source:
  type: guide
  id: usda-hb-3555-4.9
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.9 —
    Indemnification
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.9
    — Indemnification.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-4.9-full
  canonical_id: usda-hb-3555-4.9-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.9 — Indemnification
  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 ¶4.9
      — Indemnification
    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: '4.9 INDEMNIFICATION If the Agency determines that the originating
      lender did not originate a loan in accordance with the requirements of 7 CFR
      3555 and this Handbook, the Loan Note Guarantee will remain in effect for any
      holder of the loan who acquired it from an originating lender. The Agency may
      use available legal remedies against the originating lender, which may include
      revoking the originating lender’s eligibility status in accordance with §3555.52
      and Chapter 3 of this Handbook. The Agency may also require the originating
      lender to: 1. Indemnify the Agency for the loss if the loan default under the
      guarantee occurred within 60 months of loan closing when one or more of the
      following conditions is present: x The originating lender utilized unsupported
      data or omitted material information when submitting the request for a Conditional
      Commitment to the Agency. HB-1-3555 (03-09-16) SPECIAL PN 4-6 Revised (08-05-25)
      PN 649 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 x The Agency determined that the originating
      lender did not originate a loan in accordance with the applicable statutory
      requirements or the regulatory requirements of 7 CFR Part 3555. x The originating
      lender failed to properly verify and analyze the applicant’s income, assets,
      and employment history in accordance with Agency guidelines. x The originating
      lender failed to properly verify and analyze debt and obligations in accordance
      with Agency guidelines. x The originating lender failed to address appraisal
      discrepancies or deficiencies impacting the value of the property. x The originating
      lender failed to address property deficiencies identified in the appraisal or
      inspection report that affect the health and safety of the occupants or the
      structural integrity of the property. x The originating lender used an appraiser
      that was not properly licensed or certified to make residential real estate
      appraisals in accordance with §3555.107(d). 2. Indemnify the Agency for the
      loss regardless of how long ago the loan closed or the default occurred if the
      Agency determines that fraud or misrepresentation was involved in the origination
      of the loan. If it is determined the loan is subject to indemnification, the
      payout of a loss claim shall be determined based on the following scenarios:
      x If the originating lender sold the loan and transferred the Loan Note Guarantee
      to a servicing lender, the loss claim may be paid to the lender that acquired
      the loan and indemnification will be pursued against the originating lender.
      x If the originating lender assigned servicing rights to a servicing lender
      but continues to hold the Loan Note Guarantee, the loss claim will not be paid.
      x If the originating lender is also the servicing lender and no transfers have
      occurred, the loss claim will not be paid. HB-1-3555 (03-09-16) SPECIAL PN 4-7
      Revised (08-05-25) PN 649 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 Adverse decisions involving
      loss claims shall be resolved in accordance with guidance provided in Appendix
      3 of this Handbook.'
  judgment: false
