Guaranteed Loan Program - Single Family Housing-

1. Guaranteed Loan Program - Single Family Housing-

2. Hello! Linda Rhoades Single Family Housing Specialist USDA, Rural Development 210 Walnut Street 873 Federal Building Des Moines, Iowa 50309 515-284-4723 Phone 515-284-6668 Fax linda.rhoades@ia.usda.gov mary.juergens@ia.usda.gov heather.honkomp@ia.usda.gov

3. Agenda • USDA, Rural Development • Single Family Housing Guaranteed Loan Program • Benefits • Applicant Eligibility • Property Eligibility • The Process • Resources Available

4. Single Family Housing Guaranteed Loan Program (SFHGLP) • Loan made, held, and/or serviced by an approved SFHGLP lender • 90% Guarantee by USDA

5. Home Buyer Benefits • 100% LTV + SFHGLP Fee • No Mortgage Insurance • 30 Year Fixed Rate • Partner with other Funding Sources • No Loan Limit • Fees & Repairs may be Financed • Unlimited Gifts or Seller Contributions • No Reserves Required

6. Lender Benefits • 100% LTV + SFHGLP Fee • Expand Market Share • Lender Profitability • Guaranteed by Government • Lender Underwrites Loan • Quality Customer Service

7. Tools Available Online • Iowa SFHGLP Handbook http://www.rurdev.usda.gov/ia/rhsg.html • Administrative Notices (ANs) • Newsletters

9. www.rurdev.usda.gov/ia/rhsguar.html

11. Rate and Term • 30-Year Fixed • Interest Rate Set by Approved Lender • Capped by RD • One-Time GRH Fee • 2.00% Purchase Loans • .5% Refinance Loans

12. Loan Purposes • Purchase New • Stick or Modular • Manufactured • Purchase Existing • Stick or Modular

13. More Loan Purposes • Repairs • Refinance • RD Direct • Guaranteed Loan • Typical Loan Closing Costs

14. Prohibited Purposes • Construction Draws • Furniture & Personal Property • Existing Manufactured Home • Income Producing Property • Non-Essential Buildings & Land • In-Ground Swimming Pool

15. Income • Household adjusted annual income may not exceed the MODERATE INCOME limit. • Limits based on family size & county where the property is located • Income & Property Eligibility web site at: http://eligibility.sc.egov.usda.gov

16. www.rurdev.usda.gov

17. http://eligibility.sc.egv.usda.gov/eligibility/ o

23. Income Verification Verification of Employment & Most Recent Pay Stub

24. Adjusted Annual Income • Income of all Adult Household Members • Gross income • OT, commissions, bonuses, etc. • Net self-employment income • SS, child support, unemployment, etc.

25. Adjusted Annual Income • Adjustments (Annual Basis) • $480 per minor or full-time student • Verified child care expenses • $400 where borrower or co-borrower is elderly or disabled

26. Repayment Income • Adequate & Dependable Income • Repayment Income ≠ Adjusted Annual Income • OT, commission, self-employment, & bonus income should have a 24 mo. history • Earned Income Credit may be added • Non-taxable income may be “grossed-up”

27. Repayment Ability • PITI – 29.0% • TD – 41.0% • Include all debts ≥ 6 months • May exceed Ratio Limits with documented compensating factors such as: • Zero or little payment shock • 620+ Credit score • 2+ years on the job • And More…

28. Credit Verification • Verification • Residential Mortgage Credit Report (RMCR) • Tri-Merged Credit Report • Credit Alert Interactive Voice Response System (CAIVRS) • Rent History – 12 months • Required only if FICO < 620

29. Credit History • No Credit Lines ≠ Bad Credit • Scores – NO MINIMUM • ≥ 620 – no further review of credit • < 620 – review per Rural Development Regulations • Credit Waiver from Lender’s Underwriter • Temporary circumstances, • Beyond applicant’s control, • and Circumstances removed; or • Justifiable Dispute

30. Risk Layering The Big Picture • LENDER underwrites • NO ADDITIONAL Risk Layering if Payment Shock exceeds 100% (unless there are multiple compensating factors)

31. Other Criteria • Do not own a dwelling • Insufficient resources to secure conventional credit without the Guarantee • U.S. Citizen or Permanent Resident or Qualified Alien • Legal Capacity • Primary Residence

32. Site Eligibility • Must be in Rural Area http://eligibility.sc.egov.usda.gov/eligibility • Access from a Street, Road or Driveway • Environmental Review by Agency Staff • Site + Outbuilding Values ≤ 30% of total value

33. http://eligibility.sc.egov.usda.gov/eligibility/

39. Flood & Mudslide • Existing Property • must have flood insurance • must be able to afford per ratios • New Construction • not eligible in flood area in Iowa

40. Appraisal • Less Than 6 Months Old • ‘As Is’ or ‘As Improved’ • Properly Licensed or Certified Appraiser • Reviewed by Rural Development

41. Inspections • Lender determines who is qualified to inspect properties. • Home Inspection - or - • Documentation per HUD HB 4905.1 and 4150.2

42. Existing Property Inspections • Certify property is structurally sound, functionally adequate, & in a state of good repair • Meet HUD Handbooks 4905.1 and 4150.2

43. Repairs • May be included in the Loan • Completed prior to issuance of the Loan Note Guarantee • Escrow for LNG permitted when weather prevents completion

44. New Construction Inspections • Three Required Inspections with 1 Year Builder’s Warranty • Footing, Rough-In, & Final OR • Final Inspection with 10 year warranty OR • Certificate of Occupancy with a 1 year Builder’s Warranty

45. New Construction • Stick & Modular • Built in accordance with approved building codes-varies by state • Certification official must meet Agency approval • Conform to Rural Development thermal codes

46. New Construction • Manufactured • New Units ONLY • Agency Approved Dealer Contractors • Includes unit & related site development work • Must meet Agency thermal standards based on where the unit will be located • Unit must be placed on a permanent foundation

47. Sum It All Up atios ncome nterest Rate redit ouse R I I C H

48. The Process Lender accepts application. Lender pre-qualifies application. Lender reserves SFHGLP funds with RD. Lender processes application. Lender submits complete application to RD.

49. The Process Rural Development issues Conditional Commitment within 24 hours. Lender closes loan. Lender submits closing package to Rural Development. Rural Development issues Loan Note Guarantee to Lender.

50. Iowa Offices *See list of offices & contacts.