The Rural Housing Service has released a new update for Form RD 3555-17. The update changed the time within which RHS may require the Lender to indemnify RHS for loss caused by a non-compliant origination, from 24 months to 60 months. The language now states:
If RHS determines that a Lender did not originate a loan is accordance within the requirements in 7 CFR part 3555, and RHS pays a claim under the loan guarantee, RHS may revoke the Lenders’ eligibility status in accordance with Section 3555.52 and may also require the Lender: (1) To indemnify RHS for the loss, if the payment under the guarantee was made within 60 months of loan closing; or (2) To indemnify RHS for the loss regardless of how long ago the loan closed, if RHS determines that fraud or misrepresentation was involved in connection with the origination of the loan in accordance with Section 3555.108.
This update will be in effect on July 21, 2016. If you have any questions or concerns about this change, please contact client support at 800.497.3584.
DR 203128