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The Agency is publishing a final rule to mandate the use of GUS to better monitor the performance of the guaranteed loan portfolio, reduce program risk, and decrease time-consuming and expensive manual file reviews of loan guarantee requests.  All loan products with the exception of the streamlined assist refinance and pilot demonstration loans are supported in GUS.  The Agency will continue to accept manually underwritten files for the streamline assist refinance and select pilot programs.  Specifically, this final rule will amend 7 CFR 3555.107(b) and (c) to require utilization of GUS and remove the option to submit loans manually except for unsupported loan products. 

Currently, the 7 CFR part 3555 regulation allows lenders to submit loan guarantee requests by using the Agency's automated Guaranteed Underwriting System (GUS) or manually (paper-based submission). GUS is widely accepted among Single Family Housing Guaranteed Loan Programs (SFHGLP) lenders and approximately 98 percent of loan guarantee requests are submitted through the system. On November 17, 2020, the Agency published a proposed rule which included a 60 day comment period; see 85 FR 73241 and received comments from eighteen respondents. 

This final rule will also amend 7 CFR 3555.107(i)(4) to require lenders to submit loan closing documentation and fees through the Agency’s automated Lender Loan Closing (LLC) system.  The LLC is widely used among SFHGLP lenders with approximately 98 percent of guaranteed loan closings submitted through this system.  The mandatory use of the LLC will enhance the monitoring of portfolio performance, lessen program risk, reduce paperwork and time burden on lenders and the Agency, and decrease expensive manual submission of loan closings.  Specifically, this final rule will amend 7 CFR 3555.107(i)(4) to remove the option of mailed/overnighted, facsimile, and emailed packages and require the use of the LLC for all lenders.

The final rule would continue the Agency’s efforts to improve program delivery, align the Agency more closely to industry practices, and assist in risk mitigation. The changes made by this rule also supports the timely implementation of automation initiatives crucial to the continued success of the program in an environment of constrained administrative resources and aligns with the overall structure of the mortgage industry, which has drastically changed over the last ten years with an increase in technology opportunities to reduce mortgage loan processing costs and paperwork burden from customers.  Lenders and customers expect to have access to mortgage application and underwriting systems available on-line and on mobile devices 24 hours a day, 7 days a week. These changes in mortgage marketplace highlight the need for agencies to make smart and efficient changes to existing technology models.