Refinances - USDA Rural Development
RefinancesSingle Family Housing GuaranteedLoan Program1
Training Objectives Where is the topic located?* 7 CFR Part 3555 and HB‐1‐3555 Learning Checks Resources2
Things change! Every effort has been made to ensure training referencesare accurate at the time of publication. Always reference the most recent USDA publicationsavailable online.3
Guaranteed Loan Program Regulation7 CFR Part 3555 The regulation is the rule! 8 Subparts: A – H Appendix 14
7 CFR Part s‐guidelines5
7 CFR Part 35556
7 CFR Part 3555Subpart C: Loan Requirements .101:.102:.103:.104:.105:.107:.108:Loan PurposesLoan restrictionsMaximum loan amountLoan termsCombination construction and permanent loansApplication for and issuance of loan guaranteeFull faith and credit7
7 CFR Part 35558
7 CFR Part 3555: 3555.101(d)Eligible Refinance Loan Purposes Permanent financing for an interim new construction loan The full amount or pay off of a lot or site with a newconstruction dwelling Section 502 Direct and Guaranteed loans9
7 CFR Part 3555: 3555.101(d)Refinance Types Streamlined: Guaranteed loans and Direct loans thathave never received subsidy Non‐Streamlined: Direct and Guaranteed loans Streamlined‐assist: Direct and Guaranteed loans10
7 CFR Part 3555: 3555.101(d)Streamlined Direct loans (no subsidy received) and Guaranteed loans No new appraisal is required Loan amount is limited to balance of current loan(including interest) and upfront guarantee fee11
7 CFR Part 3555: 3555.101(d)Non‐Streamlined Direct and Guaranteed loans New appraisal is required Loan amount is limited to new appraised value Loan may include current balance, eligible closing costs,upfront guarantee fee, etc. Subsidy recapture (direct loans) may be financed orsubordinated12
7 CFR Part 3555: 3555.101(d)Streamlined and Non‐Streamlined New interest rate must be at or below the current rate Mortgage must have closed 12 months prior to loanapplication Mortgage must be paid as agreed for 180 days prior toloan application Borrowers may be added or deleted from the loan Full income and credit documentation required Debt to income ratios are calculated, waivers may berequested13
7 CFR Part 3555: 3555.101(d)Streamlined‐Assist Direct and Guaranteed loans No appraisal is required (unless for subsidy calculation) Loan amount may include current balance (includinginterest), closing costs, upfront guarantee fee, etc. Subsidy recapture due for direct borrowers may not beincluded in new loan14
7 CFR Part 3555: 3555.101(d)Streamlined‐Assist Mortgage must have closed 12 months prior to loanapplication Mortgage must be paid as agreed for 12 months prior toloan application Interest rate must be at or below current rate 50 net tangible benefit must be achieved Borrowers may be added, but not deleted15
Guaranteed Loan Program Technical HandbookHB‐1‐3555 Provides guidance to support the regulation HB is not the rule 20 Chapters16
HB‐1‐355517
HB‐1‐355518
HB‐1‐3555: 6.2 D1. Construction Financing2. Site without a Dwelling3. Existing Section 502 Direct & Guaranteed Loans Non‐streamlined Streamlined refinance Streamlined assist19
HB‐1‐3555: 6.2 D 3Existing Section 502 Direct & Guaranteed Loansa. Loan terms and conditionsb. Loan application documentsc. Submission processd. Closing costs and lender feese. Upfront guarantee feef. Annual feeg. Loan note guarantee issuance requirementsh. GLS reportingi. Funding limitations20
HB‐1‐3555: 6.2 D4. Existing Section 502 Direct Loansa. Section 502 Leveraged Loansb. Recapture21
TIPS Underwriter USDA Approved LenderUSDA not an underwriterResearch Rule & HB questions: Table of ContentsResearch Rule & HB questions: Control F22
7 CFR PART 3555 / HB‐1‐3555LEARNING CHECKS23
Question Slide“Topic” Question will be bulleted with scenario, or Include a statement/questionTRUE/FALSE or other answer options will be displayed24
ANSWER SLIDE“Topic”ANSWER: 7 CFR Part 3555 and HB‐1‐3555 referencesprovidedX. Correct Response Additional guidance for clarification may be provided25
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Refinance opportunities Rich has an interim construction loan with ABC Bank Rich owes 12,500 on his lot loan Rich can include his lot loan balance into the finalpermanent loanA. TRUEB. FALSE27
Refinance opportunitiesANSWER: 3555.101(d)(1) and (2), HB 6.2 D 1 and D 2A. TRUE The loan must include the site and home for collateral Remaining site debt is an eligible loan purpose under3555.101(b)28
Refinance opportunitiesWhich refinance(s) requires an appraisal for an existingguaranteed loan borrower?A. StreamlinedB. Non‐StreamlinedC. Streamlined‐assist29
Refinance opportunitiesANSWER: 3555.101(d)(i)(A), HB 6.2 D 3B. Non‐Streamlined Guaranteed borrowers require a new appraisal todetermine the maximum loan amount30
Refinance opportunitiesWhich refinance(s) does not allow a current borrower(s) tobe removed?A. StreamlinedB. Non‐StreamlinedC. Streamlined‐assist31
Refinance opportunitiesANSWER: 3555.101(d)(i)(A), HB 6.2 D 3C. Streamlined‐assist New borrowers may be added, but original borrowers maynot be deleted32
Refinance opportunitiesWhich refinance option allows the upfront guarantee fee tobe financed regardless of d‐assistAll of the above33
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3D. All of the above The upfront guarantee fee may always be included in thenew loan amount34
Refinance opportunitiesWhich refinance option allows subsidy recapture to befinanced into the new loan amount when mlined‐assistNone of the above35
Refinance opportunitiesANSWER: 3555.101(d)(i)(B), HB 6.2 D 3B. Non‐streamlined The new appraised value will determine if subsidy is dueand if it may be included Payoff of subsidy qualifies for a discount on amount due Additional refinance options allow subsidy to besubordinated36
Refinance opportunities Non‐streamlined refinance Appraised value: 100,000 Principal, interest, and subsidy payoff: 100,000 What is the maximum loan amount for this refinance?A. 100,000 plus upfront guarantee feeB. 100,000 plus eligible closing costs and upfront guaranteefee37
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3A. 100,000 plus upfront guarantee fee Non‐streamlined refinance option Maximum loan cannot exceed appraised value plus upfrontguarantee fee Subsidy recapture due is eligible to be financed when thereis sufficient equity in the property38
Refinance opportunitiesWhich refinance option(s) cannot be processed in GUS?A. StreamlinedB. Non‐StreamlinedC. Streamlined‐assist39
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3C. Streamlined‐assist Loans must be manually underwritten Submit loan documentation electronically to USDA forreview40
Refinance opportunities Ed’s current guaranteed loan interest rate is 5.5% To qualify for a USDA refinance, his new interest rate mustbe at 4.5% or belowA. TRUEB. FALSE41
Refinance opportunitiesANSWER: 3555.101(d)(ii), HB 6.2 D 3B. FALSE The new interest rate must be at or below 5.5% The 100 basis point reduction has been removed from theregulation and HB42
Refinance opportunities Cindy has a direct loan in California She now lives in Tennessee and wishes to refinance theCalifornia home Which refinance option(s) is Cindy mlined‐assistNone of the above43
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3D. None of the above Applicants must be the owner occupant/primary residentto qualify for any refinance option44
Refinance opportunities Marty wishes to apply for a refinance His current loan closed 8 months ago Marty is eligible to apply for a guarantee refinance loanA. TRUEB. FALSE45
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3B. FALSE All loans must have closed a minimum of 12 months priorto the date of loan application46
Refinance opportunities Kim applies for a streamlined‐assist refinance Her debt ratio will exceed 41% A debt ratio waiver request must be submitted to USDAA. TRUEB. FALSE47
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3B. FALSE Streamlined‐assist loans do not require ratio calculations No debt ratio waivers are required48
Refinance opportunities Streamlined‐assist refinance loanCurrent PITI: 755New PITI: 659This refinance achieves the required net tangible benefitA. TRUEB. FALSE49
Refinance opportunitiesANSWER: 3555.101(d)(i), HB 6.2 D 3A. TRUE Current PITI: 755 – New PITI 659 96 New PITI must be a minimum of 50 less than the currentPITI The applicable annual fee must be included in the PITIcalculation50
Refinance Option Overview51
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WAYTO GO!57
ulations‐guidelines58
GovDelivery Sign ubscriber/new?qsp USDARD 2559
Thank you for supportingthe USDA Single FamilyHousing Guaranteed LoanProgram!60
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This refinance achieves the required net tangible benefit A. TRUE B. FALSE 49. Refinance .
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