Navigating the USDA SFH Loan Program

USDA SFH Guaranteed Lender Recertification Training

Estimated read time: 1:20

Summary

The USDA SFH Guaranteed Lender Recertification Training session is a comprehensive course designed for lender staff involved with the Single Family Housing Guaranteed Loan Program. This training, which is mandatory every two years, covers essential program requirements and highlights recent policy updates. Attendees are guided through the detailed process of loan applications, eligibility criteria, credit score assessments, and documentation requirements crucial for effectively managing loan submissions. Furthermore, the course discusses innovative programs, such as the single close construction and rehab/repair options, which are designed to expand housing opportunities in rural areas. To complete the training, participants must pass a knowledge quiz accessed via a link provided to their organization.

Highlights

The training is crucial for lender staff involved with USDA's housing programs 🏠
Every two years, lenders must complete this recertification to stay compliant.
Emphasis laid on accurate income calculation and asset verification 💼
Special focus on policy changes and new tools like the GLP Policy Desk 🛠️
Single close construction loan programs are highlighted as a major advantage 🎉

Key Takeaways

Mandatory training ensures compliance every two years 📚
New tools and policy updates bring fresh insights 🌟
Key focus on accurate documentation and submission 📝
Streamlined-assist refinancing options explained 📈
Single close construction/rehab programs for rural areas 🏡

Overview

The USDA SFH Guaranteed Lender Recertification Training is an essential session for those involved in rural housing programs. It mandates a refresher every two years, ensuring all lender staff are abreast with program developments and guidelines, crucial for maintaining compliance.

This year's training provided a deep dive into recent policy changes, including new tools and an emphasis on accurate documentation and asset verification. Attendees were advised to utilize the updated systems to streamline application submissions and contribute feedback regarding proposed policies.

Additionally, the course highlighted innovative loan options, such as the single close construction and rehab programs, aimed at expanding affordable housing opportunities in rural areas, thus empowering both lenders and potential homeowners alike.

Chapters

00:00 - 02:00: Introduction and Course Overview The course begins by welcoming participants and expressing gratitude for their commitment to completing the USDA Lender Recertification course. It highlights the necessity for approved lender staff to undergo this training every two years as part of the Single Family Housing Guaranteed Loan Program. The introduction also mentions that the course will cover significant program requirements and updates from the past year. Participants are informed that they need to complete the course to fulfill training requirements.
02:00 - 03:00: Accessing the Knowledge Quiz and Expression of Gratitude Instructions are given to access the required knowledge quiz via a link provided by USDA through the organization's point of contact. Achieving a passing score is necessary for training completion. The presentation begins with an expression of gratitude towards lending partners for their commitment to offering affordable options and personalized support to rural homebuyers, highlighting the value of their collaboration.
03:00 - 04:00: Empowering Path to Homeownership and New Lender Training This chapter emphasizes the importance of empowering individuals and families on their journey to homeownership. It encourages viewers to take advantage of the New Lender training available in the USDA LINC Training and Resource Library, suggesting that these resources will provide a comprehensive understanding necessary for a recertification course. Access instructions via a QR code are also provided.
04:00 - 05:00: Training Overview and Policy Updates The chapter titled 'Training Overview and Policy Updates' introduces the Lender Training section of the LINC training and resource library. It aims to provide a comprehensive overview of key program highlights and remind participants of important policy updates from the past year. The focus will be on specific chapters with significant changes, which will be discussed during the session. Additionally, the timing of when the handbook and policy updates become effective will be covered.
05:00 - 06:00: USDA Policy Desk and GovDelivery Notifications The chapter discusses the USDA's initiative to enhance the feedback process on policy changes through the introduction of a new online tool called the Single Family Housing GLP Policy Desk. Announced on March 5, 2024, this tool provides lenders and stakeholders with an opportunity to review and comment on proposed changes for the Single Family Housing Guaranteed Loan Program. Advanced copies of policy changes will be accessible via this tool.
06:00 - 07:00: Challenges in Rural Housing and Program Benefits The chapter focuses on the challenges faced in rural housing and the benefits of related programs. It emphasizes the importance of the USDA LINC Training & Resource Library as a tool for lenders and stakeholders. It also highlights the significant role of the Policy Desk, encouraging feedback and engagement on proposed policy changes to Rural Development. The chapter stresses the need for stakeholders to subscribe to GovDelivery notifications to stay informed and provide valuable feedback. Additionally, the training session offers an opportunity to address factors that could be delaying file reviews, aiming to improve the efficiency of rural housing program processes.
07:00 - 08:00: USDA Loan Program and Fee Structure The chapter discusses the USDA Loan Program emphasizing the importance of understanding potential challenges that could delay the conditional commitment process. The focus is on ensuring that all involved parties are informed about these critical points to facilitate smoother loan processing.
08:00 - 09:00: Loan Uses and Refinancing Options Chapter on Loan Uses and Refinancing Options discusses the challenges faced by rural areas in accessing affordable housing and home loans, such as limited housing options, lower income levels, and fewer lending opportunities. The chapter emphasizes how these challenges make it difficult for individuals and families in these areas to become homeowners. It highlights a guaranteed program that is tailored to address these specific needs by collaborating closely with lenders to understand and meet the specific requirements of these communities.
09:00 - 10:00: Eligibility for USDA Loans The chapter titled 'Eligibility for USDA Loans' discusses the various benefits and requirements of USDA loans. Key points include the absence of a down payment requirement, flexible credit criteria, and no maximum purchase price limits. These features make USDA loans a viable option for individuals and families looking to achieve homeownership, particularly in rural areas. The chapter also highlights the role of lenders in facilitating home loans and encourages partnerships to extend reach and impact more families.
10:00 - 11:00: Exclusions and SAM.gov Checks for Applicants The chapter titled 'Exclusions and SAM.gov Checks for Applicants' provides an overview of the benefits of USDA loans, emphasizing their positive impact on communities. A significant feature discussed is the 90% guarantee provided by the USDA loans, which are noted for their low prepayment rates. These loans attract premium pricing in the secondary market and contribute to Community Reinvestment Act (CRA) credit. The chapter also highlights the composition of the guaranteed loan program team, which includes policy writers, loan reviewers, and training specialists.
11:00 - 12:30: Immigration Status and Legal Residency Requirement This chapter discusses the knowledge and experience immigrants bring, and details how operations of guaranteed loan programs are supported through a fee structure, not by taxpayer dollars, allowing the program to remain budget neutral.
12:30 - 15:00: Income Calculations: Annual and Repayment Income The chapter titled 'Income Calculations: Annual and Repayment Income' discusses the modernization of technology systems to streamline and make the loan process efficient for lenders.
15:00 - 18:00: Annual Income Inclusions and Exclusions The chapter titled 'Annual Income Inclusions and Exclusions' delves into the specifics of income considerations regarding annual income, particularly in the context of USDA loans and mortgage refinances. It explicitly states that while USDA allows for refinancing its existing Rural Development mortgages, cash out refinances are not permissible. Additionally, the chapter emphasizes the use of funds strictly for closing costs and customary purchase expenses. The content also hints at a further discussion on refinance options, suggesting a detailed exploration of eligible loans for refinancing in subsequent sections.
18:00 - 19:00: Repayment Income and Credit History This chapter discusses the key requirements for refinancing loans that are either financed or guaranteed by the USDA. It outlines the qualifications necessary for three types of refinance options: streamlined-assist, streamlined, and non-streamlined. The conditions include that the existing loan must have been closed at least 12 months prior to requesting a Conditional Commitment, it must be a fixed interest rate loan with a 30-year term, and the household must adhere to specified annual income limits. Additionally, cashing out from collateral equity is prohibited.
19:00 - 20:00: Income Documentation and IRS Transcripts The chapter discusses the prerequisites for borrowers seeking to refinance ineligible properties while also mentioning the refund policies on prepaid costs and escrow overages. It emphasizes that borrowers must occupy the property, even if it's in an ineligible area. It also addresses the need for the settlement of existing loans or their subordination. Additionally, it suggests accessing a guaranteed refinance matrix for further clarification.
20:00 - 22:00: Net Family Assets and Income Eligibility The chapter discusses the requirements for different loan types, highlighting the streamlined-assist option as the most preferred refinancing choice. It notes that a new appraisal is generally not required unless the borrower holds a USDA Direct loan with recapture subsidy. However, a limitation of this option is that living borrowers cannot be removed, and if one wishes to be, the remaining borrower must select between the streamlined or non-streamlined options.
22:00 - 24:00: Credit Score and GUS Evaluation The chapter discusses the process of credit score evaluation and GUS (Government Underwriting System) evaluation for loan applications. It explains the differences in requirements between streamlined-assist, streamlined, and non-streamlined options. Streamlined-assist requires that there have been no defaults in the past 12 months, whereas streamlined and non-streamlined require no defaults in the previous 180 days along with a full credit review per Chapter 10 guidelines. The chapter also notes that all options allow for refinancing of the principal and interest balance, as well as eligible closing costs.
24:00 - 26:00: Non-Traditional Credit and Ratio Requirements This chapter discusses the requirements and procedures for non-traditional credit and ratio analysis in loan processing. It covers the up-front guarantee fee and the necessity of including subsidy recapture for certain loans, specifically highlighting the non-streamlined option for borrowers. The chapter details the use of the GUS system to enter refinance options, necessitating supporting documentation uploads. However, it specifies limitations in processing streamlined-assist loans due to limited loan information, thus preventing final submission in GUS for these loans.
26:00 - 28:00: Considerations on Liabilities The chapter 'Considerations on Liabilities' provides guidance on the 'Manual File Submission Process' specifically for streamlined-assist refinance loans. It mentions accessing the 'Manual File Submission Job Aid' via a QR code. A crucial aspect discussed in determining applicant eligibility is the verification of current ownership by the applicant.
28:00 - 30:00: GUS Underwriting and Document Submission This chapter discusses the conditions under which borrowers can retain an existing home while obtaining a USDA guaranteed loan. It states that although borrowers can keep another home, they can only have one loan with Rural Development. Additionally, they must financially qualify to own multiple homes, and the home being purchased with the USDA loan must serve as their primary residence. Finally, it mentions that the other home should no longer meet their needs.
30:00 - 31:00: LINC and Special Initiatives The chapter 'LINC and Special Initiatives' discusses the reasons that might necessitate individuals to relocate, such as work requirements, needing a larger home for family, or other valid reasons. It emphasizes that while some examples of these scenarios are given, they do not cover every possible situation. Ultimately, the lender has the discretion to determine the validity of a reason for relocation, and this decision must be documented in the permanent loan file of the lender. Additionally, applicants must undergo a standard review process to qualify.
31:00 - 33:00: Single Close Construction Program and Rehabilitation The chapter discusses the comparison of loan terms and borrower eligibility between USDA loans and conventional loans. It explains that if an applicant qualifies for a conventional loan with comparable rates and terms to those offered by a guaranteed loan, they might be deemed ineligible for the guaranteed loan. This is based on the assessment that a guarantee is not necessary for the applicant to secure an affordable home loan.
33:00 - 35:00: Manufactured Homes and Eligibility This chapter discusses the eligibility criteria for manufactured homes when considering different loan options. It notes that the comparison made in this context doesn't pertain to FHA or VA loans, indicating that applicants can still qualify for a USDA guaranteed loan even if they are eligible for FHA or VA loans. The information provided applies solely to conventional loans. Additionally, the chapter highlights updates made to Chapter 8 in the past year, which offer lenders guidance on scrutinizing asset accounts. A significant point of emphasis is ensuring that assets are not transferred between personal and business accounts and that these accounts require distinct handling.
35:00 - 37:00: Property and Inspection Requirements This chapter outlines the importance of keeping separate financial tools for personal and business use, emphasizing that mixing assets from both accounts can impact credit assessment. Additionally, it mandates that all borrowers must be verified through SAM.gov to ensure they are not suspended or debarred from Federal Programs, as ineligibility for USDA loans is confirmed if they are.
37:00 - 38:00: Ensuring Accurate Submission in GUS Chapter 8 provides additional guidance for applicants who have been excluded from non-housing federal programs. It's important to note the emphasis on 'excluded' and 'non-housing federal agency.' Despite such exclusions, these applicants remain eligible for the SFHGLP unless they face suspension or debarment.
38:00 - 41:00: Resource Availability and Conclusion The chapter titled 'Resource Availability and Conclusion' covers the eligibility criteria for participation in the Single Family Housing Guaranteed Loan Program (SFHGLP). It emphasizes that applicants who are excluded from federal housing programs or from all federal programs are not eligible to participate. The chapter also explains the process of verifying applicant eligibility through SAM.gov and how to record the relevant information on the Additional Data Screen in GUS.

USDA SFH Guaranteed Lender Recertification Training Transcription

00:00 - 00:30 Welcome. We want to thank you for dedicating your time to go through the USDA Lender Recertification course today. Every two years, it's essential for all approved lender staff to complete this training for the Single Family Housing Guaranteed Loan Program. In this course, we will cover important program requirements and discuss some significant updates that have occurred in the last year. Once you’ve completed viewing this training course, you can
00:30 - 01:00 access the required knowledge quiz through the link provided by USDA to your organization’s point of contact. You must receive a passing score to consider this training complete. Before diving into today’s presentation, we'd like to take a moment to express our gratitude to you, our lending partners. Your commitment to providing affordable options for rural homebuyers and offering personalized support is invaluable. Working together,
01:00 - 01:30 we can empower individuals and families as they embark on their path to homeownership. We hope you've had a chance to check out our New Lender training available in the USDA LINC Training and Resource Library. If you haven't yet, we recommend watching those training videos before starting this recertification course to gain a more thorough understanding of the program. Simply scan the code here to access
01:30 - 02:00 the lender training section of the LINC training and resource library. Today’s training will give you a comprehensive overview of the key highlights of our program. We’ll also take a moment to remind you about some important policy updates that occurred over the past year. We’ll focus on specific chapters where significant changes were made, and we’ll be discussing those throughout the session. Now before the handbook and policy updates go into effect,
02:00 - 02:30 you have an opportunity to review and comment on proposed changes. On March 5, 2024, USDA announced the launching of a new online tool. The new tool, known as the Single Family Housing GLP Policy Desk allows lenders and stakeholders an opportunity to provide valuable feedback on proposed policy changes for the Single Family Housing Guaranteed Loan Program. Advanced copies of proposed policy changes are posted to this page of
02:30 - 03:00 the USDA LINC Training & Resource Library. We encourage all lenders and stakeholders to utilize the Policy Desk for review and comment on all proposed policy changed to Rural Development. Make sure you are signed up to receive GovDelivery notifications so you can share your feedback regarding upcoming policy changes with us. Today’s training presents an excellent chance for us to address factors that might be stalling your file reviews.
03:00 - 03:30 It’s crucial to pay close attention to these important points and ensure that everyone involved in processing your guaranteed loans is informed about these potential challenges that could be causing delays in your conditional commitment from USDA.
03:30 - 04:00 Rural areas often face unique challenges when it comes to accessing affordable housing and home loans. Limited housing options, lower income levels, and fewer lending opportunities can make it difficult for individuals and families to become homeowners. Our guaranteed program is specifically tailored to address these needs. We work closely with our lenders to understand the specific requirements
04:00 - 04:30 for the rural areas we serve. With no down payment requirement, flexible credit requirements, no maximum purchase price limits; homebuyers have access to affordable financing. This empowers individuals and families to achieve their dream of homeownership. As a lender, you have the power to shape the lives of individuals and families by providing them with the opportunity to secure a home loan. By partnering with us, you can expand your reach
04:30 - 05:00 and make a positive impact in the communities you serve because with our guaranteed loan, you are getting a 90% guarantee, and mainly due to their low prepayment rates, USDA loans receive premium pricing on the secondary market, and another great benefit is that USDA loans count towards CRA credit. Our guaranteed loan program team consists of highly skilled policy writers, loan reviewers, and training specialists.
05:00 - 05:30 They bring a wealth of knowledge and experience to the table and provide the support you need. You might wonder how we sustain and support the operations of the guaranteed loan program. It’s not through tax payer dollars, but lies in our fee structure. Our loan fees allow us to operate as a budget neutral program and also allow
05:30 - 06:00 us an opportunity to modernize our technology systems making the loan process as streamlined and efficient as possible for lenders. The loan can be used to acquire an existing property or to construct a new property. There are no limits on the amounts of gift funds but contributions from sellers and interested parties are limited to six percent. Rehabilitation and repairs can be part of a purchase but there is no product
06:00 - 06:30 to renovate a home the applicant already owns. While we allow refinances of USDA’s existing Rural Development mortgages, there are no allowable circumstances for cash out refinances. And, of course, funding can be used for closing costs and customary purchase expenses. Let's discuss refinance options in more detail. As noted earlier, only loans that are currently
06:30 - 07:00 financed or guaranteed by USDA qualify. For all three refinance types—streamlined-assist, streamlined, and non-streamlined—there are some key requirements: The existing loan must have been closed at least 12 months before requesting a Conditional Commitment, it must have a fixed interest rate with a 30-year term, and the household must meet annual income limits. Cash out from collateral equity is not allowed;
07:00 - 07:30 borrowers can only get back eligible prepaid closing costs and any escrow overages. Additionally, borrowers must live in the property, and properties in areas now considered ineligible can still be refinanced. Finally, any existing leveraged loans or subordinate liens must be fully paid off or subordinated. Scan the code here to access the guaranteed refinance matrix for more
07:30 - 08:00 details on each loan type's requirements. The streamlined-assist option is the most favored and effective refinancing choice. This is because it does not require a new appraisal unless the borrower has a USDA Direct loan with recapture subsidy due. One limitation with the streamlined-assist if that only deceased borrowers can be removed. If a living borrower is looking to be removed from the loan, the remaining borrower must choose between the streamlined or non-streamlined options.
08:00 - 08:30 When reviewing credit history; streamlined-assist only requires verification there have been no defaults in the past 12 months, while the streamlined and non-streamlined require no defaults in the previous 180 days plus a full credit review per Chapter 10 guidelines. All options allow refinancing of the principal and interest balance, eligible closing costs,
08:30 - 09:00 and up front guarantee fee. If the borrower is looking to include subsidy recapture, the non-streamlined option would be required. All refinance options will be entered into GUS and have supporting documentation uploaded to the application, however due to the limited loan information available for a streamlined-assist loan, you will not be able to process a final submission in GUS for these loans. You must follow the
09:00 - 09:30 guidance in the “Manual File Submission Process” guide for streamlined-assist refinance loans. Scan the code on this screen to access the “Manual File Submission Job Aid” The first key component of applicant eligibility is determining if the applicant currently owns
09:30 - 10:00 a home and if they intend to retain that home, are they eligible for a USDA guaranteed loan. A borrower can retain another home, BUT the following apply: They can only have 1 loan with Rural Development Must qualify financially to own more than one home The home being purchased must be their primary residence The other home no longer meets their needs, such
10:00 - 10:30 as the need to relocate for work, a larger home for their family, or other acceptable situation. While we have provided a few examples, they do not represent every possible scenario and it is the lender who will make the final determination as to the acceptability of any rationale. This must be documented in the lender’s permanent loan file. Applicants must undergo a standard review for qualification. What does this mean? It means
10:30 - 11:00 you will compare the loan terms and borrower eligibility of a USDA loan with a conventional loan. If this review determines the applicant would be eligible for a conventional loan with similar rates and terms of a guaranteed loan, the applicant may be ineligible for a guaranteed loan as this review suggests they do not need the guarantee to obtain an affordable home loan.
11:00 - 11:30 It’s important to note that this comparison does not apply to FHA or VA loans. Applicants can be eligible for a FHA or VA loan and still obtain a USDA guaranteed loan. The guidance on this slide applies to conventional loans only. This past year, Chapter 8 was updated to provide lenders with guidance on carefully examining asset accounts. It is important to ensure that assets are not moved between personal and business accounts. These accounts should be treated as
11:30 - 12:00 separate financial tools: one for personal use and one for business use. If assets from both accounts are mixed together, the combined assets will be considered in the credit assessment. All borrowers must be run through SAM.gov to confirm they have not been suspended or debarred from participating in Federal Programs. If they have, they are not eligible for a loan with USDA.
12:00 - 12:30 Further guidance has been provided in Chapter 8 regarding applicants that have been excluded from a non-housing federal program. Key words here are excluded and non-housing federal agency. Applicants that have been excluded from a non-housing federal program continue to be eligible to participate in the SFHGLP, unless the individual becomes suspended or debarred
12:30 - 13:00 pursuant to 2 CFR Part 180 and 417. Applicants that are excluded from federal housing programs or excluded from all federal programs are ineligible to participate in SFHGLP. Once run through SAM.gov, you will fill in the information on the Additional Data Screen in GUS.
13:00 - 13:30 Fill in the date SAM was checked and whether the borrower has been debarred from doing business with the Federal Government. Note that checking YES to this question will return an ineligible response in GUS as it’s indicating that the borrower has been debarred from doing business with the federal government. If they haven’t been debarred, make sure to select no. To be eligible, the applicant must be a
13:30 - 14:00 U.S. citizen, a U.S. non-citizen national, or a qualified alien. A change in regard to the SAVE system was implemented on April 1, 2024. This system was used to run the borrower’s information to determine the applicants’ legal residency. That system has recently been removed and it is now the approving lender’s responsibility to document the applicants’ legal residency. Applicants are required to have a valid social
14:00 - 14:30 security number and evidence of continued residency and income. The approved lender should collect all necessary documentation needed to validate their eligibility and it must be retained their permanent case file. I also want to remind everyone that in May of 2022, USDA temporarily revised Chapter 8 paragraph F on Having Acceptable Citizenship or Immigration
14:30 - 15:00 Status in our Handbook. This waiver allows for those individuals with a valid social security number and valid Employment Authorization Document (EAD) to be eligible to participate in the Single Family Housing Guaranteed Loan Program. There has been an extension to this waiver and it now expires on May 2nd, 2025. As you know, this is where our program
15:00 - 15:30 is unique. We have two calculations of income. One calculation to determine program eligibility with Annual and Adjusted Income, and then one to determine borrower purchase qualification with repayment income. So first, the approving lender would determine the Annual household income, which will include analyzing the income of every adult member of the proposed household, regardless of their participation in the loan. Next, you
15:30 - 16:00 can subtract any eligible deductions to determine the adjusted Annual Income. So, this calculation does not apply just to the borrowing members of the household, but to every adult who will be living in the proposed property. The resulting Adjusted Annual Income calculation will need to demonstrate that the household does not exceed 115 percent of the Median Household income limit.
16:00 - 16:30 Once that calculation is made to determine eligibility, then a separate calculation is performed to determine repayment income which is the income of the borrowers only. The Repayment income calculation is the type of process that all programs utilize to determine repayment ability and affordability for an applicant. Have you checked out our updated income limits for this year yet? If not, scan the code here which will take you
16:30 - 17:00 directly to our updated income limits. Annual income encompasses the earnings of all adult members of the household, not just those who are note signers. For adult full-time students who are neither the applicant, co-applicant, nor the applicant's spouse, only the first $480 of their income should be counted.
17:00 - 17:30 If the applicant and their spouse have been separated for at least three months for reasons unrelated to military or work obligations, their income can be excluded from the annual income total. Additionally, for adults in the home who are unemployed but actively looking for work, their past earnings should be included. However,
17:30 - 18:00 if they are not seeking employment, their previous earnings do not need to be factored in. Let’s review what counts as annual income. This includes the total of base wages and salaries, overtime, commissions, tips, bonuses, housing allowances, and any other payments for personal services. Also, add any income from self-employment or rental properties. If there are losses from a business or rental, these do not
18:00 - 18:30 reduce your income; they are treated as $0. Include any court-ordered payments like child support, alimony, or guardianship payments. Don’t forget to add any regular retirement or pension payments. Government benefits and long-term disability payments should also be included. If the total household non-retirement assets are $50,000 or more, you need to include income from those assets as well. We
18:30 - 19:00 will go into more detail about this later on. Also note this list is not inclusive, please take time to review chapter 9 in the handbook to learn how additional types of income are treated. Now, it’s important to note that there are a few types of income that are not included in annual income. Those include but are not limited to, foster income, live in aide income, lump sum or
19:00 - 19:30 sporadic payments, medical reimbursements, MCCs, Section 8 vouchers, SNAP benefits, student loans, GI bills, and unreimbursed employee expenses. So let’s take a look and get a quick refresher
19:30 - 20:00 on what those eligible deductions include. Households can get a $480 deduction for each qualifying dependent, including those in shared custody situations. Another deduction is for verified childcare costs for children 12 and under, based on expected expenses for the next year. Households with elderly or disabled members can also deduct unreimbursed medical costs that exceed 3% of their annual income. Likewise, households
20:00 - 20:30 with disability expenses that exceed 3% of their annual income may also deduct those expenses. Finally, if the applicant or co-applicant is 62 or older, there is a one-time deduction of $400 available. We have now looked at Annual and Adjusted Annual Income to check if a household is eligible for the program. Now, let's examine Repayment Income.
20:30 - 21:00 This helps us see if the applicant earns enough to pay back the mortgage along with any other debts. Keep in mind that Repayment Income calculations usually differ from those for annual and adjusted annual income. For repayment income, you should include reliable and consistent income that can be documented. This helps show not only past earnings but also
21:00 - 21:30 helps the lender assess the chances of this income continuing for at least three years during the mortgage. All income sources need to be documented. Lenders must look at any gaps in employment to decide if the income is stable and dependable. The Agency does not set specific rules on what counts as an acceptable employment gap; it is up to the lender to review the employment history and determine stability. Keep in mind that the lender is the underwriter, while our Agency checks the files to ensure they
21:30 - 22:00 comply with our rules and standards. Some basic guidance for repayment income eligibility is a one year history for most base wages, bonus, commission, overtime, secondary employment, and so on. A two year history is required for most self employment scenarios, seasonal, unemployment, and expenses allowances. Child support and alimony
22:00 - 22:30 would only require six months. Now let’s take a quick look at ineligible repayment income sources. This list would include but is not limited to foster income, lump sum payments such as inheritances or insurance payments, non-occupant borrower, SNAP benefits, and any kind of unreliable or sporadic income such as gifts. Again, for a more detailed list, please refer to chapter 9 of the handbook.
22:30 - 23:00 One main reason for delays in conditional commitments, as stated earlier in this training, is missing or incomplete income documentation. Now, let's explore some income documentation problems that could be affecting your loans. We feel that using real-life scenarios is a great way to understand our policies and regulations. So, in this training, we have added some fact
23:00 - 23:30 or fiction statements. Here’s the first one. Since the income calculation pages were taken out of Form RD 3555-21, lenders do not have to document adjusted annual income, annual income, and repayment income calculations anymore. Is this fact or fiction? That is fiction. Lenders are still required to document adjusted, annual and repayment income calculations in
23:30 - 24:00 their permanent loan file. Lenders may utilize Attachment 9-B, Form 1008, or an equivalent. Submission of the lender’s calculations is only required on manual submissions, and GUS Refer, Refer with Caution, and Accept with Full Documentation recommendations. One key part of verifying and documenting income is the IRS transcripts. These transcripts help ensure that all income and asset earnings reported to the
24:00 - 24:30 IRS are shared with the lender. Lenders need to obtain and check these transcripts before closing the loan and keep them with their permanent loan records. If tax transcripts are not received before closing, it won't hold up the loan closing, but they still need to be obtained and kept with the lender’s permanent loan records. If the transcripts reveal any previously unknown or undisclosed income or asset sources, the lender
24:30 - 25:00 will need to review this information further, which could affect the loans eligibility. Our Policy team has created an excellent resource that outlines various income types and their impact on annual and repayment income calculations. Please take a moment to review attachment 9a. You can access chapter 9 of the handbook by scanning the code provided here. One of the main reasons files get
25:00 - 25:30 delayed during the USDA review is due to missing income calculations or discrepancies between the calculations and the supporting income documentation. Additionally, if the lender's income calculation doesn't align with the entry in GUS, it can cause issues. Be sure to verify your figures before submitting your final application to USDA. Here’s a way to approach your income analysis and documentation.
25:30 - 26:00 Be precise in your details. Refer to the numbers as they appear in the supporting documents. Make sure to record your calculations clearly so that anyone reviewing your work can easily understand how you determined the income. Non-retirement household assets that exceed $50,000 can influence annual income and, consequently, eligibility for a guaranteed loan. Therefore, it's important to examine how asset income is determined and the proper way to document household assets.
26:00 - 26:30 That is a fact. Assets must be verified whether they are required for funds to close or not as assets may affect income eligibility and applicant eligibility.
26:30 - 27:00 When the cumulative net family assets, non-retirement assets, exceed $50,000, those assets must be reviewed for annual income purposes. Lenders must review asset information provided by applicant(s) and household members at the time of loan application. Net family assets with actual earnings will use the stated rate of interest to calculate annual income. Net family assets that do not earn interest
27:00 - 27:30 will use a current passbook savings rate to calculate annual income. A current passbook savings rate can be verified through the lender’s personal banking rates, online website, or other applicable sources. For clarification, “net” assets means assets that will still be possessed post-closing. For example, if a household currently possesses $60,000 in non-retirement assets, and they will be paying closing costs of $15,000, that leaves net
27:30 - 28:00 assets of $45,000 and therefore would require no further calculation for income purposes Lenders do not have to list assets on the loan application or the "Asset and Liabilities" section in GUS. They can process the loan or get an automated underwriting decision without
28:00 - 28:30 considering assets as a compensating factor. However, if the assets exceed that $50,000 threshold, the income from those assets must be included in the income calculations sent to USDA and on the GUS "Eligibility" page. Keep in mind that GUS Accept files do not need income calculations submitted. It's also important to note that asset verification is
28:30 - 29:00 still necessary, even if the amount is below the threshold that requires it to be included in GUS. It is crucial that assets are not overstated when used in GUS or manual underwriting. Overstated assets can lead to: incorrect GUS underwriting recommendations, invalid compensating factors, wrong annual income calculations, and possible fraud. If assets are inflated or miscalculated to get a GUS Accept recommendation or loan approval,
29:00 - 29:30 it can affect the validity of the Loan Note Guarantee and loss claim payments. This is an example of when and how to calculate assets to be included in the total household annual income. This applicant has a non‐interest bearing checking account with a balance of $17,000 as well as a savings account that earns a quarter of a % interest annually with a balance of $24,000. The applicant also has a Certificate of Deposit
29:30 - 30:00 that earns 3% annual interest with a current balance of $15,000. The applicant will use $5,000 from checking towards the purchase of the dwelling. The total of all eligible non‐retirement assets is $56,000, minus the $5,000 that will be used to purchase the home, bringing the remaining balance of assets to $51,000.
30:00 - 30:30 This is more than the $50,000 threshold, therefore an income calculation is required. Continuing with the example from the previous slide, the checking account is non‐interest bearing and will have $12,000 remaining after closing costs are deducted. We will assume the passbook savings rate for this example is .25%. This results in $30 of interest. The savings account is earning .25% interest, which equals $62.50 of
30:30 - 31:00 interest. The CD will earn $450. Add these calculations together and you get $542.50 of interest income that must be included in the annual income calculation. Again, the calculation is NOT required to be shown on the 3555-21 and not required to be uploaded to GUS for any GUS Accept loans. HOWEVER, the income calculation should ALWAYS be
31:00 - 31:30 retained in the lender’s permanent loan file and the calculation IS required to be provided on any GUS Refer, Refer with Caution or Manual Underwrite. USDA received a lot of feedback from its lending partners as to how assets were verified and how that differed from other programs and we listened! So now, lenders must use the balance as reflected on the most current bank statement,
31:30 - 32:00 or on the verification of deposit – if the date on the verification of deposit is dated after the bank statement. So basically, your most current verified balance. REMINDER: Transaction Histories are not a substitute for Bank Statements in order to verify assets. Make sure you are submitting accurate documentation to USDA and avoid processing delays. As USDA lenders, comprehending the
32:00 - 32:30 regulations that oversee our program is crucial for ensuring consistent compliance. Nonetheless, it is vital to acknowledge that the final decision-making power rests with each lender. Although adherence to regulatory guidelines is necessary, lenders possess the freedom to exercise their own judgment informed by their expertise and market insights. By staying well-informed about industry regulations and applying their professional
32:30 - 33:00 judgment, lenders can correctly maneuver through intricate lending situations while prioritizing the best interests of their clients. In cases where a credit exception may be required, there are a few circumstances of adverse credit that a lender cannot waive and those include: Previous USDA losses which occurred within 7 years of the loan submission date, delinquent non-tax Federal debts, delinquent child support, and ineligible CAIVRS results.
33:00 - 33:30 These are all not eligible for lender approved credit exceptions. For GUS Loans, GUS will decide the acceptable credit score for underwriting recommendations, including Accept, Refer, and Refer with Caution. For GUS Accept or Accept with Full Documentation files, no credit score validation is needed. For loans that are manually underwritten without
33:30 - 34:00 GUS, credit score validation is necessary. Lenders should choose the middle score from three, the lower score from two (a repeated score can be used), or the single score reported. If a credit report has no score, it must meet non-traditional tradeline requirements. To validate the credit score for GUS Refer, Refer with Caution, and manually underwritten files, at least one applicant whose income or assets are used for
34:00 - 34:30 the loan must have a validated credit score. This applicant needs to have two tradelines on their credit report that have been open for at least 12 months, based on the account opening date shown on the report. A validated score does not mean the applicant has a good credit history; it only shows they have a minimum eligible credit history. Eligible tradelines for validating the credit score can include open, closed,
34:30 - 35:00 or fully paid accounts, as long as there is a payment history. These can be loans (secured or unsecured), revolving accounts, installment loans, credit cards, collections, charge-off accounts, and more. Subject: Presentation Notes Date: 11/22/2024 2:12:00 PM The underwriter must review all collection accounts and determine if the applicant is an acceptable credit risk, regardless of GUS underwriting recommendation. USDA does not require medical collection
35:00 - 35:30 accounts to be paid. If the cumulative total of all non-medical collections exceeds $2,000, you will need to either: 1. Require payment in full of these accounts prior to loan closing; 2.Use an existing repayment agreement or require payment arrangements be made with documentation from the creditor and include the monthly payment; or 3.Include 5 percent of the outstanding
35:30 - 36:00 balance as the monthly liability amount, no further documentation required. All open collection accounts on the credit report must be listed on the GUS Liabilities page For the GUS Data Entry: Collections that will be paid at or before loan closing should select the “To be paid off at or before closing” checkbox. If the collection is not required to be paid in
36:00 - 36:30 full, the lender should select the “Omit” checkbox and provide an explanation in the additional data entry pop up box to state why the debt will be omitted from ratio consideration. If a repayment agreement has a specified monthly payment, include that amount. Do not enter “$1.00” in the monthly payment data field unless this is a documented repayment amount.
36:30 - 37:00 Rental history verification is not needed for GUS Accept files. For Refer, Refer with Caution, or Manually Underwritten files, a Verification of Rent (VOR) may be necessary. Check the GUS Underwriting Findings Report to see if a VOR is needed. All housing payments recorded in GUS must be properly verified and documented. Applicants without a verifiable housing payment history are not automatically disqualified. The
37:00 - 37:30 underwriter from the approved lender must assess the available documents to decide if the applicant has a suitable credit history and meets program requirements. If there is one rent or mortgage payment that was more than 30 days late in the last 12 months, it is seen as significant derogatory credit and will need a credit exception. Applicants without a conventional credit history or a validated credit score can demonstrate their
37:30 - 38:00 ability to meet debt obligations through alternative means. A non-traditional credit history alone does not justify a loan denial. Ultimately, it is the lender's duty to assess whether the loan aligns with Agency guidelines and represents an acceptable credit risk, regardless of the GUS recommendation. For applicants with a 12-month Verification of Rent (VOR), two tradelines are necessary: the VOR and one additional eligible tradeline
38:00 - 38:30 from the credit report with a 12-month history, or an acceptable non-traditional tradeline. Applicants lacking a rent history must provide three tradelines, which can be a mix of traditional tradelines from the credit report with a 12- month history or eligible non-traditional tradelines. Non-traditional credit can be documented in
38:30 - 39:00 several ways: 1. A Non-Traditional Mortgage Credit Report (NTMCR), 2. Self-reported tradelines on a traditional credit report, or 3. Documentation from third-party verifications, canceled checks, money order receipts, electronic payment records, payment histories from creditors, or bank statements that clearly show debit payments for services or products. An eligible non-traditional tradeline must have a 12-month history and should
39:00 - 39:30 not have been closed more than six months before the loan application. Acceptable non-traditional credit sources include, but are not limited to: rent or housing payments, utility services such as gas, electric, water, landline telephone service, or cable TV (provided these services are not included in rent payments).
39:30 - 40:00 Attachment 10A can be found in Chapter 10 of HB-1-3555. This is an excellent tool to assist you during your underwriting review. Scan the code here to access Chapter 10 of the handbook. Let’s look at another fact or fiction statement. Applicants are considered to have repayment ability if their proposed monthly housing expense
40:00 - 40:30 does not exceed 29% of their repayment income. As announced through a GovDelivery message in August 2024, that statement is now fiction. Applicants are now considered to have repayment ability if their proposed monthly housing expense does not exceed 34% of their repayment income.
40:30 - 41:00 That’s a fact. These accounts are becoming more popular, and USDA is noticing more Afterpay accounts on bank statements. Afterpay accounts should be considered as installment debt. You should gather documentation for this debt, enter it in GUS as an installment liability, and leave it out if it meets the criteria in Handbook 3555, Chapter 11.
41:00 - 41:30 Ratios are derived from the repayment income as specified by the lender in Chapter 9 of the handbook. The PITI Ratio encompasses several components, including the First Mortgage, any Subordinate Liens, Homeowner’s Insurance, Supplemental Property Insurance, Property Taxes, the USDA annual fee, Association or Project Dues for Condominiums, Coops, or PUDs, as well as other housing-related expenses.
41:30 - 42:00 For the total debt ratio, applicants are deemed to possess the capacity to repay when their cumulative debts amount to no more than 41 percent of their repayment income. The total debt ratio encompasses the monthly housing expenses in addition to any other monthly credit or debt responsibilities. The lender must document the applicants debts using records such as credit reports, direct or third party verifications,
42:00 - 42:30 court documents, and deposit verifications. All open debts and accounts incurred through the closing date, including non-medical collection accounts and judgments, must be taken into account in the total debt calculation and documented in GUS and the loan application. The amounts on the credit report will be used unless there is verification for a different payment amount. If a different amount is used,
42:30 - 43:00 the lender must provide documentation for the amount used and upload the documentation with the final submission to USDA. This slide outlines important considerations regarding liabilities. If you decide to omit a liability, ensure that it does not exceed 5% of the applicant's repayment income. For court-ordered debts, include the payment unless the applicant has been released from liability.
43:00 - 43:30 If there are 10 months or fewer remaining on the payment, and it does not exceed 5% of the monthly repayment income, it can also be excluded. Regarding student loans, regardless of their payment status: If the payment amount is greater than 0, use either the payment amount from the credit report or the actual documented payment. If the payment amount is 0, use half a percent
43:30 - 44:00 of the outstanding loan balance as shown on the credit report or through creditor verification. In community property states, the debts of a non-purchasing spouse must be included unless state law provides otherwise. The lender must reference the specific state statute in the permanent case file and ensure compliance with state laws. Let’s touch briefly on ratio waivers. First let’s look at waivers for purchase transactions.
44:00 - 44:30 The applicants’ Total Debt ratio may exceed 41 percent if the lender determines that strong compensating factors demonstrate that the household has higher repayment ability. No waivers are permitted to increase the PITI ratio above 34 percent for purchase transactions. GUS files that receive an Accept or Accept Full Documentation underwriting recommendation
44:30 - 45:00 do not require a debt ratio waiver. Submissions that receive a GUS recommendation of Refer or Refer with Caution and loans that are not supported by GUS such as the Existing Manufactured Housing Pilot loans must have documentation supporting eligible compensating factors to support a debt ratio waiver. Agency approval of a lender’s request for the Total Debt ratio to exceed 41 percent may be granted if all of the following
45:00 - 45:30 conditions are met: The maximum PITI ratio cannot exceed 34 percent, and The maximum TD ratio cannot exceed 44 percent; The validated credit score of all applicants is 680 or greater; At least one acceptable compensating factors listed in Chapter 11 must be present and supporting documentation is provided to the Agency
45:30 - 46:00 and maintained in the lender’s permanent file. Those compensating factors include: Accumulated savings or cash reserves available post loan closing are equal to or greater than three months of PITI payments. Cash on hand is not eligible. The applicants, which includes all employed applicants, have been continuously employed with their current primary employer for a minimum of two years.
46:00 - 46:30 Applicants that have received Social Security benefits or retirement income for two years may utilize this compensating factor with documentation to support the history of receipt of benefits. This compensating factor is not applicable for self-employed applicants. The proposed PITI does not exceed the applicant’s current verified housing expense by more than $100 or 5 percent, whichever is less, for the 12-month period preceding loan application. No more than one 30
46:30 - 47:00 day late payment for the previous 12 months. The subject property is an energy efficient home based on the International Energy Conservation Code (IECC) standards. Lender is responsible for verifying and documenting evidence in permanent loan file. Next we’re going to talk about debt ratio waivers for refinance transactions. GUS files that receive an Accept or Accept Full Documentation underwriting recommendation
47:00 - 47:30 do not require a debt ratio waiver. Submissions that receive a GUS recommendation of Refer or Refer with Caution and loans that are not supported by GUS such as the Existing Manufactured Housing Pilot loans require debt ratio waivers, and supporting documentation must be submitted to the Agency. There is an exception, streamlined-assist refinance loans do not require debt ratio calculations,
47:30 - 48:00 therefore no debt ratio waiver is required. Debt ratios for refinance loans are not limited to the maximum purchase debt ratio thresholds. The following are examples of acceptable compensating factors for debt ratio waiver requests for refinance transactions: A Validated credit score of 680 or higher for all applicants. The proposed PITI does not exceed the borrower’s
48:00 - 48:30 current verified mortgage payment by more than $100 or 5 percent, whichever is less, for the 12-month period preceding loan application. Accumulated savings or cash reserves available post-closing are equal to or greater than three months of the proposed PITI payment. Cash on hand is not eligible for consideration as a compensating factor. Continuous employment with the current primary employer.
48:30 - 49:00 The subject property is an energy efficient home, defined as a dwelling which meets or exceeds the current International Energy Conservation Code (IECC). Refer to HB-1-3555, Chapter 11 for further information on what qualifies as meeting or exceeding the current IECC standards.
49:00 - 49:30 Let’s kick things off with a fascinating tidbit regarding USDA property eligibility. Did you know that a staggering 92% of the land in the United States is classified as rural? That’s quite remarkable! If you’ve ever believed that your customer base
49:30 - 50:00 is limited by the USDA’s eligible areas, take a moment to consider just how much of the country qualifies for the guaranteed program! Here is the property eligibility section on the USDA eligibility website. This page allows you to input a specific address to check if a home falls within an eligible area. Alternatively, you can navigate the map just like you would on Google Maps, enabling you to identify any potentially ineligible areas before you start
50:00 - 50:30 searching for homes for your clients. When you zoom in for a closer look, the dark shaded areas show where the Guaranteed loan program cannot be used. Keep in mind that the eligibility site only checks if the home is in an eligible area; it does not assess if the home itself meets the requirements. An appraiser will make that determination.
50:30 - 51:00 With the unique challenges rural areas often face when it comes to accessing affordable housing, buyers do have options beyond traditional existing housing. Condos, with their low-maintenance lifestyle and shared amenities, have become increasingly popular among homebuyers and they are eligible under the guaranteed program. New construction is another great option, we are going to talk later on about the single close construction program. Maybe you are not currently offering the single close program but that doesn’t
51:00 - 51:30 mean new construction isn’t an option, USDA will also guarantee the end loan for new construction. And what about manufactured homes? Often underestimated, these homes have come a long way in terms of quality and design. They offer an affordable housing option for many individuals and families. By including manufactured homes as eligible properties, we not only support homeownership for a wider range of people but also contribute to the growth of the housing market.
51:30 - 52:00 We do not restrict the size of the site, but the property must mainly be designed, characterized, and used for residential purposes. It should also be typical for the area, as shown by the appraisal and comparable properties. When looking at the appraisal, be cautious of buildings or land that generate income, as these are not allowed. Accessory dwelling units may be acceptable. The appraiser must decide if the unit counts as a
52:00 - 52:30 second single-family home. The Agency depends on the appraiser's expert assessment of the property's best use as a primary residence. Multiple parcels can qualify if they meet these conditions: the mortgage must have a valid first lien on each parcel, each parcel must be fully conveyed and share the same zoning, the parcels should be adjacent unless separated by a road, and the remaining parcel cannot be developed. Additionally, the
52:30 - 53:00 entire property should have only one dwelling. The same rules apply to land. A hobby farm or garden is permitted, but the property must primarily be used, characterized, and appear residential. Land intended for income-generating activities will not be approved. USDA only requires 1 inspection for existing homes and that is the HUD
53:00 - 53:30 handbook certification by the appraiser! No additional inspections are required by USDA unless required by the lender, appraiser, inspector, or state law. NOTE: A safe water test is always required for properties with a private well.
53:30 - 54:00 Time for another fact or fiction. I want to make sure USDA has all the documentation we used in making our underwriting decision so it’s ok to upload our entire case file in GUS. That is fiction. Please only upload what we need and set aside what we don’t.
54:00 - 54:30 Lenders sometimes upload an entire file to USDA, even if the documents are not listed in the Attachment 15-A Checklist. This makes our review slower because we have to go through extra papers to find what we need. We also notice that some documents needed for Attachment 15-A are missing. Please check the GUS findings report carefully and send the necessary documents according to the 15-A Checklist. When you finish a
54:30 - 55:00 GUS Final Submit, be ready to upload the required documents to prevent delays in USDA’s review. All qualifying files must be submitted through GUS. We will cover files that are not required to be submitted through GUS later in the presentation. The most important thing to remember is that GUS does not underwrite loans. It is used to evaluate the credit risk of the borrower and does not replace the
55:00 - 55:30 judgement of an experienced underwriter. GUS incorporates a modified version of the FHA Total score card but does not evaluate the dependability of repayment income. USDA counts on the lenders to make sure all file submissions have been reviewed by an underwriter to ensure they qualify for our program. When a file is submitted you are telling USDA that this file HAS been underwritten and meets USDA Regulations as spelled out in 7
55:30 - 56:00 CFR 3555, HB 1-3555, AND the GUS Findings. Its important that all information entered into GUS is accurate and matches the 3555-21 along with any other documentation submitted. GUS will return one of these underwriting recommendations: Accept, Accept with Full
56:00 - 56:30 Documentation, Refer, or Refer with Caution Review your findings, even for a GUS “Accept”. You must ensure it hasn’t been randomly selected for a Full Documentation Review”. These files are randomly selected for a data integrity review. A “Refer” or “Refer w/Caution” require further review and will require a full document submission. Be sure to review their GUS findings report and submit documentation accordingly. utilize the Attachment 15-A with all submissions.
56:30 - 57:00 Remember files that are incomplete will be released back to the lender, put on hold and will create delays. Regardless of the GUS underwriting recommendation, you will upload all documents via the GUS application. A GUS accept requires the least number of documents to be uploaded and submitted to USDA for review. These documents include: The appraisal
57:00 - 57:30 Flood Certification 3555-21, filled out completely and accurately And a few additional items if applicable such as the Non-Purchasing Spouse credit report, and mortgage payoff for a refinance. There will be those occasions when you encounter a GUS Accept that requires a “Full Documentation Review.”
57:30 - 58:00 This process involves the system randomly choosing GUS Accepts for a quality assurance or data integrity assessment. If a file falls under the GUS Accept with Full Doc Review category, the notification will appear on the findings report. Therefore, it’s essential to thoroughly review your findings, even for GUS Accepts. For a GUS Accept with full documentation upload the following:
58:00 - 58:30 3555-21 1008 or similar form Loan application Income and asset documentation Credit report Credit report for NPS if applicable Mortgage payoff statement for refinance if applicable Flood certification Appraisal Be sure to utilize the Attachment 15-A Loan Origination Checklist. Scan here to download a copy.
58:30 - 59:00 GUS Refer files indicate that GUS has detected certain risk factors from the data provided. It is important to note that loans should not be rejected solely on the basis of the risk assessment produced by GUS. A comprehensive underwriting process must be conducted, and a complete documentation package should be submitted to USDA.
59:00 - 59:30 Consistently review your findings report. A "Refer" or "Refer with Caution" will typically indicate what issues were identified. This may include factors such as a low credit score, bankruptcy, or delinquent debts. Examine the file to assess whether the borrower is eligible for a loan through USDA before making the final submission. A "score card" finding usually suggests that there are several factors contributing to the referral,
59:30 - 60:00 such as employment duration, length of residence, and limited credit history. It is essential to consider the entire file thoroughly. Lenders should utilize page 2 of Attachment 15-A to determine what documents must be uploaded for loans receiving a Refer or Refer with Caution underwriting recommendation. 3555-21 1008 or similar form Loan application Income and asset documentation Credit report
60:00 - 60:30 Credit report for NPS if applicable Verification of rent Mortgage payoff statement for refinance if applicable Flood certification Appraisal Property not located in a rural area
60:30 - 61:00 Adjusted annual household income exceeds RD Guidelines Non-Owner Occupied Transaction A Borrower does not have acceptable citizenship or immigration status Unacceptable SAM or CAIVRS Debt to income ratios exceed the limits set forth by Rural Development and the borrower does not meet the requirements to qualify for a ratio waiver. If you feel this is an in accurate determinination, be sure to double
61:00 - 61:30 check your data entry into GUS to ensure your GUS Underwriting Recommendation is valid. The USDA LINC Training and Resource Library offers a variety of tools to help you with tasks like adding or changing your GUS security administrators, accessing training modules for entering loans into GUS, and utilizing a lender user guide for adding users to GUS. Simply scan the code provided to dive into the GUS section of the LINC library.
61:30 - 62:00 The last topic we want to highlight today is our special initiative and pilot programs. If you haven't explored these opportunities yet, they offer an excellent chance to broaden your client base! Realizing we needed to find a way to
62:00 - 62:30 expand housing options for homebuyers, we developed a few pilot programs and one in fact, turned into a permanent loan option and that’s our single close construction program where the lender receives their guarantee from us before a shovel even hits the ground.
62:30 - 63:00 This option not only makes new construction an affordable option for low to moderate income households, it also benefits the lender, real estate agent, builder and the local community. Let’s take a look at the basics of lender requirements. After obtaining USDA approval, lenders can submit a request for Conditional Commitment, which allows them to self-certify that their staff has at least two years of experience in handling construction loans. Alternatively, a lender may choose to hire a
63:00 - 63:30 construction loan management firm that has a minimum of two years of relevant experience. The lender is responsible for verifying the eligibility of the chosen company. Additionally, it is essential to confirm the eligibility of the contractors and builders involved. For Single Close Construction, the Key Responsibilities of the lender include: Approving builders
63:30 - 64:00 Overseeing disbursement of loan proceeds Monitoring the construction of subject property Obtaining documentation confirming construction is complete Ensuring use of fixed price construction contract Yet another challenge with the lack of affordable housing is that much of the existing stock is in need of repair to be safe and sanitary and sometimes the repairs are significant. And that is the basis for the creation of
64:00 - 64:30 our rehabilitation and repair program. This product is only available for a purchase. Very similar to single close construction, this product allows for lending up to 100 percent of the as improved valuation, provides for a single closing, allows escrows for contingency funds of 10 percent, and loan payments up to 6 months. Most importantly, the Loan Note Guarantee is issued at signing prior to any work beginning. And, also like the single close,
64:30 - 65:00 it pays the real estate agent fees at signing before any work begins. A separate detailed training on single close construction and the rehab/repair program is available in the LINC Training and Resource library.
65:00 - 65:30 If you are interested in learning more about how your organization can benefit from offering the single close construction loan, scan here to download our single close fact sheet. These homes have come a long way in terms of quality and design. They offer an affordable housing option for many individuals and families. By including manufactured homes as eligible properties, we not only support homeownership for a wider
65:30 - 66:00 range of people but also contribute to the growth of the housing market. For manufactured homes to be eligible for USDA, they must: Have a site that conforms to state and local standards. Be a new unit in stock that has never been installed or occupied at any other site or location. Have a floor area of not less than 400 square feet. Be placed on a permanent foundation. Meet or exceed the FMHCSS standards for
66:00 - 66:30 the geographic area the unit will be placed. USDA cannot guarantee manufactured homes if: The purchased unit is moved from a site other than a dealer’s lot. If the Unit is older than 12 months from date of the purchase agreement. Or if a unit has a tow hitch or running gear remaining. USDA is dedicated to eliminating obstacles and
66:30 - 67:00 exploring new avenues to increase affordable housing options for rural homebuyers. Many regions still face a lack of reasonably priced, traditional homes on the market. Acknowledging the advancements in the quality and design of manufactured housing, this pilot program allows for the consideration of existing units built on or after January 1, 2006. Currently, this initiative is limited to properties located in specific
67:00 - 67:30 states mentioned on this slide. It's important to note that units should not have undergone any alterations or modifications, except for porches, decks, or other structures that were constructed according to engineered designs or received approval and inspection from local code officials. Additionally, all other requirements outlined in the regulation and handbook must be met. The first program explores alternative methods
67:30 - 68:00 for determining a more precise property value when traditional appraisals are impractical or fail to reflect the true worth. The second program provides a chance to finance repairs or renovations for homes already owned on tribal land.
68:00 - 68:30 While repair-only loans are not permitted under the guaranteed program, we recognize the limited housing availability on tribal land. This pilot initiative aims to offer an affordable solution, enabling current homeowners to preserve their properties for future generations.
68:30 - 69:00 Your number one destination for origination and servicing resources and guides will be the USDA LINC Training and Resource Library. Did you know you can now find our turn times for Conditional Commitments on the LINC library home page? This site provides a tremendous amount of knowledge. Bookmark it, save it as a favorite, you will visit it frequently. Did you miss an important GovDelivery update? No problem, you can find an archive of previous GovDelivery email updates here. Scan here and bookmark the LINC library!
69:00 - 69:30 Our technical handbook enhances understanding of the regulation and offers further insights. Known as HB-1-3555, or simply "the handbook," it consists of 20 comprehensive chapters. The guidance provided within this handbook is designed to complement the regulation, not to substitute it. For the fastest access to the information you need,
69:30 - 70:00 refer to both the CFR and the handbook. Make sure to bookmark these resources and utilize CTRL-F for efficient searching. An additional valuable resource developed by our Policy team is the FAQ document. This compilation includes insightful questions posed by lenders that necessitated a deeper understanding of how the regulations and handbook policies pertain to specific situations.
70:00 - 70:30 The document features excellent examples and some quite unique scenarios. We encourage you to take a moment and review it. Still have a question after reviewing your resources and tools? We’re here to help! Scan the code to get the contact information for the Single Family Housing Guaranteed Loan Program staff. Reach out to us for assistance by sending your question to the appropriate guaranteed team email address. We want to express our gratitude to everyone for reviewing the Lender
70:30 - 71:00 Recertification training course. Your partnership and commitment to helping rural residents achieve their homeownership dreams is greatly valued. As a reminder, the last part of the training involves a knowledge quiz. If you haven't received the link from your organization's point of contact, please reach out to them to ensure you can complete this final training step. Thank you and have a great day.