RD is issuing conditional commitments “subject to funding”
I want to update you on the status of RD lending with the government coming back on line last night.
Rural Development has sent out a couple different notices here is a brief summary:
In a nutshell:
Hopefully end of next week they will be able to issue commitments and we can in theory start closing these loans again. In the mean time we will continue to process and send loan up to RD, so they can get in line.
Here is the notice straight from RD
Several USDA websites/applications were disabled in connection with the recent Federal Government shutdown. This has delayed USDA’s completion of fiscal year-end accounting processes. This process will take several days to complete. The Guaranteed Underwriting System (GUS) will become operational on Monday, October 21, 2013.
Other internal USDA systems will not be operational until late next week. For example, USDA will be unable to process lender submitted loan closings until late next week.
We are uncertain when fiscal year 2014 funding will become available in the system. Thus, beginning on Oct. 21, 2013, we will begin issuing Conditional Commitments “subject to commitment authority.” Any Conditional Commitments issued “subject to commitment authority” will contain the following language:
“Funds are not presently available for this Conditional Commitment. The Rural Housing Service’s obligation under this Conditional Commitment is contingent upon the availability of an appropriation from which payment for contract purposes can be made. No legal liability on the part of the Rural Housing Service for any payment on this Conditional Commitment may arise until funds are made available to the Rural Housing Service State Office where the application was submitted for this Conditional Commitment and until the Lender receives notice of such availability, to be confirmed in writing by that Rural Housing Service State Office. More specifically, this Conditional Commitment is subject to the Rural Housing Service receiving sufficient funds (in the Program Financial Control System for the Single Family Housing Guaranteed Loan program for the Type of Assistance and State of application submission) to fund this and all prior eligible outstanding applications in their entirety in the time and date order received in the State of application submission. When such funds become available, Rural Development will notify the lender, and the guarantee process will continue subject to all applicable Agency regulations and conditions set forth in this Conditional Commitment. Rural Development will not reserve loan funds for applications in process during this timeframe. Lenders may close the loan as scheduled. The lender will assume all risk of loss for the loan until Rural Development obligates funds and the Loan Note Guarantee is subsequently issued. When the lender requests the Loan Note Guarantee, the lender must certify to the Agency, using the process provided in this commitment, that there have been no adverse changes to the borrower’s financial condition since the date the Conditional Commitment was issued by the Agency. The lender will submit the appropriate guarantee fee at the time they request the Loan Note Guarantee. The loan will be subject to an annual fee of 0.4 percent of the average scheduled unpaid principal balance of the loan. The Agency will not be able to issue the Loan Note Guarantee until these conditions are met and funding is obligated.”
Buying a home is an exhilarating yet intricate process. For many, the dream of homeownership can seem daunting due to financial constraints. However, the U.S. Department of Housing and Urban Development (HUD) offers various financing options designed to assist individuals in purchasing HUD-owned homes, making the dream of owning a home more achievable. It is important to have a lender that is up to the challenge of navigating HUD home financing.
These properties are foreclosed homes. The previous owner had taken out an FHA mortgage and didn’t make the payments. Subsequently, these homes were foreclosed on. Often, these homes require repairs, and the utilities can’t be turned on. Frankly, HUD (the seller) doesn’t care – the properties are sold as-is, and HUD will not make any repairs to the home. That’s where things can get hairy if the lender is not equipped to navigate the process.