U.S. Code of Federal Regulations
Regulations most recently checked for updates: Sep 28, 2023
(a) The Lender has the primary responsibility for loan origination and servicing. Any action or inaction on the part of the Agency does not relieve the Lender of its responsibilities to originate and service the loan guaranteed under this subpart. The Lender may contract for services and may rely on certain written materials (including, but not limited to, certifications, evaluations, appraisals, financial statements and other reports) to be provided by the Borrower or other qualified third parties (including, among others, one or more independent engineers, appraisers, accountants, consultants or other experts.) The Lender is ultimately responsible for underwriting, loan origination, loan servicing, and compliance with all Agency regulations.
(b) Agents and Persons are prohibited from acting as both Loan Packager and Loan Service Provider on the same guaranteed loan.
(c) All Lenders obtaining or requesting a Program loan guarantee are responsible for:
(1) Processing applications for guaranteed loans. The Lender is responsible for submitting a complete application for each guaranteed loan requested;
(2) Developing and maintaining adequately documented loan files, which must be maintained for at least 3 years after the final loss has been paid;
(3) Recommending only loan proposals that are eligible and financially feasible;
(4) Properly closing the loan and obtaining valid evidence of debt and Collateral in accordance with sound lending practices prior to disbursing loan proceeds;
(5) Keeping an inventory accounting of all Collateral items and reconciling the inventory of all Collateral sold during loan servicing, including liquidation;
(6) Supervising construction;
(7) Distributing loan funds;
(8) Servicing guaranteed loans in a reasonable manner, including liquidation if necessary;
(9) Following Agency regulations and agreements;
(10) Obtaining Agency approvals or concurrence as required; and
(11) Reporting all Conflicts of Interest, or appearances thereof, to the Agency.