source:
  type: guide
  id: usda-hb-3555-4.5
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.5 —
    Maintain Fidelity Bonding
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.5
    — Maintain Fidelity Bonding.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-4.5-full
  canonical_id: usda-hb-3555-4.5-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶4.5 — Maintain
    Fidelity Bonding
  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 ¶4.5
      — Maintain Fidelity Bonding
    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: 4.5 MAINTAIN FIDELITY BONDING The lender must maintain fidelity
      insurance covering its employees’ errors and omissions at a level of coverage
      deemed prudent based on the size of the lender’s operation. The fidelity bond
      or errors and omission insurance that is generally acceptable to the secondary
      market agencies (Ginnie Mae, Fannie Mae, and Freddie Mac) will meet Rural Development
      requirements. 4.6 SELL LOANS ONLY TO APPROVED LENDERS [7 CFR 3555.54] A. Procedure
      A SFHGLP loan may be sold only to an Agency-approved lender, Fannie Mae, or
      Freddie Mac. The selling lender must report any guaranteed loan sale to the
      Agency by using Form RD 3555-11, Lender Record Change. The notification of transfer
      of the loan(s) should be emailed to the Rural Development Servicing Office at
      RD.SO.HSB@usda.gov. If the loan is sold to a party not approved to participate
      in the SFHGLP, the Loan Note Guarantee will be considered invalid. Should a
      lender be unable to complete the sale of a loan due to the loss of the original
      Loan Note Guarantee, the lender may request a copy from the Agency. The Agency
      will provide a copy marked “Reissued Loan Note Guarantee.” If the loan was closed
      in the Agency’s Lender Loan Closing System, the lender can access a duplicate
      copy within the system. B. Purchaser Risks And Responsibilities The purchaser
      of a SFHGLP loan acquires all the rights of a loan holder under the guarantee.
      This means that, should there ever be a loss, the purchaser is entitled to file
      a loss claim with the Agency. However, the purchaser must ensure that it properly
      fulfills all servicing obligations and must provide the Agency any requested
      assistance for its program monitoring. Negligent servicing actions from the
      lender may invalidate the Loan Note Guarantee. Negligent servicing is defined
      as servicing that is inconsistent with §3555.252 and includes the failure to
      perform those services which a reasonably prudent lender would perform in servicing
      its own loan portfolio of loans that are not guaranteed. Examples include, but
      are not limited to, violation of usury laws, civil rights laws, servicing requirements,
      failure to obtain the required security, and use of loan funds for unauthorized
      purposes. The Agency maintains the authority to enforce this policy regardless
      of the timeframe in which Rural Development is made aware of such HB-1-3555
      (03-09-16) SPECIAL PN 4-4 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
      action. Negligent servicing includes not only the concept of a failure to act,
      but also not acting in a timely manner or acting contrary to the way a reasonably
      prudent lender would act up to the time of loan maturity or until a final loss
      is paid.
  judgment: false
