This is a very CRITICAL UPDATE and anyone using the USDA loan, or if you KNOW of someone using USDA loans, please pass this blog link along, or RE-BLOG it to your sphere!!
I have included at the bottom of the BLOG, the entire list of loan coordinators within the United States of America! Email first if you can!
Also, check out the music video at the end as well!
The reason for this update is because the USDA is experiencing it's highest volume since the inception of the program!
REDUX COMMENT: Jeff Belonger brought up an issue in the comments that prompted me to do a little investigation. His comment was directed at JP MORGAN CHASE! I spoke to an upper level executive today at JP MORGAN about the "rumour" that they may be pulling out of the USDA business! He kinda laughed and clearly stated there is NO TRUTH to that rumour! Hence, if you have files there...rest assured, nothing is changing! He did state there was an internal stoppage on the RETAIL banking side regarding USDA loans, and the word he used was SUSPENDED. This is STILL in effect. I am confident that is only temporary though! One more reason to use Mtg Brokers & Bankers! Yahoo..
Taylor Bean & Whittaker, I am still awaiting a response from!
Thanks! Bucky
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BEFORE I SUMMARIZE the changes, we need to first cover LENDER OVERLAYS!
What is a Lender overlay you ask? Well, Im glad you asked! Thanks!
A Lender overlay is a requirement that a specific LENDER has, that maybe another Lender does not have! For example, if you speak directly with a USDA office about a specific requirement on a loan application, offer to purchase, or confront them about a situation, and you get a FAVORABLE RESPONSE, it may not mean anything at all! WHY? Because the LENDER that is UNDERWRITING and approving the loan PRIOR to the loan going to the USDA, may have a sticter rule, or may not approve a loan under those circumstances! Hence, enter the LENDER OVERLAY!
Another example, JP Morgan Chase & Taylor Bean & Whittaker, are the only two companies I AM AWARE of that allow a USDA loan product to be processed as a "Subject to" appraisal, or as a "fixer upper" loan!
Wells Fargo, and other companies do not! Why? Because they have LENDER OVERLAYS! What this is REALLY telling you is that they dont understand them, dont want to have anything to do with them, and aren't we all afraid of the unknown? They do not want to take the risk! Who does today?
NOW TWO VERY QUICK THINGS TO WATCH FOR IN THE COMING DAYS!
Realtors- If you are not getting them already, start watching for a CHANGE in loan committments! Loan committments are going to start coming through with stipulations on them! This isn't a bad thing necessarily, but you will start seeing approvals come through that say..."this loan approval is SUBJECT TO an acceptable appraisal, and any other further sitpulations put forth by the Rural Development office!
Lenders- Start looking over your appraisals WAY more closely! DO NOT RELY on your internal underwriter,manager, or processor! LOOK AT THE DARN THING YOURSELF! A friend of mine recently had her USDA loan suspended, due to the site value being 30.10% of the appraised value! Limit in USDA loans is 30%. Yes, it is only 1/10th of 1 percent, but look at the grief we are getting!
Okay, now on to the summary!
Let's first talk about rate locks!
Rural Development has experienced a HUGE increase in volume. Directly from the USDA, they are asking both Lenders & Realtors alike to allow ample time for a review of the file and a response. "Plan accordingly with your rate locks and loan closings. Contacting Rural Development multiple times as a Lender,Broker,Realtor, or borrower, will only delay your important request. " In other words folks, be patient! Lenders, make sure your Realtors understand time frames and turn times! Realtors, take your heart medication and drink lots of fluids! In other words, plan for an extended delay in high volume processing areas!
This is a quote from the USDA alert regarding CONTACTING the RD office!
"While many parties are anxious for their request to be acted upon, commication concerning guaranteed loan applications will occur between the Rural Devlopment and the approved Lender!!! Brokers, correspondent Lenders,Realtors,or potential borrowers,etc..should communicate with the approved lender, NOT Rural Development."
Lenders
The Guaranteed Underwriting System (GUS), will reduce proceesing times and allow approved lenders to verity loan data for accuracy in a timely manner! Here's the rub tho: There are MANY new GUS rules that may REQUIRE ADDITIONAL DOCUMENTATION to be submitted on "ACCEPT" loan files when a "final" underwriting submission is executed.
Read all your findings! What does this mean to Realtors? Well, sadly, they can add things at the end! I know we don't like hearing that...but they can! Tough! However, communication is VERY important on this!
Okay, now here are Bucky's Tips & Best Practices straight from the USDA!
Any of these changes may adversely affect your Conditional Loan Committment!
1. if the loan amount increases
2. if the loan interest rate increases
3. if there is an increase in mortgage or personal liabilities
4. if there is a decrease of assets, and/or the income decreases
How about an example? Let's say, your customer is buying a home. They get their Conditional Loan Committment and everybody is happy! House is inspected and/or appraised, and it is determined that the house needs a new roof. Seller refuses to pay for it! Well, the USDA plan allows for a new roof to be financed! Hurrah! However, that spells DELAY! Hence, the loan amount increases,the mortgage liability increases, and more than likely the debt ratio goes up! This means that it will need to go BACK to underwriting! Sometimes this is 1 day, or 1 week! Depends on volume! PLAN AHEAD!
LASTLY
USDA LOANS DO NOT REQUIRE HOME INSPECTIONS! Hello?? Bueller??
Click HERE for the income limits link
Click HERE for the income income eligibility link
Click HERE for the property eligibility link
THE FOLLOWING STATEMENT BELOW IS DIRECTLY FROM THE USDA!
Sign up for our email distribution list to receive timely updated information regarding program origination, GUS underwriting or servicing. Sign up at: http://www.rdlist.sc.egov.usda.gov/listserv/mainservlet.
Some more good music for ya! Click on the You-TUBE logo!
Thanks for reading & Keep selling!
-Darin-
As always, I welcome your concerns,comments,issues and suggestions! Darin@Osmwi.com
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Your links also have been a great help Darin! Keep up the good work.
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That is a post I'll have to read more than once. Thanks for the update. Even if we've been told this its great to have this here for reference.