source:
  type: guide
  id: usda-hb-3555-19.2
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶19.2 —
    Loss Claim Coverage
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶19.2
    — Loss Claim Coverage.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-19.2-full
  canonical_id: usda-hb-3555-19.2-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶19.2 — Loss
    Claim Coverage
  type: do
  tags:
  - regulator-direct
  - usda
  - usda-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶19.2
      — Loss Claim Coverage
    source_class: usda-handbook
    source_url: https://www.rd.usda.gov/sites/default/files/hb-1-3555_consolidated.pdf
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-05-25T14:10:13Z'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '19.2 LOSS CLAIM COVERAGE A. Loan Guarantee Limits The maximum
      payment that a servicer may collect from the Agency under the Single Family
      Housing Guaranteed Loan Program (SFHGLP) is the lesser of: x Ninety percent
      of the original principal amount advanced to the borrower; or x One hundred
      percent of any loss equal to or less than 35 percent of the original principal
      advanced, plus 85 percent of any remaining loss up to 65 percent of the principal
      advanced. When calculating the maximum loss claim amount, any previously reimbursed
      Mortgage Recovery Advance (MRA) provided for the loan should be included in
      the loss. For example, if the original principal amount (OPA) guaranteed on
      a loan was $100,000, the maximum loss payment would be $90,000, which is the
      lesser of: 1. Ninety percent of principal x OPA is $100,000. x 90 percent of
      OPA is $90,000. HB-1-3555 (03-09-16) SPECIAL PN 19-2 Revised (04-14-25) PN 637
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. 2. One hundred percent of 35 percent and 85 percent
      of 65 percent x OPA is $100,000. x 35 percent of OPA is $35,000. x 65 percent
      of OPA is $65,000. x 85 percent of 65 percent of OPA is $55,250. x Payment amount
      is 100 percent of 35 percent of OPA ($35,000) plus 85 percent of 65 percent
      of OPA ($55,250). This equals $90,250. The Agency’s exposure would be limited
      to $90,000, which is the lesser of the two loss payment amounts. If the Agency
      had previously reimbursed the servicer for a MRA in the amount of $30,000, The
      maximum exposure on the final loss claim would be $60,000 which is the lesser
      amount minus the MRA already paid. B. Losses Covered by the Guarantee Losses
      that are covered by the loan guarantee include the following: x Principal and
      interest owed on the loan. x Additional interest accrued up to 60 days from
      the settlement date through the date the loss claim is paid. x Principal and
      interest indebtedness on protective advances provided by the servicer to protect
      the security property. x Liquidation and disposition costs as outlined in Chapter’s
      18 and 19 of this Handbook. C. Reasonable and Customary Liquidation and disposition
      costs should be similar to costs the servicer incurs when servicing non-guaranteed
      loans. Refer to Chapter 18 for further guidance on customary HB-1-3555 (03-09-16)
      SPECIAL PN 19-3 Revised (04-14-25) PN 637 Guidance documents lack the force
      and effect of law, unless expressly authorized by statute or incorporated into
      a contract. USDA may not cite, use, or rely on any guidance that is not available
      through their guidance portal, except to establish historical facts. costs related
      to the management and liquidation of acquired properties. Allowable costs could
      include: x Appraisal-related costs excluding management fees. Reasonable and
      customary costs are determined by the Department of Veteran Affairs appraisal
      fee schedule. x Securing the property. x Payment of real estate commissions
      to sell the property at a maximum of six percent of the sales price unless incentives
      can be justified or a minimum of $2,000 commission for low value sales. Costs
      associated with servicer in-house expenses (e.g. employee salaries, in-house
      legal fees, travel, Real Estate Owned (REO) management fees and other company
      expenses) are not allowed. Allowable liquidation and disposition costs differ
      for properties sold to a third party from those that remain in the servicer’s
      inventory at payment of the loss claim. 1. Third Party Foreclosure or Pre-Foreclosure
      Sale. If the property is sold to a third-party at the foreclosure sale or by
      a pre- foreclosure sale (PFS), the loss claim will be calculated on the actual
      sales price. The Agency will reimburse the servicer for actual liquidation expenses
      plus additional interest for up to 45 days from the PFS closing date or foreclosure
      sale date. The servicer should file the loss claim within 45 days of funds receipt
      or in the case of a PFS, the settlement date, otherwise the loss claim may be
      denied or reduced. Documentation of expenses associated with a loss claim request
      must be retained in the servicer’s permanent file. 2. Acquired by the Servicer
      at a Foreclosure Sale or by Deed-in-Lieu. For property acquired by the servicer
      at the foreclosure sale or by deed-in-lieu, the servicer will order a market
      value appraisal that is compliant with Uniform Standards of Professional Appraisal
      Practice (USPAP) standards. If the servicer utilized a qualified appraisal during
      liquidation and it is dated within six months of the loss claim date, the servicer
      may reuse the existing appraisal. To estimate holding and disposition costs,
      a standard acquisition and management resale factor of 15.95% (aka VA Net Value
      Factor) as established by the Department of Veteran Affairs (VA) of HB-1-3555
      (03-09-16) SPECIAL PN 19-4 Revised (04-14-25) PN 637 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.
      the estimated sales price is used. Loss claims for acquired property should
      be filed by the servicer within 60 days of the foreclosure sale date, acquisition
      date, or possession of the security property. Loss claims filed beyond this
      period may be reduced or denied by the Agency. The servicer can negotiate a
      “cash for keys” option with the former borrower for a maximum of up to $2,500.
      The property must be left in broom swept condition with all personal property
      removed before the borrower can be eligible to receive this incentive. A written
      agreement must be signed by the borrower and retained in the servicing file.'
  judgment: false
