By Contributor published 8-21-2018 updated 8-21-2018
Louisiana homeowners that attempted to have their SBA Disaster loans removed from the DOB calculation after the public law 115-123 passed have found the first major road block provided by the SBA itself. We found that the SBA does not have an automated system to inform federal, state and local government agencies of a loan decision status change. In the field "Loan Decision" of the data feed the SBA does not offer the words Cancelled or Declined as a loan decision status for the homeowner or borrower.
The SBA requires the state to call, email or write to confirm if an SBA loan was cancelled or declined by the homeowner.
Federal, state and local governments monitor the SBA data feeds to control and minimize the risk of duplication of federal services, assistance and benefits.
Currently the SBA data feed does not offer real world information on cancelled or declined loans. This will cause the state to apply a loan decision status incorrectly to the disaster victims account. This issue may also add to the duplication of benefits calculation an amount of money that was never accepted as federal assistance.
To avoid duplication of benefits screening mistakes, omissions and errors against the homeowner and disaster victim we would need to request that the SBA use the Loan Decision field of the data feed to input and display the word Cancelled and provide a cancellation code if possible. The amount of a cancelled loan would then be $0.00 because no federal assistance or loan money was received by the homeowner or borrower.
Here is a copy of the Data Feed Fields. If you need help reading the fields ask your IT people that know what XML or JSON is all about.
SBA Application Information Data Feed Fields.
SBA Application # -app_nbr
Loan type -app_prd_product
Loan type - type
Application Effective Date -app_dt (for pre apps default value 01/01/1800)
Current application status -app_status_cd
Current application sub status -app_sub_status_cd
FEMA Declaration # - pro_fema_nbr_oda
DCMS Disaster Number- pro_nbr
SBA Declaration # -pro_sba_nbr_oda
Summary Decline indicator &ndash is_summary_decline
Pre-Processing Decline indicator &ndash is_preproc_decline
Loan Decision -loan_decision (Approved, Declined, Withdrawn, PPD, Summary Decline or In Processing)
Date of action -decision_date
Total approved amount - loan_amount
SBA Loan Number- sba_loan_number
FEMA Control # (FEMA Registration Number) -app_fema_regis_nbr_oda
Fields populated for home loans, primary applicant
Last Name - pri_apl_last_name
First Name - pri_apl_first_name
Middle Initial - pri_apl_middle_name
Family Size - pri_app_family_size
Applicant Mailing Address:
Street - apl_mailing_address1
City - apl_mailing_city
County - apl_mailing_county
State - apl_mailing_state
Zip Code - apl_mailing_zip
The issue starts with the Loan Decision -loan_decision (Approved, Declined, Withdrawn, PPD, Summary Decline or In Processing).
None of these statuses reflect borrower cancelled or SBA agency cancelled.
We know from the SOP 50 30 that the agency has cancellation codes C10 through C16 and Borrower cancellation codes C20 through C26.
If you are a Grantee it is very important that you accept the letter provided to the homeowner by the SBA as proof that the loan was cancelled. This will not be reflected in your states data provided by the SBA.
With the cancellation letter the grantee (state) should verify the letter and status by emailing the SBA with the homeowners account number and request the status codes recorded to this account.
APPENDIX 21
CANCELLATION CODES
Agency Cancellation (SBA)
C10. Failure to complete and return all loan closing documents.
C11. Failure to satisfy all terms and conditions of the loan.
C12. Adverse change. - IHP referral.
C13. Adverse change. - Other.
C14 Subsequent recoveries exceed verified loss.
C15. RESERVED
C16. Other reasons. &ndash (Agency Decision)
Cancellation at Borrower's Request
C20. Adequate recovery from other sources.
C21. Reluctant to incur additional debt.
C22. Dissatisfied with loan terms and conditions.
C23. Dissatisfied with insurance requirements.
C24. Unwilling to pledge collateral.
C25. RESERVED
C26. Other reasons. &ndash (Borrower Decision)
C27. Dissatisfied with loan interest rate (market rate). &ndash (Borrower Decision)
These are current and valid cancellation codes that meet the Public Law 115-123 requirements.
Please update your DOB Screening methods to include verification of declined SBA Disaster loans by your homeowners.
Thank you for reading. We hope your states recovery is a little smoother now that you know what to look for and how to screen a homeowners cancelled federal assistance.
Authors Opinion:
This issue will need to be reported to the SBA OIG by State Representatives as well as borrowers that are now victims to inaccurate reporting systems.
Resources: