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USDA Program Updates

Tax Transcript Policy, Maximum Loan Amount, and Eligibility.

Tax Transcript Policy

New Penn Financial is pleased to announce that tax transcripts for non-self-employed wage earners and retired borrowers are only required in the following circumstances for USDA products. Section 5.1 of the product profile has been updated. Loans/Borrowers not meeting any of the criteria below will no longer need tax transcripts:

  • Loan files where handwritten paystubs are used for income verification
  • Loans where a non-arms-length relationship exists
    • Relationship between Borrower/Seller/Loan Originator exists
    • Borrower employed by third party originator of loan
  • Borrower is employed by family member
  • Any of the following are present:
    • Additional income for qualifying is derived from sources such as rental properties, dividend/interest or other income where tax returns is required; or
    • Tax returns are used to document income; or
    • Commission (> 25% of income); or
    • At the underwriter’s discretion

 

 

Maximum Loan Amount

Section 2.1 of the product profile (Loan Limits) has been updated to reflect the maximum mortgage amount of $453,100.

 

 

Proposed Changes to Eligibility of Certain Rural Areas

Effective June 4, 2018, new ineligible areas will become effective for the USDA Guaranteed Rural Housing program. The proposed maps were posted on March 16, 2018 to the USDA Income and Property Eligibility Site at https://eligibility.sc.egov.usda.gov.

Select the “Proposed Ineligible Areas” tab after choosing the Single Family Housing Guaranteed program to view the new ineligible area maps. The “Proposed Ineligible Areas” maps show all ineligible, non-rural areas and not only the new non-rural areas. In some cases, previously ineligible areas will now become eligible rural areas.

Things to Know:

On June 4, 2018, all properties for new applications must be located in an eligible rural area based on the new maps. However, a property that is located in an area being changed from rural to non-rural may be approved if all of the following conditions are met:

1. The application is dated and received by NPF prior to June 4, 2018 and the Loan Estimate was issued by three (3) days of application receipt.

2. The applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018.

3. Applicant meets all other loan eligibility requirements.

If the property is located in an area being changed from rural to non-rural, NPF must provide Rural Development all of the following information in addition to all other required documentation. For loans submitted via the Guaranteed Underwriting System (GUS), the documentation must be uploaded into the system.

  • Copy of the signed/ratified and dated sales contract.
  • Copy of the Loan Estimate issued to the applicant
  • Verification that the property was located in an eligible rural area prior to June 4, 2018. Note: Maps of the “Previous Eligible Areas” will be available on the Eligibility site beginning June 4, 2018. A printout of the map indicating the property address was previously eligible is acceptable.

GUS underwriting recommendations will display an INELIGIBLE property determination for property that is no longer located in an eligible rural area. The INELIGIBLE property determination is the second half of the GUS underwriting recommendation. For example, an ACCEPT/INELIGIBLE underwriting recommendation will apply to a request where the applicant’s credit and capacity assessment is an ACCEPT (first part of the underwriting recommendation) however the property is located in an INELIGIBLE area (second part of the underwriting recommendation). This does not prevent the lender from completing the final submission to Rural Development. The Rural Development reviewer will be able to override the property eligibility determination when the lender has uploaded the required documentation noted above.

Please familiarize yourself with the new areas and assess any impact to your eligible lending areas.