Guaranteed Rural Housing

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DRAFT
Guaranteed Rural Housing - Single Family -
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ltinsert your personal introduction on this slidegt
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Agenda

• USDA, Rural Development
• Guaranteed Rural Housing
• Benefits
• Lender Approval
• Applicant Eligibility
• Property Eligibility
• The Process
• Resources Available

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United States Department of Agriculture
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Guaranteed Rural Housing(GRH)

• Loan made, held, and/or serviced by an approved
  GRH lender
• Guaranteed against loss by USDA

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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

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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

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Compare cost to insure
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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

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Rate and Term

• 30-Year Fixed
• Interest Rate Set by Approved Lender
• Not higher than the 30-year, 90-day actual/actual
  Fannie Mae rate plus 60 basis points
• - Or -
• Lenders Published VA rate
• One-Time GRH Fee
• 2.00 Purchase
• .5 Refinance

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Loan Purposes

• Purchase New
• Purchase Existing

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New Construction

• Stick Modular
• New is 12 months or less. Includes already
  constructed, partially constructed or planned
  construction.
• Can do Construction-perm or end loan
• Construction-perm require additional forms, see
  notes

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New Construction

• Manufactured
• New Units ONLY
• Agency Approved Dealer-Contractors
• Includes unit related site development work
• Must meet Agency thermal standards based on where
  the unit will be located
• Unit must be placed on a permanent foundation

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More Loan Purposes

• Repairs
• Refinance
• Rural Development Direct
• Guaranteed Loan
• Typical Loan Closing Costs

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Prohibited Purposes

• Construction Draws see notes.
• Furniture Personal Property
• Existing Manufactured Home
• Income Producing Property
• Non-Essential Buildings Land
• In-Ground Swimming Pool

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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

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Adjusted Annual Income

• Income of all Adult Household Members
• Gross income
• OT, commissions, bonuses, etc.
• Net self-employment income
• SS, child support, unemployment, etc.

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Adjusted Annual Income

• Adjustments
• 480/annual per minor or full-time student
• Verified child care expenses
• 400/annual where borrower or co-borrower is
  elderly or disabled

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FL/VI Adjusted HOUSEHOLD Income Limits

• All counties except Collier
  Palm Beach
• 1-P 46,700 56,200 50,050
• 2-P 53,350 64,250 57,800
• 3-P 60,050 72,250 65,000
• 4-P 66,700 80,300 72,250
• 5-P 72,050 86,700 78,000
• 6-P 77,350 93,150 83,800
• 7-P 82,700 99,550 89,550
• 8-P 88,050 106,000 95,350
• THESE ARE NOT GROSS INCOME
  LIMITS
• Verify
  income of all adult household members

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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

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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

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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 lt 660

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Credit History

• No Credit Lines ? Bad Credit
• Scores NO MINIMUM
• 660 no further review of credit
• lt 660 review per Rural Development Regulations
• Credit Waiver from Lenders Underwriter
• Temporary circumstances,
• Beyond applicants control,
• and Circumstances removed
• or
• Justifiable Dispute

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Risk Layering

• Payment Shock
• Ratio Wavier
• Credit Waiver
• 2-1 Buy Down
• Co-Applicant score below 620

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Other Criteria

• Do not own a dwelling
• Insufficient resources to secure conventional
  credit without the Guarantee
• U.S. Citizen or Permanent Resident or Qualified
  Alien
• Legal Capacity
• Primary Residence

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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)

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Flood Hazard Areas

• Existing homes may be financed if flood insurance
  is obtained.
• New home Financing Discouraged in These Areas
• Exceptions
• Obtain a FEMA Letter of Map Revision (LOMR)
  indicating property is not in flood hazard area
  A-B
• Has FEMA approved flood plain area management
  plan
• First floor elevation above the 100 year flood
  plain
• Obtain flood insurance (if no LOMR)
• No reasonable alternate non-flood zone sites are
  available.

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Appraisal of Property

• Less Than 6 Months Old
• As Is or As Improved
• State Licensed Appraiser
• FHA approved appraisers for existing properties
  (see inspections).
• Reviewed by Rural Development

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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.

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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.

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Repairs/renovations

• May be included in the Loan
• Completed prior to issuance of the Loan Note
  Guarantee
• Escrow of repairs permitted under certain limited
  circumstances

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New Construction Warranty

• 1 Year Builders Warranty
• Or
• 10 Year Builders Warranty from approved company

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Escrow Accounts

• Existing AND New Construction
• Exterior work only when due to weather
• Escrow at least 150 of the cost of completion

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The Process
Lender accepts application.
Lender pre-qualifies application.
Lender reserves GRH funds.
Lender processes application.
Lender submits complete application.
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The Process
Rural Development issues Conditional Commitment
within 48 hours.
Lender closes loan.
Lender submits closing package to Rural
Development.
Rural Development issues Loan Note Guarantee to
Lender.
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Reservation of Funds

• When lender has
• Pre-qualified Applicant
• Signed Purchase Agreement
• Fax Rural Development Form 1980-86, Request for
  Reservation of Funds
• Reservation valid for 60 days

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Application

• Agency reviews underwritten package for GRH
  compliance.
• Conditional Commitment issued within 48 hours.
• Agency informs lender if package incomplete.

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Submission Checklist

• 1980-21, Request For SFH Loan Guarantee
• AD-1048
• Lenders Loan Underwriting Analysis
• Uniform Residential Loan Application
• Income Verification
• Credit Verification
• Purchase Agreement
• Appraisal
• FEMA 81-93, Standard Flood Hazard Determination

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Post-Closing

• If 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.

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Servicing/Reporting

• Online Reporting
• Servicing
• Early default intervention
• Loss mitigation
• Liquidation
• Timely liquidation
• Timely disposal (if applicable)
• Timely loss claim to Rural Development

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Resource Websites

• Eligibility Website http//eligibility.sc.egov.us
  da.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) [phone] or http//www.hud.gov/offic
  es/hsg/sfh/sys/caivrs/caivrs/cfm

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Questions?
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THANK YOU

• ltInsert Contact Infogt