USDA announces funding availability

By
Mortgage and Lending with Jet Home Loans NMLS 1660135 310298

USDA LoansThe USDA has announced that system enhancements which allow them to use their new funding have been completed. Although these funds had been granted by Congress, the USDA was unable to use them pending changes in their system that allowed for the increased Guarantee Fee of 3.5%.

What this means is that USDA loans are expected to be fully funded through at least 2011! Look for all of the lenders that had been out of the market to begin providing USDA loans again very soon- some lenders have already sent out notices this morning.

The even better news is that GUS, the Guaranteed Underwriting System, will be back on line. By making automated underwriting recommendations GUS has allowed many lenders that that would not manually underwrite loans the ability to offer USDA loans. GUS also allows greater flexibility in the ratios of debt versus income than manual underwriting allows. This means borrowers with excellent credit and other strong positives factors will be allowed greater flexibility in underwriting.

So if you have been waiting for good 100% financing option your wait is over! Unfortunately local USDA offices will be working on the backlog of files that have been done "pending funding availability" over the last few months. This means delays in underwriting for the short term so make sure you take that into account when planning a closing date. Here in Central FL look for delays upwards of two weeks just for the USDA underwriting portion until the backlog is resolved.

Also do remember that the USDA Guaranteed Rural Development Loan program is subject to geographic and income limitations. For more information of those access the USDA eligibility page here.

Coupled with the 100% financing, the lack of monthly mortgage insurance and the flexibility in allowing seller paid closing costs make USDA loans a no brainer for borrowers that meet their guidelines. With rates in the low to mid 4% range it's easy to see why these loans are such a great deal!

Comments (7)

Travis Behem
Jane Rowe Realty - Terre Haute, IN

Thanks for the update, that is good to know, hope they get things going with thos loans soon.

Sep 08, 2010 03:06 AM
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Travis- hopefully you are already getting word from your lenders that they are bringing the program back. We never stopped doing them but I know many other lenders weren't as fortunate.

Sep 08, 2010 09:30 AM
John Cassels
Sterling Savings Bank - Tacoma, WA
NMLS #197076

Thomas,

We were notified today that our funding will resume.  We were funding them till a few weeks ago but stoped due to commitment requirements.  Here is the notice we got from our local USDA office:

At this time, funding for the USDA Guaranteed Rural Housing program has been restored. If you have already closed a loan that received a Conditional Commitment that was "subject to funding", please submit the closing packet and check for the GRH fee at this time.  Please note, page 2 of RD Form 1980-18 (Conditional Commitment for Single Family Housing Loan Guarantee) must be completed and signed ON or AFTER 9/8/2010.  For loans that have been closed for over 45 days, please include a payment history for the applicant showing that loan payments are current

 

Sep 08, 2010 06:15 PM
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

John-When the USDA announced their delay to make the system enhancements they changed the conditions of the "conditional commitment" and a few lenders did stop funding. Glad to hear you are back in the saddle again. Now let's go out and do our part to fix this market by bringing in new buyers that otherwise wouldn't qualify! Thanks for commenting!

Sep 10, 2010 03:17 AM
Coldwell Banker Camelot Realty
Coldwell Banker Camelot Realty - Mount Dora, FL
Homes for Sale Mount Dora Realtor

Gerry,

Thanks for keeping us up to date.  We can count on you for the straight answers.

Ray Levy

Camelot Realty

Mount Dora, FL

Sep 11, 2010 04:24 AM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

FINALLY! How long was this sitting around waiting for the final approval???!!?! Although I have not done any USDA loans before, I think the overall program is a good one. The increase fees suck, but at least its rolled into the loan.

Sep 12, 2010 11:34 AM
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Ray and Karen-Thanks for the nice comment and I'm glad to be a resource :)

John-Not much worse than a VA subsequent use now, so it's still worth it, but it certainly is more expensive now.

Sep 13, 2010 03:09 AM