We know that many of our members are experiencing delays in processing Rural Housing loans. In this announcement, we especially wanted to highlight the following:
"Rural Development will not put application packages in line for processing until they are deemed complete. The Rural Development office will return any incomplete application packages, including those containing inaccuracies or missing documents, to the submitting lender and those packages will go to the back of the line when submitted.”
Also important to highlight, the announcement indicates that the most common application problem that USDA encounters is that the Worksheet for Documenting Eligible Household and Repayment Income is not submitted or contains errors.
If you have any questions about a specific loan, you should contact USDA’s Single Family Housing Guaranteed Loan Division, at 202-720-1452.
November 3, 2014
Please take a moment to review your RD loan applications before submitting, and remember…IF IT’S NOT COMPLETE, IT CAN’T COMPETE.
Rural Development will not put application packages in line for processing until they are deemed complete. The Rural Development office will return any incomplete application packages, including those containing inaccuracies or missing documents, to the submitting lender and those packages will go to the back of the line when resubmitted.
Incomplete applications compete for the limited time of our staff and our rules are clear that this should not happen. Per RD Instruction 1980.353(a), “complete applications will be considered by RHS in the order received from Lenders authorized to participate in the program.” [emphasis added]
Please help us by reviewing the following guidance to ensure your submission is complete and error free. By spending a few extra minutes to confirm that your loan applications are complete before submitting them to Rural Development, you can avoid having them returned to you or reassigned in the processing queue.
We Need Your Help
We do not wish to inconvenience you or your borrowers but in recent months, our field offices have been inundated with applications with missing information, missing documents, miscalculations, oversights related to Guaranteed Underwriting System (GUS) findings, and the like. As a result, our field offices are engaging in lengthy communications with some of our lenders to try to keep these applications moving forward.
These applications, which consume significant staff time, are sometimes hastily prepared so that they can hold a place in the processing queue. This contributes to processing delays that impact all lenders, the majority of whom submit complete and accurate applications. By returning incomplete applications or reassigning them to the end of the processing queue, we believe we can encourage better submissions and allocate our staff time more effectively to meet program needs.
Tools to Make Sure your Application is Complete
To ensure that applications submitted by your staff are not affected by the steps we have taken to protect our lenders and homebuyers, we ask that you share the following information with your staff that process, underwrite and close Rural Development guarantee requests:
Available tools include:
o Lender’s Origination Stacking Order Checklist
o Lender’s Loan Closing Stacking Order Checklist
o Please make sure to submit only those documents noted. Sending additional documentation will delay the review process and impede timely response to your request.
o Applications can only be processed in the order they are received and deemed complete.
o Each state communicates to the public the date of pipeline transactions that are being processed each day.
o If states are advising of delays, consider those delays when locking interest rates, expiration of credit documents, etc.
o Accept the terms and conditions of the commitment and close the loan at or below the interest rate and amount of loan indicated on the commitment; or
o Request a modification of commitment from Rural Development PRIOR to closing the loan. The modification you request could, for example, be an increase in the loan amount, an increase in the interest rate or amending on of the conditions of the commitment; or
o Reject the commitment and cancel your request.
o Modifications that would increase the loan amount or interest rate authorized on the commitment;
o An increase in liability, a decrease in assets, a decrease in repayment income or other changes taking place after the commitment was issued which would adversely affect the credit quality of the loan.
o A change in escrow payment amounts representing more than a 2% after the commitment was issued.
Here is the most common application problem we encounter…
The “Worksheet for Documenting Eligible Household and Repayment Income” is not submitted or contains errors. For example, if the income on the worksheet doesn’t match GUS or RD Form 1980-21, the processing of your request could be delayed or the case returned to you.
o Repayment income represents the parties to the note who will repay the loan request.
o Annual income is calculated one time to qualify the HOUSEHOLD for the loan program.
o Student loans currently in repayment must have documentation to verify the current payment due (e.g. letter from a loan servicer, online account verifications, or other official written documentation), but do not need to be submitted to RD unless it is a manual or full documents submission. The credit report alone is not acceptable documentation.
o If GUS detects a borrower on the application is also associated with other submissions in GUS, you should research the matter and provide us with an explanation regarding the reason for multiple applications.
We appreciate your commitment both to the fulfillment of rural America’s homeownership dreams and to the success of the SFHGLP.
Should you have any questions, please feel free to contact the Single Family Housing Guaranteed Loan Division at 202-720-1452.
© Colorado Mortgage Lenders Association
7600 E. Orchard Rd., Suite 200S • Greenwood Village, CO 80111
Phone: (303) 773-9565 • Fax: (303) 773-8746