Based on a couple of Bills that are before Congress, it looks like we can expect to see the USDA's popular Guaranteed Rural Home Loan program have increased UpFrontMortgage Insurance Fees in the very near future. According to an article in the National Council of State Housing Agencies, two seperate Bills have been introduced to extend funding, AND to make it more self-sufficient. The Bills are in committee.
Since this isn't a simple extension of funding, I would be surprised to see it passed soon. Hope I'm wrong. We also don't know the details. Will they continue to wrap the increased fees into the loan? Will it continue to be 100% financing? Will they continue to allow 6% Seller Concessions?
Here's the full reprint of the article.
"Kanjorski and Capito Introduce Bills to Extend USDA's Rural Home Loan Guarantee Program
On April 14, Congressman Paul Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, introduced the Rural Housing Preservation and Stabilization Act of 2010, H.R. 5017. Housing and Community Opportunity Subcommittee Ranking Member Shelley Moore Capito (R-WV) introduced a similar bill, The Rural Housing Improvement Act, H.R. 5003, on April 13. Both bills would allow the Section 502 Single-Family Housing Guaranteed Loan Program to continue this year by increasing the annual commitment authority for the program, which USDA reported earlier this year would be exhausted by the end of April.
Since this announcement, NCSHA and several other housing groups have been working with Congress and the Administration to extend the program.
To make the program self-funding and avoid the need for Congress to appropriate more funds for the program this year, Kanjorski's bill would increase the current 2 percent upfront fee to 3.5 percent. It would also authorize the Secretary of the Department of Agriculture to assess an annual fee of 0.5 percent on the outstanding balance of the loan. Capito's bill would allow the Secretary to increase the upfront fee to between 3 and 4 percent, based on what fee level would cover the program's costs.
Both bills have been referred to the House Financial Services Committee. Committee Chairman Barney Frank (D-MA) stated that he hopes to bring up Kanjorksi's bill for consideration in the Committee as soon as possible. Congressmen Ruben Hinojosa (D-TX), Paul Hodes (D-NH), Charles Wilson (D-OH), and Joe Courtney (D-CT) are co-sponsors of Kanjorski's bill."
It will be interesting to see how they "tweak" this program.
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