Tuesday, December 2, 2014

Kentucky Rural Housing USDA's new program guidelines December 1st, 2014


   

The Kentucky Rural Housing USDA's new program guidelines are officially now in force! The new guidelines brings lot of changes. Some are wonderful changes  and others will make it harder for borrowers to qualify ( deferred student loans). One of the best changes is in regards to medical collections! Here is a brief synopsis of the old and new!

USDA's new program guidelines are officially now in force! The new guidelines brings lot of changes. Some are wonderful changes and others will make it harder for borrowers to qualify. One of the best changes is in regards to medical collections! Here is a brief synopsis of the old and new!


Old RHS GuidelinesNew RHS Guidelines
Manual loan closingsElectronic loan closing
Seller contributions could exceed 6% for smaller loan sizesSeller contributions are capped at 6%, regardless of loan size
To calculate assets, we would go off ending balance reflected on a bank statementTo calculate assets, we now have to use the "average" balance from months worth of bank statements. **Gift funds are not eligible for reserves. 
Appraisals were good for 180 days in some casesAppraisals are only good for 120 days.
Military - Use to not have to show a discharge time frameFor Military borrowers, they must occupy residence as primary residence, prove that they will be discharged within a reasonable period of time (usually 1 year), and the serviceperson's family will continue to occupy property if they are assigned to a combat zone.
USDA would usually not allow for more than one residenceUSDA now accepts "overcrowding" as an acceptable reason to use USDA for financing of a new home. Overcrowding is now defined as more than 1.5 household members per room. Overcrowding must have existed 90 days prior to loan application and will persist for at least 9 months into the future.
All collections must be paid with a 0 balance.Collections are adverse credit. The borrower must write a letter of explanation for each account and document mitigating circumstances. The underwriter will then make a decision to approve the loan with open or unpaid accounts. If the balance of all unpaid collections exceed $2000, the underwriter MUST require full payment OR verify payment arrangement with creditor and include monthly payment into the debt ratios OR utilize 5% of each loan balance into the debt ratios, no payment in full required. Medical collections are EXCLUDED from the $2000 total.
Prohibition on in-ground poolsSwimming pools are now approved and deduction of contributory value is now removed!


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Joel Lobb
Senior  Loan Officer
(NMLS#57916)

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

 phone: (502) 905-3708
 Fax:     (502) 327-9119

 Company ID #1364 | MB73346