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.
- 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 –