1. (a) General requirements. The Agency may approve certain lenders for Delegated Lender status as defined in § 3555.10. The Delegated Lender assumes the responsibility for meeting all loan requirements on behalf of the Agency for the purposes of pre-closing loan processing, loan approval, and post-closing issuance of loan guarantee under subparts C, D, and E of this part with the following exceptions and clarifications:

   1. (1) Application priority processing procedures under § 3555.107(a) are not applicable to applications processed by Delegated Lenders.
   2. (2) Delegated Lenders must ensure appraisals meet the requirements under § 3555.107(d); however, loans made by Delegated Lenders are not subject to Agency administrative appraisal reviews prior to loan approval under § 3555.107(d)(4).
   3. (3) The requirements relating to Conditional Commitments under § 3555.107(f) is not applicable to those lenders approved by the Agency as Delegated Lenders under the provisions of this subpart.

2. (b) Modifications. The following regulatory provisions in subpart A of this part are not applicable to Delegated Lenders or are modified as described in paragraphs (b)(1) and (2) of this section:

   1. (1) Applications processed by Delegated Lenders with a conflict of interest under § 3555.8 are not subject to the requirements under § 3555.8(d). The other paragraphs of § 3555.8 still apply.
   2. (2) Environmental reviews will be completed under § 3555.5 and 7 CFR part 1970 prior to loan approval. SFHGLP loans are generally considered to meet the requirements for a categorical exclusion from the environmental review process described in the cited authorities, absent any extraordinary circumstances. If there is an extraordinary circumstance, the Delegated Lender must notify the Agency to decide the appropriate course of action.

3. (c) Eligibility. Lenders must be approved to participate in the SFHGLP as provided in § 3555.51 and meet the following requirements:

   1. (1) Have participated in the SFHGLP for at least the previous two years;
   2. (2) Met the performance standards established by the Agency for delinquency, default, loss claims, etc. for the previous two years; and
   3. (3) Complete Agency sponsored training each year.
4. (d) Automated underwriting system. Delegated lenders must use the Agency's automated underwriting system as described in § 3555.107(b).
5. (e) Oversight. The Agency will monitor lender performance through the regular use of loan level data and lender oversight and monitoring reviews. If the lender is unwilling or unable to improve performance within an acceptable timeframe, the Agency may revoke Delegated Lender status.

6. (f) Termination of delegated authority.

   1. (1) The Agency may suspend or terminate the lender's delegated status for reasons including, but not limited to:

      1. (i) Approving loans that do not meet Agency guidelines.
      2. (ii) Providing data to the Agency's automated underwriting system which is not supported by documentation retained by the lender.
      3. (iii) Unacceptable portfolio performance as evidenced by delinquency, loss claim, default rates, material deficiencies, or any other performance metric established by the Agency; and
      4. (iv) Noncompliance with other requirements described in § 3555.51, or if the Agency determines that other good cause exists.
   2. (2) Termination of a Delegated Lender's participation in the SFHGLP under § 3555.52 automatically revokes Delegated Lender status without separate Agency action under paragraph (g) of this section.
7. (g) Revocation of delegated status. Delegated Lenders will retain delegated status until revoked by the Agency or withdrawn by the lender. If the Agency revokes the delegated authority of a Delegated Lender, the Delegated Lender will be given appeal rights as specified in § 3555.4. This is distinct from termination from participation in the SFHGLP under § 3555.52.
8. (h) Administration of delegated program. The Agency may adjust, modify, or cancel the Delegated Lender program based on overall program considerations such as budget, program performance, and program integrity.

[91 FR 13216, Mar. 19, 2026]