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USDA Funding RE: Single Family Housing Guaranteed Loan Program is Finally Moving in the Right Direction

August 24th, 2010 2:50 PM

USDA Funding for Single Family Housing Guaranteed Loan Program is Finally Moving in the Right Direction

This is an informational email regarding USDA loans only....

It appears that USDA is moving in the right direction and may enter the market again soon as a viable product. Please see the "copied and included" USDA Funding Notice regarding the Single Family Housing Guaranteed Loan Program. The notice outlines Rural Development’s efforts to complete interim enhancements to its electronic systems by mid-September to accommodate an increase in the up-front fee from two percent to 3.5 percent. Once the enhancements are complete, Rural Development will process all Conditional Commitments issued after May 26, 2010 that had the proviso “subject to the availability of funds.” These Conditional Commitments will be processed in the date order by which they were received by the agency. Additionally, once Rural Development completes the system enhancements, it will resume issuing standard commitments without the special “subject to” condition. Assuming current usage, funds should be available for the remainder of the fiscal year to fund all guaranteed refinance loans at a 0.5 percent guarantee fee.

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FROM: Tammye Trevifio
Administrator
Housing and Community Facilities Programs
SUBJECT: Single Family Housing Guaranteed Loan Program
Funding Notice

Many of you may be aware of recent legislation in which Congress provided USDA with authority to resume operating the Single Family Housing GuaranteedLoan Program (SFHGLP) at no cost to taxpayers. This was done through a combination of authority to: increase the upfront fee up to 3.5 percent of the principal obligation; charge a new annual fee of up to 0.5
percent of the outstanding principal balance; and waive payment of any fees for low and very low income borrowers up to a certain amount of loan guarantees.
Rural Development expects to complete an interim enhancement to its electronic systems by mid-September to accommodate the increase in the up-front fee to 3.5 percent. When this interim enhancement is complete, Rural Development will process all Conditional Commitments issued after May 26, 2010, that had the proviso "subject to the availability of funds." These
Conditional Commitments will be processed in the date order by which they were received by the agency. Also, after the enhancements are completed, Rural Development will resume issuing standard commitments without the special "subject to" condition.

In the meantime, Rural Development will continue to accept complete loan applications and issue Conditional Commitments subject to the condition in italics below. Lenders may close loans upon receipt of these conditional commitments, but will assume all risk until the Loan Note Guarantee is issued.
This Conditional Commitment is subject to the continuing availability of funds and the completion of Rural Development operation systems enhancements to implement guarantee fee changes made by Public Law 111-212, sec. 102 (7/29/10). When Rural Development operation systems enhancements are completed, the Agency will notify the lender, and the guarantee process will continue subject to all applicable Agency regulations and conditions upgrade to accommodate all provisions of the new law. We expect this full enhancement to be completed as early as possible next fiscal year. While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to
maintain a zero cost program. We appreciate your role as a lender in responsibly servicing loans in the SFHGLP portfolio and helping us maintain a successful program.

All Conditional Commitments issued for purchase loans under the authority described in this memorandum are subject to a guarantee fee of3.5 percent. A sample of the Conditional Commitment form, and its attachment, are both attached. The italicized language set out above will be added as an "other condition" on the attachment.

The waiver of fees for Low Income and Very Low Income borrowers that was authorized in Public Law 111-212, sec. 102, cannot be accommodated at this time. However, borrowers who meet the criteria may be eligible for USDA's Section 502 Direct Loan Program which currently has sufficient funding to meet the needs for the remainder of the 2010 Fiscal Year. Please consult with the closest Rural Development Office in your area for more information on the
Direct lending process.

Based on current usage, sufficient funds should be available for the remainder of the FY to fund all guaranteed refinance loans at a 0.5 percent guarantee fee.
Your support of the SFHGLP is appreciated. For questions regarding this notice, please contact Rural Development's Single Family Housing Guaranteed Loan Division at (XXX) XXX-XXXX.

Attachments for Direct Lenders

Posted by Korene Clopine-Seaman on August 24th, 2010 2:50 PMPost a Comment (0)

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