Well this is unexpected. The USDA Loan Processing Time for the end of 2014 just got much longer. They announced today that they will not accept any new applications for a week, beginning November 21, 2014. They are doing this because of the significant USDA Loan Eligibility Requirement changes that take place December 1, 2014. The GOAL is to reduce the backlog, because if your loan is “in line” at USDA, and they DON’T get your loan approved, you will have to get BACK IN LINE, after December 1. New documents signed, etc.
There’s another program that our bank offers for down payment assistance, that might be a great choice, if you want to buy a house in 2014, and don’t want to wait… many Sellers are not interested in waiting more than 55 days for a closing!
Directly from Washington, DC USDA Home Loan Offices
SFH Origination Update – 7CFR 3555 Implementation Conversion and Backlog Process
AN IMPORTANT MESSAGE FOR OUR LENDERS: To implement regulation-related conversion changes that will streamline processing and save you time and money, Rural Development will not accept new Single Family Housing Guaranteed loan applications from the close of business on November 21, 2014, through the start of business on December 1, 2014
To prepare for the December 1 conversion to the new 7 CFR 3555 regulation published almost a year ago, and to avoid greater disruption of our lenders’ application submission processes, we must eliminate as much of the conditional commitment backlog nationwide as possible. In some states the backlog is substantial and an undertaking of this magnitude requires that we assign all available staff resources to the project. We will focus on eliminating the backlog during the week applications are not accepted. (READl The NC Backlog, which is one of the biggest in the Country – should benefit from this decision by the USDA Loan Processing Time efforts and help from other states).
We need your help! As noted in our announcement released Monday morning, November 3, our Field offices have seen a large increase in the number of applications with missing information, missing documents, miscalculations, oversights related to Guaranteed Underwriting System (GUS) findings, and the like. We ask that you take additional time to review all application packages prior to submission. As we prepare for conversion, our staff will not be able to devote additional time to incomplete applications, and will have to return them to the submitting lenders. (READ: Some mortgage companies have been trying to get around the USDA Loan Processing Time delays by submitting incomplete files – those lenders will be penalized)
Once the conversion is completed, the turnaround time you can expect for loan approvals will be dramatically reduced.
We have not chosen this course of action without careful consideration of the consequences for our lenders and borrowers, and we do regret any inconvenience it may cause you. During our deliberations we spoke with several lenders who helped us arrive at this decision. They also posed several questions which we thought you might find helpful.
Can lenders enter applications into the Guaranteed Underwriting System (GUS) after the November 21 cut-off date? Yes. Lenders who use GUS may continue to enter new applications into the system, as you do today, however they will not be permitted to perform a final submission of the application to USDA until December 1. (READ: We can tell you what the “automated system and our Underwriters can condition the loan – however the USDA Loan Processing Time will be delayed because TONS of people will submit files on December 1st)
Will USDA accept non-GUS, manually underwritten files that lenders submit? No. Manually submitted files will be returned to the lender. These files would then need to be re-underwritten per the new 7 CFR 3555 regulation. (READ: If you have under 680 Credit Scores, or you do not meet the new Debt to Income Requirements – you will have even longer USDA Loan Processing Time as your file will require additional resources for approval).
Why have we chosen to suspend processing in this way? Were there no other options? The suspension option is considered the least disruptive for both lenders and borrowers because of two limiting factors. We are not able to process applications under two regulations simultaneously, and applications underwritten using the current 1980-D regulation cannot be approved under the new 3555 regulation.
Consequently, any backlogged applications in our processing queue that are not processed by December 1 would have to be returned to lenders and underwritten a second time. The borrowers would have to sign new documents. These applications would then be resubmitted to RD and placed at the back of the processing queue as per the regulation requirement that applications be processed in the order received.
The option we have chosen minimizes the need to resubmit loan applications. The lender holds the loan until December 1 and then submits for RD review and approval based on the 7 CFR 3555 regulation. One of the clear advantages to this approach is that the issuance of the conditional commitment will not have to be delayed by a large number of other applications already in the queue. By reducing the backlog we significantly accelerate the application turnaround.
Will states that have no conditional commitment backlogs currently be able to continue processing loan applications? No.l work among the State offices. States fully current in the issuance of conditional commitments will be helping other states resolve their backlogs. (READ: Again, this should be helpful to NC USDA Loan Processing Time, because we have one of the largest backlog – however, we could have Underwriters who are unfamiliar with our state, asking for conditions that will be unusual).
Can we guarantee lenders that the entire conditional commitment backlog in every state will be eliminated? No. This is our goal and we believe it is attainable if states current in their processing assist those that are backlogged as planned. We have already made significant strides toward backlog reduction in several states, and we can assure our lenders that all state backlogs will be dramatically improved if not entirely resolved.
If the conditional commitment backlog is not entirely resolved, will lenders have to underwrite applications not processed by December 1st a second time? Yes, but we will do everything possible to mitigate that inconvenience and avoid such an outcome. (READ: If the NC USDA Loan Backlog of files that need Underwriting does NOT get caught up – they will send files that are currently sitting in line BACK to the Lender – ADDING to the USDA Loan Processing Time for those unfortunate individuals. We actually had this happen when the USDA PMI rates changed in October – it was VERY frustrating for EVERYONE!)
We greatly appreciate your support as we begin this conversion. We believe the benefits you receive will far outweigh these early inconveniences, but we are aware that this complicates your processing and we will do everything we can to ease the transition.
Every county in NC has a portion that currently qualifies for USDA Home Loans, but those “boundary maps” are scheduled to change SLIGHTLY in December of 2014.
If these changes mean that you might not qualify for a USDA Home Loan in NC – do not worry! We are one of a handful of lenders in NC that also offer all of the NC Affordable Housing loans, which also provide Mortgage Tax Credits and Down Payment Assistance! Best of all? You don’t have to be a first time home buyer to qualify for these great programs!
For more information about USDA Loan Processing Times in North Carolina, or to understand how these guideline updates are going to affect your ability to qualify – please contact Steve and Eleanor Thorne, 919-649-5058, Connect with us on Google Plus or via Facebook to keep up to date on any changes to the USDA Home Loan program in NC!