---
kind: "section"
citation: "7 C.F.R. § 3565.103"
title: "7"
number: "3565.103"
heading: "Approval requirements."
url: "https://uscodex.org/cfr/7/3565.103"
---

# §3565.103. Approval requirements.


The Agency will establish and maintain a “list of approved lenders”. To be an approved lender, eligible lenders must meet the following requirements and maintain them on a continuing basis at a level consistent with the nature and size of their portfolio of guaranteed loans.

- (a) **Commitment.** A lender must have a commitment for a guaranteed loan or an agreement to purchase a guaranteed loan.
- (b) **Audited statement.** A lender must provide the Agency with an annual audited financial statement conducted in accordance with generally accepted government auditing standards.
- (c) **Previous participation.** A lender may not be delinquent on a federal debt or have an outstanding finding of deficiency in a federal housing program.
- (d) **Ongoing requirements.** A lender must meet the following requirements at initial application and on a continuing basis thereafter:
  - (1) Overall financial strength, including capital, liquidity, and loan loss reserves, to have an acceptable level of financial soundness as determined by a lender rating service (such as Sheshunoff, Inc.); or to be an approved Fannie Mae, Freddie Mac, Ginnie Mae or HUD Federal Housing Administration multifamily lender; or, if a state housing finance agency, to have a top tier rating by a rating agency (such as Standard and Poor's Corporation);
  - (2) Bonding and insurance to cover business related losses, including directors and officers insurance, business income loss insurance, and bonding to secure cash management operations;
  - (3) A minimum of two years experience in originating and servicing multifamily loans;
  - (4) A positive record of past performance when participating in RHS or other federal loan programs;
  - (5) Adequate staffing and training to perform the program obligations; the head underwriter must have 3 years of experience and all staff must receive annual multifamily training;
  - (6) Demonstrated overall financial stability of the business over the past five years;
  - (7) Evidence of reasonable and prudent business practices for management of the program; and
  - (8) **No negative information on Dunn & Bradstreet or similar type report.**

## Notes

### Amendments

[63 FR 39458, July 22, 1998, as amended at 64 FR 32372, June 16, 1999; 70 FR 2931, Jan. 19, 2005; 76 FR 4, Jan. 3, 2011]

### Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

### Source

Source: 63 FR 39458, July 22, 1998, unless otherwise noted.

### Amendments

[63 FR 39458, July 22, 1998, as amended at 64 FR 32372, June 16, 1999; 70 FR 2931, Jan. 19, 2005; 76 FR 4, Jan. 3, 2011]