There has been good news released about the USDA Guaranteed Loan Program funding situation. Conditional loan commitments are once again being issued for 100% USDA Home Loans subject to “the availability of funds and statutory authority to obligate such funds to support the proposed guarantee, the statutory authority to charge a sufficient guarantee fee (if any is needed, to support the proposed guarantee with available funding), and should the lender pass on to the borrower a loan origination fee that is higher than the guarantee fee that RHS is ultimately authorized to charge on the proposed guaranteed loan, the lender agrees to promptly return the difference to the borrower.”
In simpler terms, this means that lenders have started accepting USDA loan applications again for Section 502 Loans with the new 3.5% guarantee fee.
Each year in the past the USDA Loan Guarantee Program has run out of money and it usually has had no effect but this year was very different from past years. Due to the overwhelming popularity of this program, USDA Loan funding has run dry in May, many months before the end of the fiscal year end in October.
Here’s how it happened. As of late April, it looked like the program would have to be suspended until the end of the fiscal year. Then on May 11, USDA issued the news that they would once again accept applications and issue loan guarantees because it looked as a congressional bill was about to pass that would appropriate funds. That bill has not passed yet, so funding has run dry. We will keep you updated with the progress of this bill though congress.
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USDA Loans Funding Bill Clears House Financial Services Committee
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HR 5017 cleared the House Financial Services Committee late last week with a unanimous vote, which virtually assures the continued availability of USDA Guaranteed Home Loans. A full house vote on the ”Rural Housing Preservation and Stabilization Act of 2010″ could come as early as this week. We will continue to provide information on this matter as it becomes available.
H.R. 5017 was introduced last week by Congressman Paul E. Kanjorski of Pennsylvania to address the current funding issues related to the USDA Section 502 Rural Housing Loans.
If passed, H.R. 5017 would provide a permanent finance structure for Section 502 USDA Loans, meaning that they would no longer depend on yearly appropriations from congress to operate. Under H.R. 5017, the Guaranteed USDA Loans program will be self sufficient and no additional cost to the American tax payers. This would be accomplished by an raising the up front fee for USDA Loans to up to 3.5% of the loan amount from the 2% that is currently charged and possibly adding an annual premium of 0.5% of the loan amount for the term of the loan.
Funding for the USDA Guaranteed Loan program has run low in recent years because of continuously increasing popularity. If passed, this bill could address the Funding issues on a permanent basis. We will keep you posted as this bill travels towards becoming law.
Due to the drastically increased popularity of the USDA Guaranteed Rural Housing Loan Program, there is a possibility that funding for this program could run dry by the end of April. If funding should run out for this program, there is the additional possibility that no additional funding would be available until the begining of the government’s new fiscal year on October 1st. This means there could be a period of up to 5 months in 2010 that the Guaranteed program will not be available if no additional funding is appropriated. If you are considering using a USDA Guaranteed Loan for a home purchase in the near future, it would be wise to act sooner rather than later pending further developments. We will keep you updated.
Anyone who has applied for a home loan in the past year is probably familiar with some of the changes that have taken place in the mortgage market lately. The implosion of the subprime loan market and ensuing financial crisis has caused a significant tightening of the criteria for getting approved for a home loan. Very few programs are available today for borrowers to purchase a home without a significant down payment.
USDA Home Loans have become the fastest growing mortgage product in the U.S. because of the advantages they offer to home buyers. USDA Loans can only be used to purchase homes, not to refinance unless the home has a USDA loan already. USDA Loans can be used to buy a home with no down payment and no mortgage insurance. There isn’t another mortgage available that offers such great terms for home buyers who aren’t military veterans.
If you are looking to buy a home with zero down, look into a USDA Loan. You could be pleasantly suprised.
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84,000 Families Have Achieved Homeownership Through The Reinvestment and Recovery Act And USDA Loans
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According to USDA Release 0608.09 and Agriculture Deputy Secretary Kathleen Merrigan, 84,021 rural families from throughout the country have become homeowners so far as a result of USDA funding provided by the American Recovery and Reinvestment Act (ARRA). Merrigan made the announcement while standing on the front porch of a Carlisle, Pa., home that Kelly Hench, a mother of five, purchased in April with ARRA funds.
“Homeownership and access to affordable housing are important to maintaining stable communities, and the Obama administration is committed to ensuring that all Americans have the opportunity for a safe, suitable and affordable place to live,” said Merrigan. “This Recovery Act funding has helped people like Kelly Hench and allowed USDA to meet the overwhelming demand from rural families seeking homeownership.”
Shortly after Hench bought her bi-level house in Carlisle, she converted the lower level into bedrooms for herself and the youngest of her five children. The other children all have their own rooms. Hench is renovating the kitchen and preparing to buy new appliances. She is among more than 2,290 rural Pennsylvania residents who have received home loans as a result of Recovery Act funds during FY 2009.
Through Recovery Act funding, USDA Rural Development offers guaranteed and direct single-family-housing USDA loans to eligible rural residents. Down payments are not required for direct and guaranteed loans, and payments for direct loans are based on the borrower’s income. A reasonable credit history is required, and borrowers must have sufficient income to repay the loan. USDA rural loans use strict underwriting standards to assess each borrower’s credit, income and cash flow. As a result, this single-family-housing loan program has a low delinquency and default rate.
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The U.S. federal government is slowly extracting itself from the MBS market for home loans, closing out several emergency measures put into place in the throes of distress last year to prevent a collapse of mortgage finance.
According to a recent WSJ online article, The Federal Reserve’s $1.25 trillion program to purchase mortgage-backed securities, considered the most critical support, will draw to a close in the first quarter of 2010. Fannie Mae, Freddie Mac and Ginnie Mae will then be without a government buyer of last resort for their home loans for the first time since the mid-1990s and will have to rely solely on private investors.
Simply put, this means that interest rates can not remain at their present levels for much longer. If you are on still on the fence about a refinance or home purchase, the time to move is now. Learn more about Home Mortgage Loans, FHA Loans, USDA Loans, VA Loans and Jumbo Loans and Conventional Loans at www.loans-101.com. Blog Catalog
USDA Home Loans are increasing in popularity at an accelerated rate.
