4/20/10 – As we’ve mentioned (a couple of times) USDA Single Family Rural Development Home Loan Program is running out of money… WHEN that magic date is – we don’t know… But we know it’s coming in the next few weeks.
The Hombuilder’s Association of America is in Washington this week to discuss (read they are begging Congress) ways to get more money to the program FAST! No wonder – it’s a zero down payment loan, and it’s the hottest mortgage product we have! (Guidelines are pretty strict read here if you’ve had a foreclosure or bankruptcy)
Last week two members of the House proposed legislation that would continue the funding… but both bills add requirements that would force lenders to raise the rates for these loans! 8o((
Rep. Shelley Moore Capito (R, WV) the ranking Republican member of the House Financial Services Subcommittee on Housing and Community Opportunity, late Tuesday introduced legislation that would increase the current 2% guarantee fee to between 3% and 4%.
Separate legislation was recently introduced by Rep. Paul E. Kanjorski (D, Pa.), chairman of the House Financial Services Subcommittee on Capital Markets. That version has the lender paying a 3.5% upfront fee when the loan is issued, while authorizing an annual assessment of .5% of the outstanding balance.
Neither program places additional cost on the taxpayers.
The next step is discussion at committee level before a final bill is moved to the House floor. That’s expected to happen quickly, given the money is quickly dwindling during the key Spring selling season.
Okay so WHY does Congress feel that it is necessary to either add a downpayment requirement and/or increase the Guarantee Fee?
These are ZERO Downpayment loans (for current guidelines click here) that have to be located in a more rural area. There are income requirements… these are not $750,000 loans in Los Angeles (where FHA has way high loan limits). For the most part, these are $200,000 to $300,000 loans made to people living in outlying areas who are blue collar workers. They have 2 or 3 jobs, and they are conservative, and the USDA Home Loan program has a LOW default rate!
I’m hopeful that Congress gives the program more money – and I hope upon hope that they don’t make it more expensive!
If you have questions about taking advantage of the USDA Home Loan program in NC – call us. We can tell you exactly what’s happening now! Steve and Eleanor Thorne, USDA Mortgage Specialist, 919-649-5058