15-02: New USDA Rural Housing Rule and Handbook
PennyMac has aligned with the updated version of the rule governing USDA Rural Housing loans. In addition to the updated rule, Rural Housing released a technical handbook to better assist lenders in underwriting, documenting, and closing loans in accordance with Rural Housing’s requirements.
Some notable changes are shown below. Please note that the below chart does not represent all the changes. Lenders are strongly encouraged to review the Rural handbook for complete information.
|Topic||Previous Guideline||New Guideline|
|Loan Purpose||New|| |
|Interest Rate||For Purchase Transactions, the maximum interest rate for the Rural Development Guaranteed Rural Housing Program is defined as the FNMA 90-day actual-actual yield requirements plus 60 basis points, rounded up to the nearest quarter percent. Provide a copy of the lock confirmation which includes the date the loan was locked.|| |
|Credit Reputation||New|| |
|Housing History||Not required with a GUS accept. Manual underwriting must follow Rural Housing repayment history requirements.|| |
|Verbal Verification of Employment (VVOE)||VVOE required within 120 days of note.|| |
|Tax Transcripts||New|| |
|Departing Residence: Rental Income||Rental income is allowed on a departing residence when the residence is outside the commuting area, or is not structurally sound, functionally adequate, regardless of the amount of time the rents have been received||Rental income from the departing residence may not be used if received for less than 24 months. Rents received less than 24 months do not represent a stable continued source of income for repayment income due to lack of history and cannot be used when qualifying the loan request.|
|Maximum Number of Properties Owned||Borrowers may not own a dwelling in the local commuting area. An exception is not required if the borrower owns a dwelling which is not structurally sound or functionally adequate.|| |
|Student Loans||Payment for the student loan is dependent on the type of loan. Additional documentation, e.g. letter from loan servicer, online statement, required, in addition to the credit report.|| |
|Long Term Obligations||Obligations with more than 6 months remaining must be included.||Obligations with more than 10 months remaining must be included.|
|Collection Accounts||New|| |
|Sales Concessions||New||Financing or sales concessions may not exceed 6% of the sales price.|
|Appraisal Age||6 months from the request for conditional commitment|| |
|Condo||Condos must be approved by FHA, VA, or Fannie Mae||Lenders must perform an underwriting review of the condo to ensure the project meets HUD, FHA, VA, Fannie Mae or Freddie Mac guidelines.|
|Swimming Pools||Pools are not included in the Appraiser's estimate of value||Rural Housing may approve dwellings with in-ground swimming pools.|
|Escrow Holdback: Interior||New||Escrow holdbacks for interior improvements are now allowed provided the holdback is limited to 10% of the final loan amount.|
Please contact your Sales Representative with any questions.