RE76R12: USDA/Rural Loans

Approved Feb. 14, 2012

USDA/Rural Housing Loans: What Real Estate Agents Should Know About USDA/Rural Housing Development Loans

1. The origination of the United States Department of Agriculture (USDA) and its development to the present day.

A. Information on development of the USDA loans

1. Historical roots and beginnings

2. How the Rural Home development (RHD )loan has evolved?

3. What are the objectives of the USDA/RD.?

4. Who originates & underwrites the loan

5. Who guarantees the USDA loans?

2. Who is eligible for a USDA/RD Loan?

A. How does a consumer obtain an RHD loan?

1. What is a RHD loan?

2. RD Loan uses?

3. Guaranteed and Direct RD loans and how they differ

4. Special Grants available from USDA

3. Eligibility for an RHD Guaranteed or Direct loan

A. Credit Requirements

1. Minimum FICO Scores

2. Federal Debts and impacts

3. Bankruptcy and Foreclosure

4. Judgments

5. Collection accounts minor & major

4. USDA/RD Loan Income Qualification Ratio’s

A. Income Requirements for a loan

1. Income Limits and County Limits for RHD loan eligibility

2. No Down payment for RHD loans

3. Qualification ratios for an RHD loan

4. How strong files can affect Qualification ratios

5. Compensating factors used in RD loans

6. Qualification Ratio example

5. RD loan safeguards for Buyers

A. Family and House requirements

1. How the income is calculated

2. Counseling & Education for RD loans

3. Housing costs & budgeting

4. Examples of how income is calculated

6. RHD Guaranteed Loan funding Fee

A. RD Guarantee Funding Fee

1. What is a funding fee?

2. Who pays it?

3. How much is it?

4. Who is exempt?

7. Seller Contributions, Closing Costs and Loan Assumptions

A. What can the seller contribute to transaction?

1. What monies can be contributed by the seller?

2. What are eligible closing costs?

3. RD loans can be assumed and by whom

8. The RD loan Appraisal Process

A. Who conducts the RD appraisal and what they look for?

1. Eligible properties

2. Ineligible properties

3. Red flags-condition, safety and habitable

4. Private roads

9. Processing, Underwriting and Closing the RD loan

A. Who processes, underwrites and guarantees the loans?

1. Application & processing of guaranteed loans approved lenders

2. Application and processing of Direct RD loans

3. Underwriting approvals needed for each type of RD loan

4. Appraisal reviews and conditions corrected

5. Title work reviewed

6. Closing and final package requirements

 

Websites Resources:

www.hud.gov/respa

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