Presented by USDA Rural Development SECTION 502 DIRECT

  • Slides: 22
Download presentation
Presented by: USDA Rural Development SECTION 502 DIRECT & GUARANTEED HOME LOANS Overview

Presented by: USDA Rural Development SECTION 502 DIRECT & GUARANTEED HOME LOANS Overview

USDA RD Has Two (2) Purchase Programs (Fact Sheet line 1) 1) Section 502

USDA RD Has Two (2) Purchase Programs (Fact Sheet line 1) 1) Section 502 Guaranteed Rural Housing (GRH) Loan Program • Network of USDA-Approved Lenders (most ‘big-box’ lenders, many smaller ones, too) • Up to ‘Moderate’ income households (115% of ‘Median’ income for county) • Lender processes & makes the loan • USDA RD ‘guarantees’ the loan (reimburses lender if a loss incurred) • Losses are not paid from taxpayer funds – a Guarantee Fee paid by each borrower funds the program

USDA RD Has Two (2) Purchase Programs (Fact Sheet line 1) 2) Section 502

USDA RD Has Two (2) Purchase Programs (Fact Sheet line 1) 2) Section 502 Direct Housing Loans Program • USDA RD Area Offices located across GA (and across the U. S. ) • Up to ‘Low’ income households (80% of ‘Median’ income for county) • We also have a ‘Very Low’ income category (50% of ‘Median’ income for county) • Agency processes and makes the loans ‘directly’ to eligible applicants • If a loss happens, it comes from taxpayer funds

‘No Down-Payment’ Loans (Fact Sheet line 2) • Both loans are ‘no down-payment’ loans:

‘No Down-Payment’ Loans (Fact Sheet line 2) • Both loans are ‘no down-payment’ loans: 100% ‘plus’ Loan-to-Value (LTV); • Appraised value can be exceeded only by: GRH: DIRECT: 1 -time, upfront Guarantee Fee. 1) Escrow deposit, (As of Oct 1, 2016 = 1% of loan) 2) Appraisal fee, 3) Tax service fee 4) Homebuyer Education fee

USDA Rural Development is not FHA (Fact Sheet line 3) USDA Rural Development is

USDA Rural Development is not FHA (Fact Sheet line 3) USDA Rural Development is a separate Agency with its own regulations and accountability. • Though RD may adopt some FHA guidelines as our own, the Agency does NOT follow FHA guidelines in all matters

Properties in Rural Areas only (line 6) Rural Area Definition: • Open country that

Properties in Rural Areas only (line 6) Rural Area Definition: • Open country that is not part of or associated with an urban area • Any town, city or place that is not part of or associated with an urban area and vthat is rural in character with a population <10, 000; or v. Is not contained within a Metropolitan Statistical Area (MSA) and has a serious lack of mortgage credit with a population between 10, 000 -35, 000 (if area was already ‘urban’ before 1990, then max population is 20, 000) • Map of rural area: http: //eligibility. sc. egov. usda. gov/eligibility/welcome. Action. do

All of GA is eligible except areas around: Chattanooga, Dalton, Rome, Atlanta, Gainesville, Athens,

All of GA is eligible except areas around: Chattanooga, Dalton, Rome, Atlanta, Gainesville, Athens, Carrollton, Griffin, La. Grange, Columbus, Macon, Augusta, Milledgeville, Albany, Valdosta, Hinesville, Savannah, & Brunswick

Target Customers (line 7) GRH Direct • “Moderate” income households • “Very Low” income

Target Customers (line 7) GRH Direct • “Moderate” income households • “Very Low” income households – • Up to 115% of Median Income 50% of Median Income • “Low” income household – 80% of Median Income

Maximum Income Limits (line 11) Both USDA RD programs have Maximum Income Limits for

Maximum Income Limits (line 11) Both USDA RD programs have Maximum Income Limits for household size: GRH (Moderate is max): DIRECT: (Low is max): http: //www. rurdev. usda. gov/HSFDirect_Income_Limits. html

Primary Home / Other Credit (line 10) • Home being purchased must be the

Primary Home / Other Credit (line 10) • Home being purchased must be the applicant’s Primary residence (no 2 nd/3 rd homes) • Cannot already own adequate home that meets family needs and must: GRH: • Meet test for inability to obtain conventional credit Direct: • Be unable to obtain a loan from other lenders offering reasonable rates/terms (VL applicants automatically meets this)

Repayment Ratios (line 18) GRH • 29/41 manually underwritten loans; Automated system (Guaranteed Underwriting

Repayment Ratios (line 18) GRH • 29/41 manually underwritten loans; Automated system (Guaranteed Underwriting System ‘GUS’) may allow higher DIRECT • 29/41 for Very Low Income Applicants • 33/41 for Low Applicants Exceptions may apply based on compensating factors and high energyefficient homes (Direct)

Maximum Loan Amounts (line 19) GRH: • NO maximum loan amounts. Applicants’ income &

Maximum Loan Amounts (line 19) GRH: • NO maximum loan amounts. Applicants’ income & repayment ability limits loan amount DIRECT: • House must be ‘modest’, decent, safe & sanitary • Modest is < 2, 000 square feet AND under these dollar amounts • Pilot program under way now. Limits are now 80% of HUD limits – $235, 000 - $287, 000 (previously limits ranged $110, 000 - $160, 000)

Credit History (line 20) DIRECT: GRH: A Tri-Merged Credit Report (TMCR) will be Automated

Credit History (line 20) DIRECT: GRH: A Tri-Merged Credit Report (TMCR) will be Automated Merged and Residential Mortgage ordered: $25. 00 single/joint. A 'reliable' credit Credit Reports are acceptable. See details in score of 640+ is considered acceptable credit, but Chpt 10. A 'validated' score is required; score Federal Judgments are unacceptable regardless of of 640+ is considered acceptable credit. score. Alternative credit (rent, utilities, phone, etc) Validated: min 2 trade lines open for 12+ may be used if there isn't enough credit to obtain a months when verified rental history obtained; score on the report. 'Reliable' score = 3+ trade 3 trade lines if no rental history. Alt credit lines in the last 24 months open/active 12+ allowed. If <640 and manually underwritten, months. If score <640, see pg '4 -44' for Indicators indicators of unacceptable credit followed: of Unacceptable Credit (to follow):

Credit – Indicators of Unacceptable Credit GRH (manually underwritten loans): • Foreclosure within 3

Credit – Indicators of Unacceptable Credit GRH (manually underwritten loans): • Foreclosure within 3 years: Including pre-foreclosure activity, such as a pre-foreclosure sale or short sale • Chpt 7 Bankruptcy within 3 yrs • Chpt 13 Bankruptcy within 1 yr • Mtg/Rent pmt >30 days late within 1 yr DIRECT: See next page…

Credit – Indicators of Unacceptable Credit DIRECT: • Little or no credit history -

Credit – Indicators of Unacceptable Credit DIRECT: • Little or no credit history - mitigated by alternative credit • One installment loan pmt >30 days late within last 12 months • Non-RD debt written off in last 36 months, unless paid in full at least 12 months ago • RD debts that were debt settled in last 36 months, or in debt settlement now • Two revolving loan pmt >30 days late within last 12 months • Delinquency on a federal debt • Foreclosure within last 36 months • Judgment satisfied <12 months ago • Tax liens with no satisfactory arrangement for payment • Applicants w/Federal judgments are never eligible • Two rent/mtg pmts >30 days late in last 2 yrs (if >640, 1 yr) (except if obtained in US Tax court). Cannot be • Collection accts w/irregular pmts or no satisfactory waived. arrangement for pmt • Collection accts paid in full in last 6 months, unless regular pmts made previously • Discharged Bankruptcy: • Chpt 7 in last 3 yrs • Chpt 13 in last 1 yr

Property Type (line 22) Allowed: • Existing • Over 1 -yr old –or •

Property Type (line 22) Allowed: • Existing • Over 1 -yr old –or • <1 -yr old & previously occupied • New Construction • Recently finished • <1 -yr old & never occupied • Proposed Construction • Certified Plans/Specs & licensed Residential Contractor required

Single-close Construction Loans (line 30) GRH: DIRECT: Have always been able to close construction

Single-close Construction Loans (line 30) GRH: DIRECT: Have always been able to close construction loan to allow Recently regs were changed to allow Lenders to close Borrower to purchase lot, enter contract with contractor to construction loan & obtain the Loan Note Guarantee build on their lot. After construction/inspections, we before construction begins. After capitalize accrued interest (accrues at subsidized rate) & construction/inspections, they convert loan to permanent loan. Saves on closing Costs – no need for separate construction loan. Realtor fee can now be an itemized cost item for builder & paid at initial loan closing! convert loan to permanent loan. Saves on closing costs no need for separate construction loan.

Loan Application Packagers Assist USDA • • Provide outreach and presence in counties where

Loan Application Packagers Assist USDA • • Provide outreach and presence in counties where a Field Office is not located; Help us reach very low-income applicants; Promote the program in underserved areas; Prescreen potential applicants; Counsel potential applicants on how to improve their ability to qualify for a home; Ensure that applications are complete and accompanied by the supporting documentation needed for the Agency’s decision; Give applicants insight into the Agency’s application process and regulations. Packager: Individual who works for a tax-exempt non-profit, certified as USDA Packager & has at least one year of affordable housing loan origination and/or affordable housing counseling experience. Packagers must go through Intermediary for approval & loan application submissions – they review the work before coming to USDA Fee earned: Up to $1, 500 for each closed loan (Intermediary shares this fee)

Section 504 Repair Loans/Grants USDA RD also offers assistance for rural homeowners to repair

Section 504 Repair Loans/Grants USDA RD also offers assistance for rural homeowners to repair the home they already own. Must be under Very-Low Income limit Grants up to $7, 500 • For owners 62 and older to remove Health & Safety Hazards • Must show lack of repayment for Loans up to $20, 000 at 1% rate for up to 20 year for modernizing/repairing home • Do not have to be elderly • $4. 60/month per $1, 000 borrowed (20 yr term)

Contact Us (lines 37 & 39) DIRECT: GRH: • The GRH Staff is separate

Contact Us (lines 37 & 39) DIRECT: GRH: • The GRH Staff is separate from the Direct loan staff at right. Please submit questions to this email Inbox. It is checked daily. Have UNDERWRITER answer questions for Originators/Processors. • ra. [email protected] usda. gov Cartersville: 770 -386 -3393; X 100 Clarkesville: 706 -754 -6239; X 4 Ft Valley: 478 -827 -0016; X 4 Sandersville: 478 -552 -0901; X 4 Camilla: 229 -336 -0371; X 4 Douglas: 912 -384 -4811; X 4 http: //www. rd. usda. gov/files/gasfh 504 contactlist. pdf

QUESTIONS ? ?

QUESTIONS ? ?

Contact Information Rural Development Single Family Housing Division Ed. peace@usda. gov Office: 706 -552

Contact Information Rural Development Single Family Housing Division Ed. [email protected] gov Office: 706 -552 -2593 www. rd. usda. gov/ga