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Guaranteed Loan Program Seminar

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  1. Guaranteed Loan ProgramSeminar Single Family Housing Guaranteed Loan Program By Bob Coordsen, Housing Specialist

  2. The FL/VI Team Myself, in the Gainesville HHQ 1 originations coordinator 1 post-closing coordinator 6 specialists (underwriters) 4 processors Handle over 6,000 loan packages annually Currently about 30-35 days backlogged

  3. RD Instruction 1980-D http://www.rurdev.usda.gov/rd_instructions.html

  4. Program Mission 1980.301(b) • Low to moderate income rural homebuyers • Adequate, safe and sanitary primary residences • Assist lenders to extend credit with reduced risk

  5. Guaranteed Loan Benefits! • 100% financing • No purchase price limits per county/city • Ratios: 29/41 • Fixed, 30 year interest rates • No reserves required • Nontraditional credit accepted • Eligible gift/grant/MCC’s/Buydowns allowed • Not limited to first time homebuyers

  6. Guaranteed Loan Benefits! 90% Loan Note Guarantee! Original principal loan amount: $150,000 Maximum loss claim payout: $135,000 See 1980.322(a)(2) for loss payment calculation

  7. Maximum Loan Amount 100% of the appraised value plus the upfront guarantee fee • Purchase price lower than appraised value, room to include eligible closing costs, lender fees, etc. • Purchase price = appraised value, only the g-fee may be included in the loan • No Maximum CLTV

  8. Annual & Upfront Guarantee Fee Loans may be subject to: • Upfront guarantee fee and/or • Annual Fee • Ensure applicable fees are utilized. • Provide subsidy neutral program • Statute authority per Housing Act 1949, as amended

  9. Guarantee Fee & Annual Fee Calculatorhttps://usdalinc.sc.egov.usda.gov/ 1 2 3

  10. Applicant Eligibility 1980.346 a.) Cannot own a dwelling in the local commuting area or owns a dwelling which is not structurally sound, functionally inadequate.

  11. Applicant Eligibility: 1980.346(a) Local commuting area: • No specific mileage range • Contact State RD Coordinator for assistance Structurally unsound: • Documented evidence of structural/sanitation issue Functionally inadequate: • Overcrowding: too many bodies not enough space • Disability accommodations required

  12. Applicant Eligibility 1980.346 b.) Be without sufficient resources to provide the necessary housing and be unable to secure the necessary conventional credit without a RD guarantee upon terms and conditions which the applicant could reasonably be expected to fulfill.

  13. Applicant Eligibility: 1980.346(b) Conventional credit qualification criteria: MUST MEET ALL SIX • 20% downpayment (cash/cash equivalents) • Closing cost/lender fee money • 28 PITI ratio • 36 TD ratio • Acceptable conventional credit tradelines/history • 30 year term with no PMI required

  14. Applicant Eligibility 1980.346 c.) Be a U.S. Citizen/Permanent Resident Alien d.) Legal capacity to enter into mortgage debt e.) Ability to personally occupy the property on permanent basis

  15. Learning Check Debbie and Bill own a home in Utah but they are moving to Georgia. Can they retain the home in Utah and purchase a new home in Georgia with a SFHGLP loan? • Yes • No

  16. Learning Check Debbie and Bill own a home in Utah but they are moving to Georgia. Can they retain the home in Utah and purchase a new home in Georgia with a SFHGLP loan? • Yes • No

  17. Learning Check Josh and Leanne own a home and have two children. Current home: 3 Bedroom 2 Bath Want to buy: 5 Bedroom 3 Bath, with a finished basement, located two blocks away from current home They want to have more children and they need extra space for Josh’s hunting gear. Do Josh and Leanne meet the regulation? • Yes • No

  18. Learning Check Josh and Leanne own a home and have two children. Current home: 3 Bedroom 2 Bath Want to buy: 5 Bedroom 3 Bath, with a finished basement, located two blocks away from current home They want to have more children and they need extra space for Josh’s hunting gear. Do Josh and Leanne meet the regulation? • Yes • No

  19. Learning Check Sean is in the military and will be deployed. His wife and children will occupy the home he wishes to purchase while he is away. Is Sean eligible for a SFHGLP loan? • Yes • No

  20. Learning Check Sean is in the military and will be deployed. His wife and children will occupy the home he wishes to purchase while he is away. Is Sean eligible for a SFHGLP loan? • Yes • No

  21. Learning Check Maribeth owns a home in Bolingbrook, IL and she wishes to move closer to her employment located in Bloomington, IL. She currently commutes two hours one way to work. Is Maribeth eligible to retain her current home? • Yes • No

  22. Learning Check Maribeth owns a home in Bolingbrook, IL and she wishes to move closer to her employment located in Bloomington, IL. She currently commutes two hours one way to work. Is Maribeth eligible to retain her current home? • Yes • No

  23. Learning Check Enrique is from Mexico. He has a temporary VISA and a TIN#. He has applied for permanent residency. Is Enrique eligible as an applicant for a SFHGLP loan? • Yes • No

  24. Learning Check Enrique is from Mexico. He has a temporary VISA and a TIN#. He has applied for permanent residency. Is Enrique eligible as an applicant for a SFHGLP loan? • Yes • No

  25. Learning Check Purchase Price: $150,000 Appraised Value: $153,000 What is the maximum loan amount RD can issue a loan note guarantee. • $150,000 + upfront guarantee fee • $153,000 + upfront guarantee fee

  26. Learning Check Purchase Price: $150,000 Appraised Value: $153,000 What is the maximum loan amount RD can issue a loan note guarantee. • $150,000 + upfront guarantee fee • $153,000 + upfront guarantee fee

  27. Learning Check Guaranteed loans are only for first time homebuyers. • True • False

  28. Learning Check Guaranteed loans are only for first time homebuyers. • True • False

  29. ELIGIBLE RURAL PROPERTY SFH residences must be located in an eligible rural area.

  30. Nationwide Eligibility Web Site http://eligibility.sc.egov.usda.gov • Property Eligibility • Income Eligibility • Income Limit pdf by state • State Guaranteed Loan Coordinator Contacts

  31. Property Eligibility

  32. Eligible Housing Existing homes: • HUD Handbooks 4150.2 and 4905.1 Existing home is defined as: 1. Home completed for 12 months (per occupancy document) never occupied 2. Home completed for less than 12 months previously occupied

  33. Eligible Housing New Construction: Option #1: • Acceptable building permit or Form RD 1924-25 • Acceptable certificate of occupancy, or copies of 3 construction inspections (footing/framing, mechanicals exposed/inspected, and final) • Acceptable one year builder warranty Option #2: • Ten year insured builder’s warranty • Builder signs Form RD 1924-25

  34. Eligible Housing Condominiums:Fannie/Freddie/HUD or VA approved. Evidence from entity is acceptable. PUD’s/Townhomes: All eligible Modular:Existing and New Construction

  35. Eligible Housing Manufactured: Built to HUD Code • New units: purchase agreement dated within one year of manufacture date of unit • Built by approved-dealer contractor (states have lists) • Existing units: Original owner with direct or guaranteed loan, or lender has property in REO and holds guarantee

  36. Ineligible Housing • Rental / Vacation Homes • Income Producing Properties (active farms/commercial property/cell phone towers/wind turbines) • Site values above 30%, that do not meet 1980.313(d)

  37. Site Value Over 30% Two tests: 1980.313(d) • Value of site must be typical for area, per appraisal • Parcel cannot be eligible to be subdivided into two or more lots States cannot impose specific acreage limitations.

  38. Outbuildings • Vacant land primarily used for agriculture, farming, or commercial enterprise is not eligible. • Property must be predominately residential in design, use and character. • Functional farm service structures, typical for area, not used for income producing purposes: deduct contributory value from appraised value. • Garages, storage sheds, etc. are eligible.

  39. Outbuildings Example: Appraised value of site and structures: $100,000 Contributory value of functional farm service structure: $10,000 Net value adjustment: $90,000 Maximum loan amount for guarantee: $90,000 (plus any financed portion of or the full amount of the upfront guarantee fee)

  40. In-ground Pools Deduct contributory value from appraised value to determine maximum loan amount. Appraiser is responsible to determine value of pool. Example: Appraised Value: $175,000 Value of in-ground pool: $3,000 Maximum Loan Amount: $172,000 + upfront guarantee fee

  41. Learning Check Cathy wants to purchase a SFH residence that has 5 acres of land which has a small pond and wooded area, appraised value is $150,000. There are two older traditional barns valued at $12,000. What is the maximum loan amount RD can guarantee? • Appraised value + upfront guarantee fee • Appraised value - $12,000 + upfront guarantee fee • $0, the property is ineligible it has barns

  42. Learning Check Cathy wants to purchase a SFH residence that has 5 acres of land which has a small pond and wooded area, appraised value is $150,000. There are two older traditional barns valued at $12,000. What is the maximum loan amount RD can guarantee? • Appraised value + upfront guarantee fee • Appraised value - $12,000 + upfront guarantee fee • $0, the property is ineligible it has barns

  43. Learning Check Bill and Katie want to purchase a brick ranch with full basement and fenced yard for $175,000. Bill is a school teacher and Katie has a small daycare she operates from her home. Does Katie’s in-home business make the home income producing and ineligible for a guaranteed loan? • Yes • No • No, not if the fence is removed from the yard