On May 11, 2010 USDA's Office of Rural Development announced the Guaranteed Rural Housing Program would once again accept loan applications and issue approvals! All new conditional commitments must be modified to read:

Loan approvals are �subject to the availability of funds and Congressional authority to charge a 3.5% guarantee fee for purchase loans and a 2.25% guarantee fee for refinance loans�.

To put it simply,  the USDA would continue to issue Section 502 Loan Guarantees when the Congressional vote was final.  All indications were that the vote was just a formality. 

Well it wasn't a "sure thing" and the legislation has not yet been passed.

USDA offers 100% financing to qualified buyers in eligible areas of the U.S.  The borrower is charged a Guarantee Fee equal to 2% of the loan amount.  This fee may be financed into the loan as long as the final loan amount does not exceed 102% of the appraised value.  This fee is actually 3.5%, however, the government has been kicking in 1.5%.   The new legislation essentially removes the 1.5% government subsidy and puts the entire 3.5% guarantee fee on the shoulders of the borrower.  Some politicians think the guarantee fee should be larger.  As a result the bill is still stuck in committee, the USDA is not issuing new loan approvals,  and lenders are not taking new loan applications.

H.R. 5017:  Rural Housing Preservation and Stablization Act of 2010

Latest Major Action: 4/28/2010 Referred to Senate committee.
Status: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. 

Congress goes on Memorial Day break from May 31-June 4th.  If a decision is not made before the 31st, we are well into the 2nd week of June before legislation is passed. 

If you have questions on USDA or other financing options available, please call my office at (509) 232-7725 or email me at dgeibel@cascademortgagewa.com.