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Code of Federal Regulations (Last Updated: July 5, 2024) |
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Title 7 - Agriculture |
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Subtitle B - Regulations of the Department of Agriculture |
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Chapter XVIII - Rural Housing Service, Rural Business-Cooperative Service, Rural Utilities Service, and Farm Service Agency, Department of Agriculture |
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SubChapter H - Program Regulations |
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Part 1980 - General |
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Subpart D - Rural Housing Loans |
§ 1980.360 - Conditions precedent to issuance of the loan note guarantee.
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(a) Lender certification. The Lender must certify to RHS that:
(1) No major changes have been made in the Lender's loan conditions and requirements since the issuance of the conditional commitment, except those approved in writing by RHS. In the event the interest rate has not been fixed at the time the conditional commitment is issued, and the interest rate increases between the time of issuance of the conditional commitment and loan closing, the Lender should note the change when submitting the package to RHS for loan guarantee. If either or both of the underwriting ratios are exceeded as a result of the interest rate increase, the Lender should list the compensating factors that demonstrate that sufficient repayment ability still exists.
(2) All planned property acquisition has been completed and:
(i) All development has been completed; or
(ii) An escrow account has been established in accordance with §1980.315.
(3) Required insurance coverage is in effect and an escrow account has been established for the payment of taxes and insurance.
(4) Truth-in-lending requirements have been met.
(5) All equal employment opportunity and nondiscrimination requirements have been met.
(6) The loan has been properly closed by a party skilled and experienced in conducting loan closings and the required security instruments, including any required shared equity instruments, have been obtained and recorded in the appropriate office in a timely and accurate manner.
(7) The borrower has a marketable (clean and defensible) title to the property then owned by the borrower, subject to the instrument securing the loan to be guaranteed, and any other exceptions approved in writing by RHS.
(8) Lien priorities are consistent with the requirements of the conditional commitment.
(9) The loan proceeds have been disbursed for purposes and in amounts consistent with the conditional commitment.
(10) There has been no adverse change in the borrower's situation since the conditional commitment was issued by RHS.
(11) All other requirements of the conditional commitment have been met.
(b) Inspections. The Lender will certify to RHS that inspections in accordance with §1980.341 have been completed.
(c) Lender agreement. There must be a valid lender agreement on file.
(d) Lender file. The Lender will maintain a file for each guaranteed RH loan containing originals or copies, as appropriate, of all documents pertaining to that loan.