FORM RD 2006

FORM RD 2006-46 (Rev. 01-98)

U.S. DEPARTMENT OF AGRICULTURE MANUAL ISSUE No.

RURAL DEVELOPMENT WSAL PN 413

Washington, D.C 20250 DATE

October 5, 2007

PROCEDURE NOTICE

RD MANUAL CHANGES

INSERT RD INS 440.1
(WSAL)

INTEREST RATES, AMORTIZATION, GUARANTEE FEE, ANNUAL CHARGE, AND FIXED PERIOD.

Exhibit B, to update the Treasury Judgement Rate and various program rates effective September 1, 2007.

REMOVE INSERT
Exhibit B: Pages 1 & 2 (Rev 35). Exhibit B: Pages 1 & 2 (Rev 36).

INSERT RD INS 1901-A
(WSAL)

LOAN AND GRANT APPROVAL AUTHORITIES.

Exhibit A is revised to provide the criteria used to periodically review designated State authority level.

Exhibit B is partially revised to increase the maximum authority in State Office for the Business and Industry Guaranteed Loan Program and the Renewable Energy Systems Direct Loans from $7.5 million to $10 million.

REMOVE                                INSERT
Exhibit A; and                        Exhibit A revised 10-05-07; and
Exhibit B: Pages 1 & 2 (Rev 1) and   Exhibit B: Pages 1 & 2 (Rev 2) and
3 & 4.                              3 & 4 (Rev 1).

INSERT RD INS 2006-W
(WSAL)

POLICIES FOR RURAL DEVELOPMENT E-MAIL. Exhibit A is revised to add additional e-mail addresses, and to revise the O&M all employees list and the IT staff list.

REMOVE INSERT
Exhibit A. Exhibit A revised 10-05-07.

RD HANDBOOK CHANGES

INSERT RD HB-1-3550
(WSAL)

DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS FIELD OFFICE HANDBOOK. This Handbook is partially revised. Specific revisions include:

Table of Content:

To add a section “Definition” and ”Rural Development Acceptance of a Condominium Project” under Section 2 in Chapter 9.

Chapter 1:

Exhibit 1-2, to reflect the new language to Handbook Letter 15, “Standardized Adverse Decision Letter, in the sample.

Chapter 4:

Attachments 4-A and 4-B, to correct the reference for assistance in calculating anticipated annual and repayment income.

Chapter 9:

Paragraph 9.13 A., to add a definition of a condominium;

Paragraph 9.13 B., to allow condominium projects that are approved by the State Housing Finance Agency to be eligible for Agency financing;

Paragraph 9.13 C., to provide for Rural Development Acceptance of a Condominium Project. Rural Development will conduct a review of projects to determine if a unit is eligible for Agency financing if the Loan Originator is unable to verify prior approval by one of the eligible entities listed in paragraph 9.13 B;

Paragraph 9.13 D., to clarify the condominium status that is required for Agency financing; and

Attachment 9-C, is added to document Rural Development approval of a unit in a condominium project.

Appendix 3:

To change the title of Handbook Letter 12(3550) to Notification of Approval (504 Grant and/or Loan), to add language regarding the approved 504 loan amount, and to add a note about grants eligibility; and

Handbook Letter 15, to add language about contacting TransUnion if one of the reasons for denial was an unacceptable credit history.

Acronyms:

To add the acronym SHFA “State Housing Finance Agency”.

REMOVE                                INSERT
Table of Contents dated 01-23-03:     Table of Contents dated 01-23-03:
Pages 13 thru 16;                   Pages 13 thru 16 revised;
Chapter 1 dated 01-23-03:             Chapter 1 dated 01-23-03:
Pages 1-11 & 1-12;                  Pages 1-11 & 1-12 revised;
Chapter 4 dated 01-23-03:             Chapter 4 dated 01-23-03:
Attachment 4-A: Pages 1 & 2,       Attachment 4-A: Pages 1 & 2 revised,
Attachment 4-B: Pages 1 thru 4,   Attachment 4-B: Pages 1 thru 4 revised;
Chapter 9 dated 01-23-03:             Chapter 9 dated 01-23-03:
Pages 9-7 thru 9-20;                Pages 9-7 thru 9-21 revised; and
Appendix 3 dated 01-23-03:            Appendix 3 dated 01-23-03:
Page 1 of 1,                        Page 1 of 1,
Handbook Letter 12,                 Handbook Letter 12 revised,
Handbook Letter 15;                 Handbook Letter 15 revised;
Acronyms dated 01-23-03:              Acronyms dated 01-23-03:
Pages 3 & 4.                        Pages 3 & 4 revised 10-05-07.

INSERT RD HB-2-3560                     MFH ASSET MANAGEMENT HANDBOOK. This
(WSAL)                                handbook is partially revised as
                                      follows:

Table of Contents:

To reflect the changes in Chapter 4, Section 5 and to add Attachments 4-C through 4-H. These Attachments are added to provide more instruction to the CPA’s as far as standards expected for the Agreed-Upon Procedures and Audit and examples of the Reports required.

Chapter 4:

Paragraph 4.31 A., clarifies the reporting year based on the borrower’s fiscal year;

Paragraph 4.31 B., clarifies the reporting period and due dates;

Paragraph 4.32 A., to change the Financial Reporting for Sections 514 and 515 Multi-family Properties as follows:

       - All borrowers will provide a self-certification to 9 performance
       standards.

       - All borrowers will provide the budget Form RD 3560-7, "Multi-Family
       Housing Project Budget/Utility Allowance" and Form RD 3560-10, "Multi-
       Family Housing Borrower Balance Sheet."

       - Projects of 16 - 23 units will provide a report of three agreed upon
       procedures, prepared by a CPA (except entities subject to OMB Circular
       A-133 reporting requirements.

       - Projects of 24 units or more will provide a financial audit report,
       prepared by a CPA (except entities subject to OMB Circular A-133 reporting
       requirements.

Paragraph 4.32 B., clarifies the use of Forms RD 3560-7 and 3560-10 and the line items which should match between the two forms;

Paragraph 4.32 C., clarifies the requirement that this is a borrower self-certification and two new certifications have been added as part of the financial reporting requirements, "There have been no changes in project ownership other than those approved by the Agency and identified in certification. Non-Profit organizations certify that the board is active and maintains oversight of the property." And "The real estate taxes are paid in accordance with state and/or local requirements. There are currently no delinquent taxes";

Paragraph 4.32 D., has consolidated the Agreed Upon Procedures from eleven procedures to three for borrowers with 16 or more units. These requirements are to be completed by a CPA according to the agreed-upon procedures and determinations established by the Agency;

Paragraph 4.32 E., is added for borrowers with 24 or more units must follow the Generally Accepted Government Auditing Standards (GAGAS) requirements. This section also includes the items that must be included in the financial audit;

Paragraph 4.32 F., clarifies the OMB Circular A-133 requirements;

Paragraph 4.32 G., clarifies the due dates of the annual financial reports;

Exhibit 4-7, to remove the "Is Cash Flow Positive" question;

Attachments 4-A and 4-B updates page numbers only;

Handbook Letter 209 is removed and is replaced with Attachment 4-E.

NOTE: These financial reporting requirements are effective for project fiscal year ends of December 31, 2007 and thereafter. We are extending by 30 days the due date for these financial reports to April 30, 2008. We do not believe these changes will increase the auditing cost for most properties over last year’s expense, except for those properties that did not undertake a financial audit for partnership or tax credit purposes. Borrowers who need to revise their FY 2008 budget tot accommodate the audit requirement should contact their Rural Development Servicing Office.

REMOVE                                  INSERT
Table of Contents dated 02-24-05:       Table of Contents dated 02-24-05:
Pages 7 thru 17;                        Pages 7 thru 17 revised;
Chapter 4 dated 02-24-05:               Chapter 4 dated 02-24-05:
Pages 4-37 thru 4-44,                   Paged 4-37 thru 4-44,
Attachment 4-A: Pages 1 & 2,           Attachment 4-A: Pages 1 & 2,
Attachment 4-B: Pages 1 thru 12;     Attachment 4-B: Pages 1 thru 12 revised,
Appendix 4 dated 02-24-05:                Attachments 4-C thru 4-H added 10-05-07.
Handbook Letter 209.

RD MANUAL CHANGES

NOTICE
(WSAL)

The following Spanish translated forms have been revised to conform to the most current revisions to the English forms. These forms are available on the Rural Development Instructions home page (http://www.rurdev.usda.gov/regs). These documents are made available for the convenience of our Spanish-speaking customers. Applicant/Borrower case files must contain the signed English version of the form. Any documents used for third party verification should include the English translation as well.

FORM No.         REVISION DATE      TITLE

RD 1927-16S      07-07              Notification of Loan Closing
RD 1944-59S      04-07              Certification of Eligibility
RD 3550-7S       04-07              Funding Commitment
RD 3550-23S      04-07              Applicant Orientation Guide

NO SPECIAL PROCEDURE NOTICES RELEASED.

ADMINISTRATIVE NOTICES RELEASED:

(See AN Checklist.)

oOo