, default, loss claims, etc. for the previous two years; and
(3) Complete Agency sponsored training each year.
(d) Automated underwriting system. Delegated lenders must use the
Agency's automated underwriting system as described in Sec.
3555.107(b).
(e) Oversight. The Agency will monitor lender performance through
the regular use of loan level data and lender oversight and monitoring
reviews. If the lender is unwilling or unable to improve performance
within an acceptable
[[Page 13217]]
timeframe, the Agency may revoke Delegated Lender status.
(f) Termination of delegated authority. (1) The Agency may suspend
or terminate the lender's delegated status for reasons including, but
not limited to:
(i) Approving loans that do not meet Agency guidelines.
(ii) Providing data to the Agency's automated underwriting system
which is not supported by documentation retained by the lender.
(iii) Unacceptable portfolio performance as evidenced by
delinquency, loss claim, default rates, material deficiencies, or any
other performance metric established by the Agency; and
(iv) Noncompliance with other requirements described in Sec.
3555.51, or if the Agency determines that other good cause exists.
(2) Termination of a Delegated Lender's participation in the SFHGLP
under Sec. 3555.52 automatically revokes Delegated Lender status
without separate Agency action under paragraph (g) of this section.
(g) Revocation of delegated status. Delegated Lenders will retain
delegated status until revoked by the Agency or withdrawn by the
lender. If the Agency revokes the delegated authority of a Delegated
Lender, the Delegated Lender will be given appeal rights as specified
in Sec. 3555.4. This is distinct from termination from participation
in the SFHGLP under Sec. 3555.52.
(h) Administration of delegated program. The Agency may adjust,
modify, or cancel the Delegated Lender program based on overall program
considerations such as budget, program performance, and program
integrity.
Subpart C--Loan Requirements
Sec. 3555.107 [Amended]
0
4. Amend Sec. 3555.107 by removing paragraph (i)(5).
George Kelly,
Administrator, Rural Housing Service.
[FR Doc. 2026-05387 Filed 3-18-26; 8:45 am]
BILLING CODE 3410-XV-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.