Authority

Circular No. A-129

12

ate. Agencies should also produce lists that highlight potential loans or types of loans that may warrant additional
management oversight for senior management.
b. Appropriate Report Types. Depending on the program, reporting documents should include pipeline reports, portfo­
lio dashboards, watch lists, internal operations, reporting and lender monitoring (for guaranteed programs).
C. Management of Guaranteed Loan Lenders and Servicers.

Guidance
1.

REFERENCES

I Treasury/FMS Managing Federal Receivables

Lender and Servicer Eligibility.
Participation Criteria. Federal credit granting agencies shall establish and publish in the Federal Register specific
eligibility criteria for lender or servicer participation in Federal credit programs. These criteria should include:

a.
i.

Requirements that the lender or servicer is not currently debarred/suspended from pa1iicipation in a Government
contract or delinquent on a Government debt;

ii.

Qualification requirements for principal officers and staff of the lender or servicer;

iii. Fidelity/surety bonding and/or errors and omissions insurance with the Federal Government as a loss payee,
where appropriate, for new or non-regulated lenders or lenders with questionable performance under Federal
guarantee programs; and
1v. Financial and capital requirements for lenders not regulated by a Federal financial institution regulatory agency,
including minimum net worth requirements based on business volume.
b. Review ofEligibility Agencies shall review and document a lender's or servicer's eligibility for continued participa­
tion in a Federal credit program at least every two years. Ideally, these reviews should be conducted in conjunction
with on-site reviews of lender or servicer operations (see Section III.C.3) or other required reviews, such as renewal
of a lender or servicing agreement (see Section III.C.2). Lenders or servicers not meeting standards for continued
participation should be decertified. In addition to the participation criteria above, agencies should consider lender
or servicer performance as a critical factor in determining continued eligibility for participation.
c. Fees. When authorized and appropriated for such purposes, agencies should assess non-refundable fees to defray
the costs of detennining and reviewing lender or servicer eligibility.
d. Decertification. Agencies should establish specific procedures to decertify lenders, end servicing contracts, or take
other appropriate action any time there is:
i.

Significant and/or continuing non-conformance with agency standards; and/or

ii. Failure to meet financial and capital requirements or other eligibility criteria.
Agency procedures should define the process and establish timetables by which decertified lenders or former ser­
vicers can apply for reinstatement of eligibility for Federal credit programs.
e.

2.

Loan Servicers. Lenders or agencies transferring and/or assigning the right to service loans to a loan servicer should
use only servicers meeting applicable standards set by the Federal agency. Where appropriate, agencies may adopt
standards for loan servicers established by a Government Sponsored Enterprise (GSE) or a similar organization
(e.g., Government National M01igage Association for single family mortgages) and/or may authorize lenders to use
servicers that have been approved by a GSE or similar organization.

Agreements. Agencies should enter into written agreements with lenders that have been detennined to be eligible for

participation in a guaranteed loan program. Lender agreements and servicing contracts should incorporate general