As many lenders that originate USDA loans under the Single Family Housing Guaranteed Loan Program (“Program”) know, there is a short period of time – approximately two weeks – at the beginning of the fiscal year for the Program in which funding is not available. (Fiscal year 2019 began on October 1, 2018, and ends at the close of business on September 30, 2019.)
In an Unnumbered Letter, the United States Department of Agriculture (USDA), Rural Development, announced that during this time, commitment authority will be unavailable and, therefore, Program Directors may issue Conditional Commitments subject to the availability of funds. Additionally, Rural Development advised that the upfront guarantee fee and annual fee for FY 2020 will remain the same as the 2019 rates.
Until commitment authority is restored, Conditional Commitments must contain specific language related to funding as a condition of the loan guarantee.
Accordingly, DocMagic has updated the Conditional Commitment (DocMagic File Name: RD355518.RH) to include the required language during the timeframe that commitment authority is unavailable in the form of an Attachment to the Conditional Commitment. Note that on page 1, the first check box under the “Additional Conditions and Requirements” section will be marked to indicate that conditions and requirements will be attached to the form.
The upfront guarantee (or funding) fee will remain at 1.00%. The annual fee of 0.35% will also remain the same. The fees apply to both purchase and refinance transactions in FY 2020.
DocMagic has updated the upfront guarantee and annual fees for the new fiscal year from October 1, 2019, to September 30, 2020 in all of its platforms. For more information about fee selection in DMO, please see this prior Compliance Wizard article here. In addition, DocMagic has updated its existing data validation audits accordingly.
If you have questions about the information presented in this article, please see the USDA Unnumbered Letter here or contact DocMagic’s Compliance Department.
