USDA Guideline Changes On Monday, December 1, 2014

Rural Development (USDA) announced this week they will not accept any new Single Family Housing Guaranteed Loan Application from the close of business on Friday, November 21, 2014 through the start of business on Monday, December 1, 2014.  Applications will be suspended for this period of time in order for USDA to be able to implement new the  USDA Guideline Changes On Monday, December 1, 2014.

The new Guideline Changes are intended to streamline the processing and time on USDA Loans.  This means Lenders will not be able to Close any USDA Loans which have not been approved by Friday, November 21st., until new approvals are received under the new USDA Guidelines are implemented on Monday, December 1st.

A draft handbook (Titled 7 CFR 3555) of the new USDA Guideline Changes is available at https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do   Below are some highlights of the new USDA Guideline Changes On Monday, December 1, 2014. 

• Form RD 1980-21 has been replaced with Form RD 3555-21.
• The restriction for properties with in-ground pools has been eliminated and the value of the pool no longer needs to be subtracted from the appraised value.
• The requirement to deduct value from farm outbuildings has been removed
• The restriction on the site exceeding 30% of the total value has also been removed
• Disputed accounts – GUS Accept loans must be downgraded to a manual underwrite unless certain conditions are met.
• Maximum number of properties owned has changed and the borrower(s) may not own any other property after the loan closing
• Student loans. The greater of one percent of the outstanding loan balance reflected on the credit report OR the verified fixed payment due by the loan servicer as reflected on the credit report. Monthly payment amounts listed on the credit report, which are less than one percent of the outstanding balance may be used when evidence from the loan servicer is obtained indicating; 1)the applicant is on a fixed repayment plan not subject to change under the terms of the current agreement and 2) and the monthly payment amount due. Fixed payments have a monthly amount that is not subject to change through the fixed repayment time frame. Income Based Repayment (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of repayment plans that are subject to change therefore are not eligible to be used and must include a payment of 1% of the loan amount.

I would highly recommend anyone who has a USDA Loan in process which they have not received approval yet from USDA, that an extension be requested for Commitment and Closing.  Lenders should be contacted to suggest a date for how long an extension should be requested to cover the time to implement the new USDA Guideline Changes On Monday, December 1, 2014.