source:
  type: regulation
  id: usda-hb-3555-12.20
  authority: USDA Technical Handbook HB-1-3555 §12.20 — Loan Closing
  description: "USDA HB-1-3555 §12.20 (Loan Closing). Gap-fill (verbatim). \n"
obligations:
- id: usda-hb-3555-12.20-0
  canonical_id: usda-hb-3555-12.20-0
  section: USDA HB-1-3555 12.20 — Loan Closing
  description: '12.20 Loan Closing: AN CLOSING Standard industry closing documents are utilized when closing a single-close
    loan. The lender is responsible for ensuring all applicable security documents, including a valid and enforceable
    Note, are completed at loan closing. The lender is responsible for any state s…'
  type: do
  tags:
  - regulator-direct
  - gap-fill
  - usda-hb-3555
  - section-complete
  primary_source:
    tier: 1
    authority: USDA Technical Handbook HB-1-3555 §12.20 — Loan Closing
    source_class: usda-handbook-hb-1-3555
    source_url: https://www.rd.usda.gov/resources/directives/handbooks
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-06-18T00:00:00+00:00'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: AN CLOSING Standard industry closing documents are utilized when closing a single-close loan.
      The lender is responsible for ensuring all applicable security documents, including a valid and enforceable
      Note, are completed at loan closing. The lender is responsible for any state specific construction related
      requirements that may influence the validity of the first lien or the construction disbursement process. The
      date of closing will be the date the interim construction loan is closed. These construction documents may
      be in any form acceptable to the lender. At closing, the term of the loan is for thirty years. During construction,
      interest on the construction loan is payable monthly, either directly from the borrower or indirectly drawn
      from an established reserve account. If the lender elects not to establish a reserve account and the borrower
      will pay these expenses directly, clear documentation that they possess the ability to do so must be demonstrated
      in the application package. The interest rate during the construction period must be a fixed rate. Adjustable
      interest rates during construction are not allowed. x Warehouse line of credit lenders may opt for dual loan
      disclosures to the borrower disclosing the terms of the interim construction period and a separate disclosure
      for the terms of the permanent loan, or they may choose a single disclosure method that blends the terms of
      the construction portion and the permanent loan. Lenders may establish an interest only or PITI reserve account.
      If the lender elects not to collect a PITI reserve account to make the regularly scheduled PITI payment during
      the construction period, only interest payments on the advanced construction loan balance will be due and
      paid during the construction phase. Once construction has been completed, excess funds from the contingency
      reserve account, if any, will be applied as a principal curtailment. The loan may be reamortized to achieve
      full repayment for the remainder of the loan term. When a loan is reamortized via a modification, the lender
      can also reduce the permanent interest rate. In such cases, the lender must provide an executed loan
    drafter_attestation: Verbatim from HB-1-3555 §12.20 body (max-gap occurrence), snapshot 0466acd1ea2d17a4; substring-verified.
  judgment: false
- id: usda-hb-3555-12.20-1
  canonical_id: usda-hb-3555-12.20-1
  section: USDA HB-1-3555 12.20 — Loan Closing
  description: '12.20 Loan Closing: 05-05-25) PN 640 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.…'
  type: do
  tags:
  - regulator-direct
  - gap-fill
  - usda-hb-3555
  - section-complete
  primary_source:
    tier: 1
    authority: USDA Technical Handbook HB-1-3555 §12.20 — Loan Closing
    source_class: usda-handbook-hb-1-3555
    source_url: https://www.rd.usda.gov/resources/directives/handbooks
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-06-18T00:00:00+00:00'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '05-05-25) PN 640 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. reamortization agreement (modification
      agreement) to confirm the existence of the permanent loan and the corresponding amortizing interest rate on
      the mortgage loan. Amortization must begin no later than the first of the month, 60 days from the final inspection.
      x Lenders who securitize the loan immediately after loan closing may elect to establish a reserve account
      for the borrower’s regularly scheduled PITI payment from the original loan closing. The established PITI reserve
      account will then be utilized to make the monthly loan payments on the amortized loan during the construction
      period. This alleviates the requirement for a loan modification or reamortization at the end of the construction
      period and allows the lender to securitize the loan prior to the completion of construction. Once construction
      has been completed, excess funds from the contingency reserve account, if any, will be applied as principal
      curtailment. Annual guarantee fees will begin to accrue upon loan closing and will be due and payable each
      year upon the anniversary of the initial loan closing. At the completion of construction, the lender should
      obtain the appraiser’s final inspection, a certificate of occupancy, a final endorsement to the title policy
      clear of all liens, and retain evidence in the lender’s permanent loan file. The approved lender monitoring
      the construction of the subject dwelling should retain a certification stating the dwelling has been completed
      and ready for occupancy, construction phase inspections have been conducted, and the required warranty coverage
      has been obtained. Attachment 12-D of this Chapter is an example of a lender certification. The approved lender
      (i.e. the lender identified on the Loan Note Guarantee) will finalize the single-close transaction by completing
      the Single Close Construction/Rehab page in the Lender Loan Closing (LLC) system. Users must have security
      permissions to access the LLC. Upon logging into the system, the user will be routed to the Single Family
      Housing Lender Administration List page. The loan can be found by searching on USDA Borrower ID, Borrower
      SSN, Borrower Name/Property State, or Lender Loan Number. Note: User will need to toggle the default selection
      for Request Type from Obligations to Loans in order to find the borrower/loan. Once the loan is found, user
      must select Single Close Construction/Rehab from the Action dropdown menu and then select the hyperlinked
      Borrower ID associated with the request. In the Construction/Rehab Completion Information section of the page,
      the user will choose'
    drafter_attestation: Verbatim from HB-1-3555 §12.20 body (max-gap occurrence), snapshot 0466acd1ea2d17a4; substring-verified.
  judgment: false
- id: usda-hb-3555-12.20-2
  canonical_id: usda-hb-3555-12.20-2
  section: USDA HB-1-3555 12.20 — Loan Closing
  description: '12.20 Loan Closing: 05-05-25) PN 640 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.…'
  type: do
  tags:
  - regulator-direct
  - gap-fill
  - usda-hb-3555
  - section-complete
  primary_source:
    tier: 1
    authority: USDA Technical Handbook HB-1-3555 §12.20 — Loan Closing
    source_class: usda-handbook-hb-1-3555
    source_url: https://www.rd.usda.gov/resources/directives/handbooks
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-06-18T00:00:00+00:00'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '05-05-25) PN 640 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. from the following options for Completion
      Type: Principal Reduction Only, Principal Reduction with Loan Modification, or Construction Complete (No Principal
      Reduction or Loan Modification). The page will dynamically display fields necessary for completion based on
      the Completion Type selected. Document upload is required to process the transaction when Completion Type
      is either Principal Reduction Only (requires evidence of the principal reduction) or Principal Reduction with
      Loan Modification (requires evidence of the principal reduction and a copy of the Loan Modification Agreement).
      Documents are to be uploaded via the Lender Upload Document(s) push button located on the SFH Construction/Rehab
      page. When more than one type of document is to be uploaded, the user must upload each document separately
      using the Type of Document dropdown to uniquely identify each document being uploaded. Once the page has been
      completed, the user must select the Submit push button at the bottom of the page to transmit the information
      to USDA.'
    drafter_attestation: Verbatim from HB-1-3555 §12.20 body (max-gap occurrence), snapshot 0466acd1ea2d17a4; substring-verified.
  judgment: false
