Rural Development Single Family Housing Programs Promoting Homeownership in Underserved Markets Joyce Allen Deputy Administrator for Single Family Housing October 20, 2014

Rural Development Rural Areas

Rural Development

Rural Areas

Rural Development Guaranteed Loan Program Overview No down-payment required 30 year fixed interest rates Guaranteed Underwriting System Automated Loan Closing System Mostly purchase transactions, 3-8% refinance 85% first time homebuyers 10% new construction Low and moderate income households Rural areas = up to 90% of the USA

Rural Development

New Regulation 7 CFR 3555 replaces old regulation Effective December 1, 2014 Handbook Expanded interest rate cap Construction to permanent financing  promotes new construction in rural areas  Replace aging housing stock Delegated servicing decisions  Approval of loss mitigation actions  Approval of property disposition plans to lender

Rural Development Guaranteed Loan Program Construction to Permanent Loans  Also known as “Single Close” loans  Encourages new construction in rural areas  Lender gets guarantee before construction begins  Interest payments during the construction period can come from interest reserve account or from the borrower  Borrower rests assured because the financing is all arranged up front  Reduces credit risk because newly built home require less maintenance Won’t need new roof for 20 years Won’t need new furnace for up to 7 years New appliances in kitchen and laundry Everything is brand new Less maintenance means better cash flow for borrowers

Rural Development Guaranteed Loan Program Automated Loan Closing  Lenders should sign up now  Paperless processing  Electronic submission of documents  Electronic submission of guarantee fees  Electronic delivery of agency forms  Lenders save money by: No longer cutting paper checks No more overnight delivery fees Receiving their Loan Note Guarantees much faster

Rural Development Training Opportunities Sign up for Automated Loan Closing

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Rural Development What is loan application packaging?  Packaging is an optional service that may be used by applicants to obtain direct single family housing assistance from the Rural Housing Service (RHS).  Packagers, who are separate and independent from RHS, help applicants navigate the loan application process. Section 502 Direct Program Partnering Through Loan Packaging

Rural Development Certified Loan Application Packaging Proce ss Proposed rule published on August 23, 2013 (78 FR – 52464); final rule is expected in the near future. Through the rulemaking, the loan application packaging process currently in place will be strengthened and improved. Requirements will be placed on eligible individuals to become Agency-certified packagers and on qualified nonprofit organizations and public agencies that employ certified packagers. The requirements will cover experience, training, proficiency, and structure. Packaging in the Future

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