USDA Loan Guarantees Are Back

Over the last several months, we have continued to fund USDA Loans in Arizona based on our ability to obtain a Conditional Commitment Letter from the local Rural Development Office.  However, not all lenders have been willing to continue funding USDA Loans off of a Conditional Commitment Letter which is why a whole lot of home buyers have been left in a holding pattern.

In an earlier post I outlined the potential changes to USDA Loans at the onset of the new USDA Fiscal Year and in order for the USDA Government Underwriting System (GUS) to be used for automated underwriting; these changes would need to be implemented within the GUS system.

Over the past several months, when a USDA Loan has been funded the USDA Loan application had to go through a Manual Underwrite which eliminated many of the available underwriting waivers and made it more difficult to obtain the USDA Loan approval.

Today I received the USDA Loan Funding Notice from the national office in Washington DC stating that the enhancements to the systems will be complete on September 8th, 2010.

This announcement is great news and means that beginning September 8th, approved USDA lenders will be able to use the Government Underwriting System and will no longer be required to manually underwrite USDA Loans.

What this means to the prospective USDA Loan home buyer:

1. Underwriting will now be automated, not manual
2. Credit and Debt Ratio waivers will be available
3. It will be less restrictive for borderline applicants and easier to get an approval
4. Funding will return for banks that earlier refused to fund USDA Loans

To apply for a Guaranteed USDA Rural Home Loan click on the USDA Get Started tab or click here.  You can also ask a question about Guaranteed USDA Rural Home Loan on Get Started tab.

I’d love to hear your comments on this new way of funding USDA Rural Home Loans below.