USDA improves loan program for single-family housing
Send a link to a friend
[December 20, 2013]
WASHINGTON — Last week, U.S. Department of
Agriculture Secretary Tom Vilsack announced a series of sweeping
changes to a popular loan program for rural homebuyers. The changes
are part of an extensive overhaul that will strengthen rural housing
markets, increase the availability of rural home loans and spur the
construction of new homes in rural areas.
"These improvements will help create jobs and enable more people to
participate in the rural home loan guarantee program," said Colleen
Callahan, Illinois director for USDA Rural Development. "Since the
inception of the program, more than 54,000 rural residents in
Illinois have received mortgages guaranteed by USDA Rural
Development. This program gives rural Americans more opportunities
to make financing decisions that lay the groundwork for the future
prosperity of their families."
The changes were published in the Dec. 9 Federal Register. They
take effect Sept. 1, 2014, and make several improvements to USDA
Rural Development's Single Family Housing Guaranteed Loan Program.
Among other things, they expand the types of lenders who are
eligible to participate. With the rule change, any lending entity
supervised and regulated by the Federal Deposit Insurance Corp., the
National Credit Union Administration, the Office of the Comptroller
of the Currency, the Federal Reserve Banks or the Federal Housing
Finance Board may underwrite loans guaranteed by Rural Development.
This will enable many small community banks and credit unions to
participate in the guaranteed loan program. Currently, these
entities are not eligible lenders.
In another policy change, for the first time, borrowers will be
able to choose home loan terms shorter than 30 years. This will
result in a significant cost savings for borrowers who qualify for
the higher payments and who want to pay off their loan faster and
pay less interest on their loan.
As part of the overhaul, Rural Development has begun a series of
enhancements to automate processes, reduce paperwork and reduce loan
approval times. Additional program improvements are:
[to top of second column]
borrowers no longer will be required to initiate separate
construction and permanent loans for new homes. Instead,
there will be one closing for one loan, known as a
Lenders will be required to
consider foreclosure prevention techniques such as loan
modifications and short sales. Currently, lenders are
"encouraged" but not required to do so.
These changes will be fully outlined in a new handbook to
accompany program regulations. The handbook will provide a single
reference point on program rules for borrowers and lenders. It will
replace more than 20 administrative notices that are written
separately and must be updated annually.
For additional details, see
Page 73927 of the Dec. 9 Federal Register. USDA welcomes public
comment on the changes. The deadline to submit comments is Jan. 8.
Page 73927 for information on how to submit comments.
[Text from file received from
USDA Rural Development]