This just in!! USDA is now issuing conditional commitments. What does this mean? Well, the good news is that we can now start once again funding USDA loans. There has been a change in the guarantee fee that is rolled into the loan. That fee was 2.00% and has been increased to 3.626%. This does not affect the borrower’s funds to close but will marginally affect the payment.
What has not changed is the lack of a monthly MI fee. Just like the old loans these new loans will not have monthly MI payments. Unfortunately, these conditional commitments have not solved all the problems, as ALL USDA loans must now be manually underwritten because USDA’s automated underwriting system(GUS) is not going to be updated with the new guidelines until Congress passes the new bill.
This means that USDA will issue fewer
- credit waivers for borrowers with less-than-perfect credit.
- ratio waivers for borrowers with higher-than-published debt ratios.
and have
- longer turn-times at USDA office before they issue the conditional commitments.
So, just to recap: The good news is that we can once again start closing USDA loans, but the flip side is that they will be moderately more expensive to use, harder to qualify for, and take longer to process from start to close.
John McClellan -
{ 10 comments… read them below or add one }
Have an old GUS approval for a file that was supposed to close last week of May. Ratios are 18/47.6% with old GUS approval. Bank can’t make exception over 43% for debt ratio if manually undewritten. Seller may not hold house for that long…Do you know of any other banks doing USDA using our credit at 620? Trying to find lender to make maual exception that USDA says is up to each lender. This whole thing just stinks…should have been an easy file. Battle on every file these days.
how long will it be before the gus is udated im waiting to close
Could be some time before they update their system. We are anticipating sometime around the end of July. Please keep in mind that they will not start fixing the “GUS” system until the Congress refunds the program and issues its formal list of changes to the program. So until then we will continue to close and fund USDA loans BUT they have to fit within the traditional “manual” underwriting guidelines.
I have been approved for a home loan with Bank Of America and also approved through USDA. What is the holdup with the USDA bill. I was suppose to close June 30
Annette,
If Bank of America is not closing your USDA we will! We are still funding USDA loans even though they are not refunded by congress….so let me know if I can help.. john.mcclellan@supremelending.com
Will the jobless benefits bill have the usda attached to it so as to turn on the GUS system or are we still waiting for another bill.
Its the end of July. Still no word on refunding USDA loans?
we are currently funding USDA loans, have been for 4 weeks. I did hear yesterday that the new bill is going to the presidents desk in next 3 weeks or so. However there no reason to wait since there is already Mortgage companies out there (like us) that are doing them.
How long is the approval process with your company
we are at about 2-3.5 weeks on a USDA loan right now..from application to funding