USDA Loan Program Out Of Funds!

Yes it’s true and it will impact a majority of home buyers looking to use the USDA Loan Program to fund their purchase transaction.  How will it impact you?  It won’t, if you follow my advice..

So grab a pen and take some notes.

In A USDA Loan Program Memo Issued October 1st..

The USDA announced that funding for the USDA Loan Program will not be available for a short period of time at the beginning of the Fiscal Year 2011, which by the way starts on October 1st 2010.  The funding for the USDA Loan Program will become available again once “Congressionally Appropriated Funds for Purchase Transactions” are made available.

Can You Still Get Into The USDA Loan Program?

Absolutely you can.. If you apply for a USDA Loan through a lender (LIKE US) who will fund off of a Conditional Commitment Letter.  Many lenders at this time have continued to stay away from the USDA Loan Program until the funds have been appropriated.  If you are in Arizona, we can provide the USDA Loan Program for you.  If you are NOT in Arizona, head on over to MyFHAMortgageBlog.com and search for someone in your state.

How Does The USDA Conditional Commitment Work?

1. We underwrite your USDA Loan application and once we issue the approval will send it to the local Arizona Rural Development office.
2. The Arizona Rural Development office will review the appropriate portion of your loan application to verify that it fits into the USDA Loan Program.  Once they approve it for the program they will issue a Conditional Commitment.
3. We close the loan as scheduled and you move in.  The following steps are for the lender and the USDA only and do not require your assistance, other than making your regularly scheduled payments.
4. Once the funds are appropriated, the USDA will “Obligate” funds for your specific loan.
5. Once the USDA has “obligated” the funds it will process the Conditional Commitment letter and is able to fund it and issue the USDA Loan Guarantee.

Apply for a USDA Loan Online Now: Loan Application

So if you do your homework and apply for the USDA Loan Program with a lender (again, like us) who is funding off of the Rural Development Conditional Commitment letter, you will be able to fund your USDA Loan and move on in.

I’d like your opinion…

What do you think?  Will the interruption of available USDA Funds cause a further slowdown in an already messy mortgage market?  Or will the ability of “certain lenders” to fund off of a Conditional Commitment letter keep the flow going and most home buyers will get their loan without interruption?

Click here to apply for a the USDA Loan Program.  You can also ask a question about Guaranteed USDA Rural Home Loan on Get Started on USDA tab.

USDA Loan Guarantees Are Back

Over the last several months, we have continued to fund USDA Loans in Arizona based on our ability to obtain a Conditional Commitment Letter from the local Rural Development Office.  However, not all lenders have been willing to continue funding USDA Loans off of a Conditional Commitment Letter which is why a whole lot of home buyers have been left in a holding pattern.

In an earlier post I outlined the potential changes to USDA Loans at the onset of the new USDA Fiscal Year and in order for the USDA Government Underwriting System (GUS) to be used for automated underwriting; these changes would need to be implemented within the GUS system.

Over the past several months, when a USDA Loan has been funded the USDA Loan application had to go through a Manual Underwrite which eliminated many of the available underwriting waivers and made it more difficult to obtain the USDA Loan approval.

Today I received the USDA Loan Funding Notice from the national office in Washington DC stating that the enhancements to the systems will be complete on September 8th, 2010.

This announcement is great news and means that beginning September 8th, approved USDA lenders will be able to use the Government Underwriting System and will no longer be required to manually underwrite USDA Loans.

Apply for a USDA Loan Online Now: Loan Application

What this means to the prospective USDA Loan home buyer:

1. Underwriting will now be automated, not manual
2. Credit and Debt Ratio waivers will be available
3. It will be less restrictive for borderline applicants and easier to get an approval
4. Funding will return for banks that earlier refused to fund USDA Loans

To apply for a Guaranteed USDA Rural Home Loan click on the Get Started on USDA tab above.

I’d love to hear your comments on this new way of funding USDA Rural Home Loans below.

USDA Loan Rural Development Update

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.

Apply for a USDA Loan Online Now: Loan Application

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.

To apply for a Guaranteed USDA Rural Home Loan click on the Get Started tab above or click here.  You can also ask a question about Guaranteed USDA Rural Home Loan on Get Started tab.

I’d love to hear your comments on this new way of funding USDA Rural Home Loans below.

USDA Loans May Go Uninterrupted

That’s right USDA Rural Home Loans get a reprieve.  Just this morning HR 5017 passed the House Financial Services Committee which is the first step to gaining perpetual uninterrupted funding for USDA Rural Home Loans.

Next, the USDA Rural Home Loan supporting bill HR 5017 moves to a vote in the House.

Once it passes, USDA Rural Home Loans will be self sustaining and not rely on tax payer dollars for continuation.

The USDA Rural Home Loan will have some changes, such as a possible increase of the USDA Guarantee Fee from the current 2% to a possible 4%.  The USDA Rural Home Loan may also begin to look more like an FHA product with the POSSIBLE introduction of a monthly mortgage insurance payment.

Even with an increased USDA Guarantee Fee and a possible monthly mortgage insurance payment, the USDA Rural Home Loan will continue to be the most cost effective way to buy a home with zero money down.

Apply for a USDA Loan Online Now: Loan Application

Stay posted for updates to this story.

To apply for a Guaranteed USDA Rural Home Loan click on the Get Started tab above or click here.  You can also ask a question about Guaranteed USDA Rural Home Loan on Get Started tab.

I’d love to hear your comments on this new way of funding USDA Rural Home Loans below.

Is the USDA out of Funds?

Last week the Rural Development’s national office in Washington DC issued a statement that the anticipate the funds to issue guarantees for USDA Rural Home Loans will be exhausted by the end of April.

Every year we see the same thing happen.  Last year the funds ran out in March and while many lenders pulled out of the market, we did continue to fund USDA Rural Home Loans.

This year looks similar in many ways and many lenders have already pulled the plug on USDA loan applications.  Wells Fargo is no longer accepting USDA applications from it’s mortgage brokers.

For us it is business as usual and we don’t expect to stop funding unless the Committee on Appropriations gives an absolute no on a special allocation of $12 billion to get us through to the end of the fiscal year in September.  We are confident Congress will provide the money considering what is at stake for housing and our national economy.

Apply for a USDA Loan Online Now: Loan Application

What can you do to help?

You need to contact your US Congressman, US Senator, professional lobby and employer to get them working on a solution because if this happens many homeowners will be left out on their loan closing because it simply won’t happen.

Please take 5 minutes and follow the links below to provide your support.

Write to your Congressman

Write to your Senator