This morning the ever knowledgeable and on top of it real estate agent Taylor Clark mentioned to me that USDA is out of money for the popular rural housing loan. He said that Wells Fargo has already stopped applications for Rural Housing loans as they won’t be able to be underwritten.
This is a pretty big deal for Cache Valley Real Estate. The USDA Rural Housing loan is one of the few 100% financing loans available, and most of the towns in Cache Valley are classified as rural areas that qualify for this loan.
Well after looking things up I found this information from mortgagenewsdaily.com:
This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.
Once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.” This is because it is not certain when additional funding will be available.
Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita. Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.
We apologize for any inconvenience this may cause you. Should you have any questions, you may contact the Single Family Housing Guaranteed Loan Division at (202)720-1452.
Every year USDA runs out of money for their fundings and normally you are not affected by this however, this year is very different. The USDA Section 502 guaranteed Rural Housing Program will have exhausted there 2010 fiscal funds by the end of April. The USDA would need to receive about 150 million in funding to be able to continue funding loans for the rest of fiscal year 2010.
In past years USDA has appropriated funds from other areas to make up for the shortfall in funding dollars giving lenders the oppurtunity to continue to fund USDA loans.
Why is this year any different then past years? USDA is removing the “subject to receipt of appropriated funds” from their conditional commitments meaning there is no guarantee that lenders will be able to guarantee the loan and fund it.
Why are they doing this? The money usually runs out around the end of the government’s fiscal year which is September 30th and USDA basically tells everyone we’ll get you’re funding commitments either this year or next. Since the money is running out so early in the fiscal year USDA is not sure where the money will come from therefore will not put “subject to receipt of appropriated funds” on their conditional commitments. Last year the money ran out in March but the stimulus provided the gap funding to carry the program thru to the end of the year but this year there is no stimulus money.