DO NOT PANIC...
I've received numerous calls and emails about this very topic. I understand there are various notices floating around from lenders essentially claiming that USDA is pulling the program. Apparently, some of the "big boys" are pulling out of the program and as a result have decided to employ scare tactics. I'm sure there will be more to join the bandwagon.
Many lenders who traditionally in the past have not focused on the program are claiming that USDA is no longer accepting files. This is untrue.
On March 9th, USDA issued a statement that funding is likely to be exhausted by the end of April, 2010. At this point the Government does not know what pool of funds the funding will come from. However, our sources tell us that there is a strong possibility that funds could become available by the end of April.
While funds are typically exhausted towards the end of the government's fiscal year in September, USDA runs out of funds for the program every year.
In previous years when there has been a shortage, USDA would set aside funds from other areas to make up for any shortage of funds allowing lenders the opportunity to continue to fund USDA loans. When this occurs, USDA would issue conditional commitments stating "subject to receipt of appropriated funds".
At the present time, USDA is uncertain where the funding will come from and IF the funds are not replenished before too long they will not honor "subject to receipt of appropriated funds" on their conditional commitments. This means that many lenders will not be able to guarantee and or fund the loan.
The USDA loan program is a wonderful program for Rural America. The program is run very efficiently and statistically, it has the lowest default rate of ANY loan program. Politically, the administration will want to continue any positive program, especially in an election year. Hopefully the political wheels will turn and funding will be made available soon.
We encourage you to contact your professional lobby and or politicians to request they begin working on a solution today!
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