Wednesday, November 19, 2014

Reminder on Kentucky Rural Housing USDA Mortgage changes on 12/1/2014

Reminder on Kentucky Rural Housing USDA Mortgage  changes on 12/1/2014

  • No changes to LTV, CLTV, Credit Score or DTI. 100% financing with zero down payment with same mortgage insurance of 2% funding fee and annual usda fee of .50 bps. Some lenders will go down to a 580 on USDA loans, but most lenders that I deal with will still want a 640 mid score with a GUS Accept Eligible Findings. If it comes back refer eligible, this will necessitate the needs for additional credit and income overlays for debt to income ratios. 
  • Refinances can have 0 x 30 mortgage lates in the last 6 months. Previously 0 x 30 in last 12 months.
  • Streamlines will be submitted to GUS.  Previously GUS did not support Streamline Refinances.
  • Language has been added  for minimum of 3 tradelines (non-traditional credit may be used).
    • There must be at least one score per borrower
    • At least one applicant whose income or assets are used for qualification must have at least three historical trade line payment references that have existed for at least 12 months
    • Non traditional credit may be used to establish the minimum tradelines
    • Refer to HB-1-3555, chapter 10.
  • KY USDA guidelines for Bankruptcy of 36 months.  Shorter periods may be allowed if documented extenuating circumstances and per KY USDA guidelines.
  • Gifts may be received from members of the household.
  • Site size must be typical for the area.  The 30% site value restriction has been removed.
  • In-ground swimming pools are now allowed with no additional restrictions.
  • Existing properties in a flood zone are eligible with no restrictions other than being located in area with NFIP available and flood insurance will be required.  New construction in a flood zone continues to be ineligible.
  • Additional guidance will be provided on when a borrower may be allowed to own another property.  The borrower may not own any other property, including property owned free and clear, unless: 
    • The additional property is sold prior to or concurrently with the purchase of a new home.
    • The additional property is not structurally sound or no longer meets the applicant’s needs. This must be sufficiently documented in the loan file. Example: A disabled borrower that owns a property that is no longer suitable to their needs.
    • The borrower must be able to qualify with the full PITI payments for each property.  Rental income can only be used to qualify with a 2 year history of receipt.
    • The borrower may own only 1 additional property.
  • Repair escrows will be allowed for minor interior development.  Previously escrows were only allowed for exterior development work.
  • Tax return transcripts are required for all adult household members to fully verify total household income.  Previously this was for all borrowers providing income.