Guaranteed Rural Housing- Single Family -

DRAFT

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AgendaUSDA, Rural DevelopmentGuaranteed Rural HousingBenefitsLender ApprovalApplicant EligibilityProperty EligibilityThe Process Resources Available

Rural Development

Business & Cooperative

Community Facilities

Housing

Multi-Family Housing

Single Family Housing

502 Direct

502 Guaranteed

504 Loan & Grant

Utilities

United States Department of Agriculture

Guaranteed Rural Housing(GRH)

Loan made, held, and/or serviced by an approved GRH lender

Guaranteed against loss by USDA

Lender Approval An Approved Lender must be:A State Housing Agency, Farm Credit

Service, or:Approved by HUD, VA, Fannie Mae,

Freddie Mac, or:A participant in other Rural Development

or Farm Service Agency Guaranteed loan programs

Home Buyer Benefits☺102% LTV☺No Mortgage Insurance ☺30 Year Fixed Rate☺Partner with other Funding Sources☺No Loan Limit ☺Fees & Repairs may be Financed☺Unlimited Gifts or Seller Contributions☺No Reserves Required

Compare cost to insure

$6,290 $4,586 $2,000 $2,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

10 Year Cost To Insure $100,000 Loan

FHA FNMA 90% VA RD

Lender Benefits• Community Reinvestment Act (CRA)

• 102% LTV

• Saleable to Secondary Market

• Lender Profitability

• Guaranteed by Government

• Expand Market Share

• Lender Underwrites Loan

• Quality Customer Service

Rate and Term30-Year FixedInterest Rate Set by Approved Lender

Not higher than the 30-year, 90-day actual/actual Fannie Mae rate plus 60 basis points

- Or -Lender’s Published VA rate

One-Time GRH Fee2.00% Purchase.5% Refinance

Loan Purposes

• Purchase New

• Purchase Existing

New Construction

Stick & Modular:New is 12 months or less. Includes

already constructed, partially constructed or planned construction.

Can do Construction-perm or end loanConstruction-perm require additional

forms, see notes

New ConstructionManufactured

New Units ONLYAgency Approved Dealer-ContractorsIncludes unit & related site development

workMust meet Agency thermal standards

based on where the unit will be locatedUnit must be placed on a permanent

foundation

More Loan Purposes

Repairs Refinance

Rural Development Direct Guaranteed Loan

Typical Loan Closing Costs

Prohibited Purposes

Construction Draws – see notes.Furniture & Personal PropertyExisting Manufactured Home Income Producing PropertyNon-Essential Buildings & Land In-Ground Swimming Pool

Income

Household adjusted annual income may not exceed the MODERATE INCOME limit.

Limits based on family size & county where the property is located

Income & Property Eligibility web site at: http://eligibility.sc.egov.usda.gov

Adjusted Annual Income

Income of all Adult Household MembersGross incomeOT, commissions, bonuses, etc.Net self-employment incomeSS, child support, unemployment,

etc.

¤ Adjustments

¤ $480/annual per minor or full-time student

¤ Verified child care expenses

¤ $400/annual where borrower or co-borrower is elderly or disabled

Adjusted Annual Income

FL/VI Adjusted HOUSEHOLD Income Limits

All counties except Collier Palm Beach1-P 46,700 56,200 50,0502-P 53,350 64,250 57,8003-P 60,050 72,250 65,0004-P 66,700 80,300 72,2505-P 72,050 86,700 78,0006-P 77,350 93,150 83,8007-P 82,700 99,550 89,5508-P 88,050 106,000 95,350

THESE ARE NOT GROSS INCOME LIMITS Verify income of all adult household members

Repayment Income

Adequate & Dependable Income Repayment Income ≠ Adjusted Annual

Income OT, commission, self-employment, &

bonus income should have a 24 mo. history

Earned Income Credit may be added Non-taxable income may be “grossed-up”

Repayment Ability PITI – 29.0%

TD – 41.0% Include all debts ≥ 6 months

May exceed Ratio Limits with documented compensating factors such as: Zero or little payment shock 660+ Credit score 2+ years on the job And More…

Credit Verification Verification

Residential Mortgage Credit Report (RMCR) Tri-Merged Credit Report

Credit Alert Interactive Voice Response System (CAIVRS)

Rent History – 12 months Required only if FICO < 660

Credit Historyo No Credit Lines ≠ Bad Credit o Scores – NO MINIMUM

o ≥ 660 – no further review of credito < 660 – review per Rural Development Regulations

o Credit Waiver from Lender’s Underwritero Temporary circumstances,o Beyond applicant’s control,o and Circumstances removed; o oro Justifiable Dispute

Risk Layering

Payment ShockRatio WavierCredit Waiver2-1 Buy DownCo-Applicant score below 620

Other CriteriaDo not own a dwelling Insufficient resources to secure

conventional credit without the GuaranteeU.S. Citizen or Permanent Resident or

Qualified AlienLegal CapacityPrimary Residence

Site Eligibility Must be in Rural Area http://eligibility.sc.egov.usda.gov/

Access from a Street, Road or Driveway Environmental Desk Review by Rural

Development Staff Site Value ≤ 30% of total value Leasehold Estates (where applicable)

Flood Hazard AreasExisting homes may be financed if flood insurance

is obtained.New home Financing Discouraged in These Areas

ExceptionsObtain a FEMA Letter of Map Revision (LOMR)

indicating property is not in flood hazard area A-BHas FEMA approved flood plain area management

planFirst floor elevation above the 100 year flood plainObtain flood insurance (if no LOMR)No reasonable alternate non-flood zone sites are

available.

Appraisal of Property

Less Than 6 Months Old‘As Is’ or ‘As Improved’State Licensed AppraiserFHA approved appraisers for existing

properties (see inspections).Reviewed by Rural Development

Inspections – New Homes

For FL, Agency has no additional requirements beyond the Certificate of Occupancy.

Wells and septic systems must be approved by local government agency.

Existing Property Inspections

Property must comply with HUD Handbook 4150.2 and 4905.1

Contract with FHA appraiser to complete URAR. Deficiencies must be corrected.

Test well water. Must meet county requirement.Meet RD Thermal Criteria. Ask the FHA appraiser to

note the type and amount of insulation on the URAR. See notes.

Pest Inspection. Deficiencies must be corrected.

Repairs/renovations

May be included in the LoanCompleted prior to issuance of the Loan

Note GuaranteeEscrow of repairs permitted under

certain limited circumstances

New Construction Warranty 1 Year Builder’s Warranty Or 10 Year Builder’s Warranty from

approved company

Escrow Accounts

Existing AND New Construction

• Exterior work only when due to weather• Escrow at least 150% of the cost of

completion

Lender accepts application.

Lender pre-qualifies application.

Lender reserves GRH funds.

Lender processes application.

The Process

Lender submits complete application.

The ProcessRural Development issues Conditional Commitment

within 48 hours.

Lender closes loan.

Rural Development issues Loan Note Guarantee to Lender.

Lender submits closing package to Rural Development.

Reservation of Funds

When lender has:Pre-qualified ApplicantSigned Purchase Agreement

Fax Rural Development Form 1980-86, Request for Reservation of Funds

Reservation valid for 60 days

Application

Agency reviews underwritten package for GRH compliance.

Conditional Commitment issued within 48 hours.

Agency informs lender if package incomplete.

Submission Checklist 1980-21, Request For SFH Loan Guarantee

AD-1048

Lender’s Loan Underwriting Analysis

Uniform Residential Loan Application

Income Verification

Credit Verification

Purchase Agreement

Appraisal

FEMA 81-93, Standard Flood Hazard Determination

Post-ClosingIf repairs were escrowed, repairs must be

completed prior to issuance of the Guarantee.

Submission Checklist 1980-19, Loan Closing Report Guarantee Fee Lender Certification

Loan Note Guarantee issued.

Servicing/ReportingOnline ReportingServicing

Early default interventionLoss mitigation

LiquidationTimely liquidationTimely disposal (if applicable)Timely loss claim to Rural Development

Resource Websites Eligibility Website http://eligibility.sc.egov.usda.gov/ National Web Site www.rurdev.usda.gov Rural Development Instruction 1980-D http://

www.rurdev.usda.gov/regs/regs_toc.html Administrative Notices http://

www.rurdev.usda.gov/regs/an_list.html Fannie Mae Rates

http://www.efanniemae.com/singlefamily/reference_tools/net_yields/db_rate_chart.jhtml

Credit Alert Interactive Voice Response System (CAIVRS) (301)344-4000 or http://www.hud.gov/offices/hsg/sfh/sys/caivrs/caivrs/cfm

Questions?

THANK YOU

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