Category: Rural Development loan

DIFFERENCES BETWEEN THE SECTION 502 GUARANTEED AND DIRECT LOAN PROGRAMS


 

There are several other Section 502 loan programs, but the only one that approaches the guaranteed program in number of loans made is the Homeownership Direct Loan Program

This program once accounted for almost all the Section 502 loans, but the number of guaranteed loans has greatly increased in the last few years. In Fiscal Year 2001, the guaranteed program obligated approximately $2.3
billion for 29,326 loans, while the direct program obligated approximately $1.07 billion for a total of 14,789 loans. The important differences between the Section 502 guaranteed and direct loan programs are as follows:

ƒ The lender for Section 502 guaranteed loans is a private savings and loan institution, bank, or mortgage company which also handles all the loan servicing. The lender for the direct program is the Rural Housing Service; Rural Development handles the servicing.

ƒ Income levels for Section 502 guaranteed borrowers are capped at 115 percent of the area median income. Income levels for the direct program must be no more than 80 percent of the AMI. ƒ Payment assistance subsidy is not available 
through the guaranteed program. Payment assistance, which can reduce the interest paid on the mortgage to as low as 1 percent, is available for borrowers in the direct program and is based on the borrower’s income as a percent of AMI.
ƒ Borrower protections differ between the programs. Applicants for guaranteed loans do not have the rights of moratorium or of appeal that accompany the direct program. Also, in the case of default, Section 502 guaranteed loans are liquidated by
the commercial lender, while direct loans are liquidated by the government

 

 

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Credit Requirements for A Kentucky Rural Housing RHS Mortgage Loan


2013 Credit Requirements for A Kentucky Rural Housing RHS Mortgage Loan  Kentucky First Time Home Buyers---Zero Down Loans Still Exist
REQUIREMENTS
  • · Credit report must match GUS Findings.
  • · Must not be older than 120 days on the date of closing for existing properties and 180 days for proposed and new construction.
  • · Must contain complete information provided by all three repositories.
  • · The credit report must show the following three required FICO scoring models for the report to be valid with Platinum Mortgage, Inc.:

1. Equifax Beacon 5.0

2. Transunion FICO Risk Score, Classic 04

3. Experian/Fair Isaac Risk Model V2.

  • · Must reflect a minimum of 1 score per borrower.

TRADELINE REQUIREMENTS:

GUS Approved: Each credit report must contain 2 acceptable tradelines with at least 12 month history and last active within the last 24 months (see below regarding acceptable tradelines).

Manual Underwrite: As determined acceptable by the underwriter.
CREDIT SCORE
  • · If more than one score is supplied by the same repository, the lesser of the scores will be used.
  • · Determining Qualifying Credit Score:

o Middle of 3

o Lower of 2

o If only one score is provided, that score is the qualifying credit score for that borrower.

Minimum credit score for:

  • · Manual Underwrite = 660
  • · GUS Approval = 660

LIABILITIES & CREDIT HISTORY

(INDEX)
H
OPEN CHARGE ACCOUNTS
ALIMONY, CHILD SUPPORT, OR SEPARATE MAINTENANCE
  • · Court-ordered payments should be documented by a copy of the court order.
  • · Borrower(s) must have an acceptable existing repayment plan for any arrearages and proof of 12 months on time payments, and/or be required to pay account in full prior to, or at closing.
  • · See Collections/Chargeoffs for additional requirements if there are arrearages.
CONTINGENT LIABILITIES
  • · If the borrower is a co-signer on an account paid by a 3rd party, the liability may only be excluded from the borrower debt ratios if evidence the primary obligor has been making the payments on time on the debt for a minimum of 12 months can be obtained.
  • · Court-ordered assignment of debt should be documented by a copy of the court order. Must have 12 months cancelled checks from the payer of the court ordered debt in order to exclude from the debt ratio.

PREVIOUS MORTGAGE:

  • · Section 1980.345(c)(1)(ii) requires all previous mortgage liabilities disposed of through a sale, trade, or transfer without a release of liability, to be included in the debt ratio calculation unless evidence can be obtained to confirm the remaining party has made payments over the last 12 months.
  • · In divorce settlements when one person retains ownership of a residence as a result of the proceedings, it does not imply that the person relinquishing ownership is automatically released of the financial liability associated with an existing mortgage debt. The divorce decree along with a release of liability from the mortgage creditor must be presented as evidence that an applicant is no longer legally responsible for the mortgage payment. If no release of liability is granted by the creditor then the applicant remains legally obligated for the debt. Quit claim deeds do not remove liability for mortgage debts.
DEFERRED INSTALLMENT DEBT May not be omitted from debt ratio. If the credit report does not reflect a monthly payment due at the end of the deferment period, the lender may request a copy of the applicant’s payment letter, or utilize the industry standard of estimating student loan payments as 1% of the loan balance.
NON-REIMBURSED EMPLOYEE EXPENSES If the borrower claims any non-reimbursed employee expenses (IRS Form 2106 or 1040 Schedule A), the borrowers monthly income should be reduced by the annualized monthly average.
BUSINESS DEBT IN BORROWER’S NAME When the account in question does not have a history of delinquency, the debt may be excluded with satisfactory evidence the obligation was paid out of company funds (such as 12 months cancelled company checks). If the account in question has a history of delinquency, the full debt obligation must be included in the borrower’s debt ratio.
FINANCED PROPERTIES Additional financed properties are generally not permitted as borrower may not own any other suitable housing at time of closing.
DEBTS WITH <6 REMAINING PAYMENTS The total debt ratio should include revolving debt regardless of when the debt will be retired. Installment loans will only be considered if the debt will be retired in more than six months. However, if the monthly payment on the debt is substantial, the payment will also be included in long term debt. The GUS system will automatically exclude debt that is eligible to be excluded. If not excluded by GUS the debt must be included in the debt ratio.
“PAYING DOWN” ACCOUNTS Not permitted. Settlement offers will not be considered as proof of balance
SETTLEMENT OFFERS Are acceptable on accounts that will be paid in full at closing as long as the offer is in writing from the creditor reporting on the credit report.
PAST DUE ACCOUNTS (NOT A COLLECTION OR CHARGE OFF) Recent derogatory credit >1×30 within the previous 12 months is not permitted unless approved by GUS. All past due accounts must be current at time of closing.
COLLECTIONS/ CHARGE OFFS
  • · No accounts converted to Collection/Charge off in previous 12 months allowed, unless approved by GUS.

GUS Approved:

  • · Medical Collections/Charge offs are not required to be paid.
  • · Other Collections/Charge offs, if >24 months, not required to be paid, otherwise accounts must be paid in full prior to, or at, closing.

Manual Underwrite:

  • · Medical Collections/Charge offs are not required to be paid.
  • · Other Collections/Charge offs must be paid in full prior to, or at closing.

Any unpaid Collections/Charge offs will require a satisfactory letter of explanation from the borrower.
OUTSTANDING FEDERALLY INSURED OR GUARANTEED DEBT Borrower(s) must have an acceptable existing repayment plan (minimum of 12 months), and/or be required to pay account in full prior to, or at closing. Borrower must also be cleared through CAIVRS.
JUDGMENTS/LIENS
  • · Must be paid at, or prior to, closing.
  • · Borrower(s) may not have any new Judgments/Liens within the previous 12 months, unless approved by GUS.
BANKRUPTCY (ALL) 3 years seasoning required from Discharge or Dismissal date.
FORECLOSURE 3 years seasoning required.
DEED-IN-LIEU OF FORECLOSURE 3 years seasoning required.
SHORT SALES 3 years seasoning required.
COMPENSATING FACTORS Some compensating factors include:

  • · Conservative use of credit
  • · Minimal increase in borrower’s housing expense
  • · Substantial cash reserves after closing
  • · Credit score >660
  • · Low total debt ratio (does not compensate for high housing ratio)
MULTIPLE RISK LAYERING Multiple risk layering is not allowed on manually underwritten loans:

  • · Payment Shock (>100%)
  • · Ratio Waiver
  • · Credit Waiver
  • · Credit Score <660
  • · Short Duration of Employment (less than 12 months employment with current employer)
Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
Free Preapproval for Kentucky RHS USDA Mortgage Loan
Kentucky Rural Housing RHS Mortgage Loan Credit Requirements for 2013
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Bullitt County Kentucky USDA Home Loan and Rural Housing Loans for Bullitt County KY


Bullitt County Kentucky USDA Home Loan and Rural Housing Loans for Bullitt County KY.

via Bullitt County Kentucky USDA Home Loan and Rural Housing Loans for Bullitt County KY.

Kentucky Single Family Housing Guaranteed Loan Program


Kentucky Single Family Housing Guaranteed Loan Program

Kentucky Single Family Housing Guaranteed Loan Program 
– 25 Frequently Asked Questions

“

25 Questions and  Answers

1 What is the guarantee?
USDA Rural Development provides the full faith and assurance of the U.S Government
that any financial loss resulting from servicing the loan will be reimbursed in full up to
an amount not exceeding 90% of the original loan amount. All loss up to an amount not
exceeding 35% of the original loan is fully reimbursed. Losses exceeding 35% are 85%
reimbursed.
2 What is the advantage to the customer?
100 percent financing, fixed interest rate,  low monthly mi fee (.50bps) and upfront mi fee of 2% and no restrictions on size or design are just a few of the advantages.
3 What are the eligibility requirements?
Have adequate and dependable income (up to 115 percent of adjusted area median
income), have acceptable credit, do not own a dwelling in the local commuting area, US
Citizen or permanent resident, have the ability to personally occupy the home on a
permanent basis, and do not have funds for a 20% down payment loan plus closing and
moving expenses.
4 Can a Broker originate Guaranteed loans? Yes, however only Approved lenders may underwrite & submit loans.
5 How long does it take to get an answer?
Our goal is a 2 to 5 day turnaround. Time will be longer in some offices due to the large
number of guarantee requests received.
6 What is the maximum fixed Interest Rate  and term?
Fannie Mae 90 day delivery rate plus 60 basis points rounded up to nearest quarter of
one percent Or no more than the Lender’s published VA rate for first mortgage loans
with no discount points. The term is 30 years.
7 What is the maximum loan amount? The Loan amount is limited by the market value and repayment ability.
8 What is the maximum Loan to Value? It can be up to 100% LTV plus the Agency guarantee fee.

9 What is the Guarantee Fee? The guarantee fee is 2.0 percent of the “Total” loan amount.
10 What are the qualifying ratios? PITI Ratio 29 percent, TD Ratio 41 percent.
Higher ratios may be approved with compensating factors.
11 Do we show deferred student loans in the debt ratio?
Deferred student loans should be included in the debt ratio calculations for Guaranteed
Loans regardless of the deferment period.
12 What is the minimum credit score?
Under certain criteria, credit score 640 and above no comment required.
For credit score 639 and below document circumstances were temporary in nature
beyond the applicants control and have been removed. In most cases, loans will not be
guaranteed for applicants who have a middle credit score of 580 & below.
13 What about location? The dwelling must be located in eligible rural area (See eligibility site) http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
14 What about refinancing? Limited to existing USDA Rural Development guaranteed or direct loans.
15 Can loans include acreage?

Possibly. The acreage must not contain any income producing facilities and the value of
acreage may not exceed of the total property value.
16 Can Manufactured Homes be financed? Yes, however they must be new and sold by an approved dealer contractor. We as a lender currently don’t offer these type of loans

17 What about an in-ground swimming pool?  Swimming pools are now okay with the recent changes on December 1st, 2014

18 What are the required inspections?Property must meet HUD Handbook 4905.1 & 4150.2 or similar standard. A FHA roster appraiser can verify adequacy/working order of electrical, plumbing, heating, water & waste disposal on existing dwellings.
19 Will USDA Rural Development issue a letter asking the Approved Lender to make a loan? No. This is the Approved Lender‟s loan. They underwrite the loan and decide if it meets their standards and Agency standards before submitting.
20 Is homebuyer education required? Homebuyer education is not required, however it is recommended.
21 Are seller concessions allowed? Yes. Rural Development  restricts  the amount of seller concessions to 6% of sales price
22 Who approves the Appraiser? The appraiser must be licensed by the State to complete appraisals.
23 Can necessary repairs be included in loan? Yes. An „as improved‟ appraisal will be needed to include cost of repairs.
24 Are alternate verifying income documents allowed

Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax

years, and telephone verification of employment.

25 Who buys Guaranteed Housing Loans?

FHLB, Fannie Mae, Ginnie Mae, and other

— b91d9-requestinformationbutton

 
Joel Lobb
Senior  Loan Officer
(NMLS#57916)
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

Kentucky USDA Mortgage Upfront Guarantee Fee and the monthly mortgage insurance Annual fee


August 1, 2012

 

Kentucky USDA Mortgage Upfront Guarantee Fee and the monthly mortgage insurance Annual fee 

 

Effective on October 1, 2012, the start of Fiscal Year (FY) 2013, Rural Development will revise the Up-Front Guarantee Fee and the monthly mortgage insurance fee structure as follows on a Kentucky USDA Mortgage loans in Kentucky for the Guaranteed Loan RHS :

 

Up-Front Guarantee Fee

FY 2012

Through

9/30/2012

FY 2013 Effective

10/01/ 2012
Purchase Transactions (no change)

2%

2%
Refinance Transactions

1.5%

2%

 

Annual Fee

FY 2012

Through

9/30/2012

FY 2013

Effective 10/01/2012
Purchase Transactions

.30%

.40%
Refinance Transactions

.30%

.40%

 

The FY 2013 fee structure is applicable to all Conditional Commitments (Form RD 1980-18, “Conditional Commitment for Single Family Housing Loan Guarantee”) issued by Rural Development on or after October 1, 2012.  Loan guarantee requests submitted to Rural Development by September 30, 2012, in which a Conditional Commitment has not been issued, will be subject to the FY 2013 fee structure.

 

Lenders are encouraged to plan for the changes noted and should keep in mind that some Rural Development offices are experiencing extreme backlogs in loan guarantee delivery.  There are no exceptions to the FY 2013 fee structure. Therefore, starting on October 1, 2012 all Conditional Commitments will be subject to the FY 2013 fee structure, regardless of the date the request was received by Rural Development.

 

The FY 2013 fee structure is only applicable to Conditional Commitments issued on or after October 1, 2012, Conditional Commitments issued by Rural Development prior to this date are notsubject to the new fee structure.

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

Today’s Rates: 

Conforming1 Loan Rate FHA
30 Year
Fixed		 15 Year
Fixed		 30 Year
Fixed
Interest Rate 3.75% 2.875% 3.375%
Annual Percentage Rate (APR) 3.925% 3.182% 4.410%
Monthly Payment $833.61 $1,232.26 $995.53
Payment Term 30 YEARS 15 YEARS 30 YEARS
Loan Amount $180,000 $180,000 $180,000
Est. Prepaid Finance Charges $3,800 $3,800 $3,800
Down Payment 25% 25% 3.5%

Be aware that mortgage rates can change without notice and apply only in certain conditions. The APR for the loan products shown reflects the interest rates and estimated prepaid finance charges which include 1% of your loan amount to be paid toward the loan origination charge, but does not include all closing costs or discount points. The displayed rates assume that you’re refinancing a single-family primary residence with a 90-day-lock.

These mortgage rates are based upon a variety of assumptions and conditions which include a consumer credit score which may be higher or lower than your individual credit score. Your loan’s interest rate will depend upon the specific characteristics of your loan transaction and your credit profile up to the time of closing.

The monthly payment amount displayed includes principal, interest and any required mortgage insurance. The payment amount does not include homeowner’s insurance or property taxes which must be paid in addition to your loan payment.

Conventional loans with a down payment less than 20% require mortgage insurance which could increase the monthly payment and APR.

FHA loans require both an upfront and in most cases, an annual mortgage insurance premium. The premium varies based on the individual loan characteristics. For illustrative purposes on FHA loans, our loan detail results include an estimated mortgage insurance payment added to the monthly principal and interest payment.

1 Conforming loan amounts for certain loan products have increased in federally designated metropolitan areas. Larger limits available in the state of Hawaii. To find out if these new loan limits can help meet your needs, contact us

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