Showing posts with label Rural Housing Guidlines. Show all posts
Showing posts with label Rural Housing Guidlines. Show all posts

The Rural Housing Bubble

The Rural Housing Bubble







The Rural Housing Bubble

USDA program’s mismanagement led to nine-figure losses, IG report says


BY: 
A federal program that guarantees home loans to rural borrowers has seen taxpayer losses and foreclosure rates skyrocket, problems federal watchdogs attribute to bureaucratic mismanagement but others say are more fundamental.
President Barack Obama used $10.5 billion in stimulus funds in 2009 to increase federal spending on the U.S. Department of Agriculture’s (USDA) Single Family Housing Guaranteed Loan Program.
USDA spent $27.8 billion on the program, which reimburses private lenders for up to 90 percent of the cost of default for loans made to low- and moderate-income borrowers in rural areas, in the four fiscal years ending in 2011.
The department’s loss claims—its reimbursements for loans in default—increased dramatically in recent years, according to a recent report from USDA’s inspector general. The program paid $103 million in loss claims in fiscal year 2008; that figure had nearly tripled, to $295 million, by fiscal year 2011.
The number of guaranteed loans increased by 131 percent from FY 2008 to FY 2011, while the number of foreclosures increased by 458 percent.
The IG in part blames bureaucratic mismanagement, noting that USDA did not put in place measures to ensure that borrowers were actually eligible for the program and did not undertake required steps to minimize taxpayer losses.
However, financial experts say the program’s losses speak to an inherent problem in federal efforts to extend credit to borrowers who might not qualify absent government intervention.
“Structurally, these programs will always lose money,” said Mark Calabria, director of financial regulation studies at the Cato Institute, because they exist to encourage banks to lend to borrowers who would not qualify for home loans if the risk of losses from those loans were not borne by taxpayers.
USDA did not respond to a request for comment. The agency did propose a host of corrective actions in response to the IG’s concerns.
The IG report estimates that USDA staff did not undertake all necessary steps to minimize taxpayer losses for about 70 percent of guaranteed loans. As a result, the report questions another $254 million in loss claims.
Because “the agency did not take steps to verify that lenders had considered all options for assisting the borrower without having to resort to foreclosure,” the report states, taxpayers “cannot be assured that losses from these loans were minimized as much as possible to the USDA.”
The report also estimates that about 30 percent of guaranteed loans were made to borrowers who may not have been eligible, resulting in $87 million in questioned loss claims.
The USDA agency that administers the program, according to the report, “did not identify these loans as being questionable, and, therefore, paid the loss claims without having them examined by a review committee that may have reduced the losses paid or disqualified the claims entirely.”
“Most of these loans had problems that could have been easily identified during a data scan, such as low credit scores, high debt ratios, or short employment histories,” the report notes.
Calabria said such problems are perfect examples of the deficiencies inherent in such programs.
“Usually lenders are happy to make safe loans,” he said.
Additional financial incentives are needed only for borrowers who, like those identified in the IG report, have credit histories that might disqualify them from a non-guaranteed home loan.
“The intent of the program is clearly to get lenders to make loans they wouldn’t make otherwise” due to the heightened risk of default, Calabria said.
John Berlau, senior fellow for finance and access to capital at the Competitive Enterprise Institute, agreed.
“The government subsidize[s] risky home loans that the private sector would never have made without these direct or indirect subsidies,” he said. “Republicans and Democrats, though the latter to a much larger extent, pursued the misguided goal that everyone should be encouraged to be a homeowner to achieve the American Dream.”
“The USDA’s additional souring mortgages should be a wakeup call to these politicos that government’s only role in housing should be to lift crushing regulatory barriers to affordable homes, such as Dodd-Frank and green ‘smart-growth’ regulation,” he said.
Update (4:13 p.m.): An earlier version of this article contained incorrect percentage increases in guaranteed loans and foreclosures. Those figures have been corrected.

The Rural Housing Bubble


Lachlan Markay   Email Full Bio | RSS
Lachlan Markay is a staff writer for the Washington Free Beacon.







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*






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Here are the cities in Kentucky that will no longer be eligible for RHS or USDA Rural Development mortgage loans:


More Info on Kentucky RHS - Support Rural Definition Amendment for Kentucky  USDA Programs - Please read carefully and ACT NOW!!!

USDA Rural Housing Loans - No Down Payments, Lower Payments than FHA Loans. Income and location restrictions apply. Contact Ed Collins at Kentucky Federal Savings & Loan at 859-525-6655.


On July 31, 2012 Congress passed a 6-month Continuing Resolution (CR) to fund the government through March 31, 2013, avoiding a messy fight over the FY13 Appropriatios bills.  At this time, the Continuing Resolution (CR) is our best opportunity to enact a solution to USDA's "rural" definition issue before the October 1, 2012 deadline for RHS.
PLEASE CALL OR EMAIL YOUR REPRESENTATIVES TODAY AND EVERY DAY and ask them to sign on to Rep. Fortenberry's letter to Appropriations Chairman Hal Rogers, urging the Committee to address the "rural" definition issue in the Continuing Resolution (CR).
The CR is our best opportunity to address these issues before the October 1st deadline.  If the House does not enact a solution to the "rural" definition issue, USDA will move forward with the below changes on October 1st.  The Senate already has a provision in their appropriations bill.  Now, we need the House to act. When you call or email your Representative make sure they know that without this CR, the October 1st changes will serve a massive blow to affordable housing in rural communities.
Please, don't think that someone else will make the calls or send the emails.  It is up to YOU! Also contact all the Realtors and Builders that you know because it affects them too!  Ask them to call their Representatives as well. 

Here are the cities in Kentucky that will no longer be eligible for RHS mortgage loans:

Bardstown, city 

Burlington, city

Elizabethtown, city

Gerogetown, city

Independence, city

Nicholasville, city

Shelbyville, city

Shepherdsville, city





IMPPORTANT - READ CAREFULLY!
Representative Hal Rogers is the Chairman of the Agriculture Appropriations Committee.  The Farm Bill is currently in the House of Representatives Agriculture Appropriations Committee for review.  Hal Rogers is in favor of the changes we are requesting.  Even if he is not your Representative contact him anyway so that he can provide more fuel to the committee as to the importance of this bill - he's on our side. CLICK HERE TO CONTACT HAL ROGERS.


Click here if you would like tips on how to communicate with your legislato





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Kentucky USDA Refinance Funds Have Been Exhausted for Fiscal Year 2012





Kentucky USDA Refinance Funds Have Been Exhausted for Fiscal Year 2012!

August 21, 2012

USDA Mortgage Purchase and Refinance Funding Update for Kentucky Homeowners and Buyers 

This announcement is to inform you of the current commitment authorities available for the Single Family Housing Guaranteed Loan Program (SFHGLP) loans.

Due to a change in Fiscal Year (FY) 2013 fee structure which goes into effect October 1, 2012, Lenders are urged to check with States to determine application processing time frames before underwriting applications.

 USDA Mortgage Refinance Funds:

FY (fiscal year) 2012 USDA Mortgage refinance funds have been exhausted.
We expect to run out of refinance commitment authority no later than Monday, August 20, 2012.  When USDA Mortgage refinance commitment authority is exhausted, refinance loan requests for which a conditional commitment (Form RD 1980-18) has not been issued will be returned to the lender and require underwriting under the fiscal year 2013 fee structure.  The FY 2013 fee structure will require a one-time upfront guarantee fee of 2 percent and an annual fee of 0.40 percent.  At this time, the Agency will not issue conditional commitments “subject to” receipt of FY 2013 funding or commitment authority.


USDA Mortgage Purchase Funds:

Lenders are urged to be cognizant of the differing backlogs and processing time frames from state to state.  If it is determined unrealistic that the State will be able to review the USDA loan guarantee application and issue a conditional commitment before September 30, 2012, lenders are urged to underwrite the USDA Mortgage application at the FY 2013 fee structure.  The FY 2013 guarantee fee structure will require purchase and refinance loans to carry a one-time upfront guarantee fee of 2 percent and an annual fee of 0.40 percent.

In addition, if the state where the property is located is experiencing longer processing time frames, lenders should advise the applicant accordingly when discussing interest rate locks and potential loan closing dates.



Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax

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




Fill out my form!

Kentucky USDA Rural Housing Update 




August 17, 2012

Purchase and Refinance Funding Update

This announcement is to inform you of the current commitment authorities available for the Single Family Housing Guaranteed Loan Program (SFHGLP) loans.  

Due to a change in Fiscal Year (FY) 2013 fee structure which goes into effect October 1, 2012, Lenders are urged to check with States to determine application processing timeframes before underwriting applications.

REFINANCE FUNDS:

FY 2012 refinance funds are nearly exhausted. 
Currently, the balance of available refinance commitment authority is under $15 million.  We are issuing refinance commitment authority at a pace of approximately $10 to $15 million per day.  We expect to run out of refinance commitment authority no later than Monday, August 20, 2012.  When refinance commitment authority is exhausted, refinance loan requests for which a conditional commitment (Form RD 1980-18) has not been issued will be returned to the lender and require underwriting under the FY 2013 fee structure.  The FY 2013 fee structure will require a one-time upfront guarantee fee of 2 percent and an annual fee of 0.40 percent.  At this time, the Agency will not issue conditional commitments “subject to” receipt of FY 2013 funding or commitment authority.

PURCHASE FUNDS:

Lenders are urged to be cognizant of the differing backlogs and processing timeframes from state to state.  If it is determined unrealistic that the State will be able to review the loan guarantee application and issue a conditional commitment before September 30, 2012, lenders are urged to underwrite the application at the FY 2013 fee structure.  The FY 2013 guarantee fee structure will require purchase and refinance loans to carry a one-time upfront guarantee fee of 2 percent and an annual fee of 0.40 percent. 

In addition, if the state where the property is located is experiencing longer processing timeframes, lenders should advise the applicant accordingly when discussing interest rate locks and potential loan closing dates. 



The Kentucky USDA program has changed. Effective October 1, 2012 it will no longer be subsidized by the US Taxpayer.

Effective October 1, 2012, USDA mortgage insurance rates are:

For purchases, 2.00% upfront fee paid at closing, based on the loan size.
For refinances, 2.00% upfront fee paid at closing, based on the loan size.
For all loans, 0.40% annual fee, based on the remaining principal balance.

A $100,000 loan would require a $2,000 mortgage insurance payment at closing, and $33.33 of mortgage insurance paid monthly.




Changes to RHS Guarantee and Annual Fee
Effective on October 1, 2012, RHS will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:

Up-Front Guarantee Fee
Through
Sept. 30, 2012
Effective
Oct. 1, 2012
Purchase Transactions (no change)
2%
2%
Refinance Transactions
1.5%
2%

Annual Fee
Through
Sept. 30, 2012
Effective
Oct. 1, 2012
Purchase Transactions
.30%
.40%
Refinance Transactions
.30%
.40%

Loan guarantee requests submitted to RHS by September 30, 2012, in which a conditional commitment has not been issued, will be subject to the new, October 1, fee structure.  Lenders are encouraged to plan for the changes because, as mentioned previously, some RHS offices are experiencing extreme backlogs in loan guarantee delivery.




With the Kentucky USDA Rural Housing Program, your home must be located in a rural area. This is based on the most recent US Census. Follow this link to check a home’s eligibility;

-The USDA has no down payment requirement. You can finance 100% with a USDA loan.


 the Kentucky USDA Rural Housing Program can be used by first-time buyers and repeat buyers.


USDA will let you finance your Upfront Mortgage Insurance payment into your loan size. For example, if you bought a home for $100,000 and borrowed the full $100,000 from your lender, your Upfront Mortgage Insurance would be $2,000. You could then raise your loan size to $102,000.




The USDA / Rural Housing Program offers 30-year fixed rate mortgages only. There is no 15-year fixed rate mortgage.



USDA loans allow gifts from family members and non-family members. You will need a gift letter to accompany your loan application.


There is no minimum score, but 640 is generally regarded to get an Automated Approval through  their online underwriting system named GUS 


If you are a W-2 employee, you are eligible for USDA financing immediately; you don’t need a job history. If you have less than 2 years in a job, however, you may not be able to use your bonus income for qualification purposes.

Self-employed persons can use the USDA Rural Housing Program. If you are self-employed and want to use USDA financing, as with FHA and conventional financing, you will be asked to provide 2 years of federal tax returns to verify your self-employment income.




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*


Fill out my form!

Kentucky USDA RHS Guarantee Fee Change

Kentucky USDA RHS Guarantee Fee Change




RHS Guarantee Fee Change
 
   
Beginning October 1st, All Kentucky RHS  and USDA Mortgage Guarantee fees will be changing as indicated in the following table:
 
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%
 
This is effective for all RHS loans which receive conditional commitments on or after October 1st, 2012 regardless of when the loan was submitted.
 
Several USDA/Rural Development offices have a significant backlog of files. You can contact your state and local USDA/Rural Development offices for further information and to check their current turn-around times. Please make sure to accurately disclose guarantee fees with this in mind as errors may cause a delay in approval.
 
 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*



Fill out my form here by clicking this link and getting a free mortgage pre-approval for a USDA Loan in Kentucky !

Low and no money down home loans - wave3.com-Louisville News, Weather & Sports

Low and no money down home loans - wave3.com-Louisville News, Weather & Sports



LOUISVILLE, KY (WAVE)- Springtime is always a popular time to house hunt and potential buyers often don't need much when it comes to a down payment.   A recent survey by Lending Tree finds the average money down is just over 12% which means a lot of people are putting down far less.

Thanks to government loans and programs, low or even no-money down mortgages are not just possible, they're plentiful and many people are surprised to find they qualify.

Of course, VA is out if you're not a veteran or a veteran's widow, but two other government funded loan programs are viable options, turning paychecks into the property.

As 23 year old Lacey Lamon shows our WAVE TV camera around her new home, she giggles with pride, pointing out the 2 car garage, the landscaping and once inside, the stainless steel appliances.

"I've had a ton of people asking me, 'where did you get the money to put down a down payment?', and once I tell them I didn't have to they're just really surprised."

Lacey's loan officer at Citizens Union Bank in Shelbyville, Nathan Poole agrees that many are shocked to find out the types of mortgages available that don't require the traditional 20% down.

"There's a lot of good home buyers out there" said Poole, "that just don't have the traditional 20% down for a conventional loan."

He's helped countless people like Lacey own a home using government loans.  "It's just a matter of meeting guidelines.  The debt to income ratio" Poole said.
For both the popular FHA and the lesser known USDA Rural Housing Service (RHS) loans, the borrower must have a credit score of 640.
FHA loans require at least 3 1/2% down, and there's a loan limit just over $300,000.  For USDA's RHS loans, there's an income limit that's not much higher than the average income in the area of the home.  And the home must be in a qualifying area.  Jefferson County homes do not qualify for RHS loans, but homes in all of Shelby, Oldham and Spencer Counties and in pockets of Bullitt County do qualify

Poole crunched the numbers on both loan types for Lacey and "the RHS just seemed like the best fit" she said.

With no money down and the lowest monthly payment.  Poole says between the two option, RHS is often the way to go.

All low or no down payment loans come with a price called PMI, a Private Mortgage Insurance that the lender charges so that the buyer can get the loan without that 20% down.

The PMI is more costly up front on an RHS loan, but Poole says the monthly premium added in on the FHA loan is much higher and in the end will cost more.

"Couple that with the fact, you don't have to make a down payment and 99 out of 100 times the RHS deal is better than the FHA deal" Poole said.

Low or no money down mortgage options are a surprising welcome mat to lots of potential home buyers often giving people the key to home affordability.

Another low  money down option is a conventional loan with as little as 5-percent down, but if your credit score is below 740 you'll get penalized with a higher interest rate and you'll pay PMI with this too.

Some other guidelines apply with these loans, like a buyer can't own a home while getting a USDA RHS loan, but if you sell your home, then you may qualify for the loan.

If you're in the market, it may be worth the time to crunch the numbers if you qualify.



SFH Guaranteed Underwriting System Updates for Kentucky Rural Housing and USDA Loans in Kentucky

SFH Guaranteed Underwriting System Updates for Kentucky Rural Housing and USDA Loans in Kentucky
   


 





August 1, 2012

Advance Notice:  Changes to Guarantee and Annual Fee

Effective on October 1, 2012, the start of Fiscal Year (FY) 2013, All Kentucky Rural Development loans will revise the Up-Front Guarantee Fee and Annual Fee structure as follows:

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 Loans In Kentucky  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 Kentucky  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 office in Kentucky prior to this date are not subject to the new fee structure.



Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell







http://kentuckyusdaloan.com


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