The year 2013 has been good thus far for the USDA single-family program in adding additional scope to the refinance program, clarification to underwriting criteria and an eligibility deadline extension.
Effective in February, the USDA added 16 new states to their Rural Refinance Pilot Program. Individuals with existing USDA-insured home loans located in one of these states could refinance without the need to obtain a credit report or appraisal. The original states were: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee. The additional states added are Alaska, Arkansas, Colorado, Idaho, Kansas, Missouri, Montana, North Dakota, Oklahoma, Puerto Rico, South Dakota, Texas, Utah, Washington, West Virginia and Wisconsin.
Also, in February the USDA offered clarity with regard to underwriting guidelines as they apply to loans with and without Guaranteed Underwriting System (GUS) findings. The update published a comparison checklist for documentation required for manually underwritten loans and loans receiving GUS finding recommendations as "refer" and "refer with caution.” As part of the update, the USDA has also addressed the details of reduced documentation for eligible loans receiving a GUS accept recommendation.
Most recently, it was announced that the USDA would delay the implementation of the 2010 Census Data that would align area eligibility. This is good news since the data, if acted upon, would have adjusted area eligibility and disqualified more than 900 currently approved communities and disqualify nearly 40 percent of the loans in process at the time. The current eligible areas will remain in effect through Sept. 20, 2013. This extension was part of the 2013 Appropriations Act of 2013. To remain eligible, it is stated that the Rural Development (RD) field office would need to receive a “complete application” by end of business on Sept. 30.
The USDA program continues to be the only source of non-military 100 percent financing in the marketplace. In 2012, before the Refinance Pilot Program was released in March, 97 percent of Rural Development production was purchase money, and after its release, 92 percent of total production are purchase transactions. All 50 states currently have areas of eligibility.
As an originator, one should develop a more purchase-dominated pipeline where the USDA fits in nicely as a loan option. There is a learning curve in mastering this product, and having a wholesale lending partner that is exclusively dedicated to processing and underwriting this loan is an advantage.
With more than 25 years in the mortgage industry, Rich Obermeier, branch manager for GSF Mortgage Corporation, has worked with some of the largest mortgage companies in the county developing retail and wholesale channels. Rich has assisted in developing and implementing operational protocols for sales managers, originators and loan processors. In recent years, Rich has developed the USDA Rural Development Product in multiple states and locations. Rich may be reached by phone at (262) 957-8901 or e-mail
[email protected]
