The USDA Loan has been on hold with the Rural Development offices across the country as they “ran out” of funds for USDA Loans. There are several bills on the table that would eliminate the funding problems for USDA Loans and one is being reviewed in the Senate right now.
The most immediate need for home buyers who need a USDA Loan is to get the funding going right now. H.R. 4899 is the Disaster Relief and Summer Jobs Act of 2010 which the Senate is discussing today at 3:00. If it passes it will provide $102.7 million to the USDA Loan program. That doesn’t sound like a lot, does it?
The way the USDA Loan guarantee works is that the buyer currently pays a 2% USDA Loan guarantee fee and the remaining 1.5% is subsidized by the USDA. The replenishing of funds replenishes the subsidy, so $102.7 million could help provide USDA Loan guarantees throughout the end of 2010.
The other bill on the table is H.R. 5017 the Rural Housing Preservation and Stabilization Act of 2010 which would put the full 3.5% guarantee onto the home buyer and also introduce a monthly mortgage insurance payment for USDA Loans which would make it look more like an FHA loan product.
Once we hear more on the Senate discussion, we will post them here. If it passes today, we could see lenders begin to fund USDA Loans right away.