topic Re: Usda is out of money in Mortgage Loans

Usda is out of money

svtthis — Fri, 12 Jan 2018 20:35:47 GMT

I have been working since October of last year to qualify for a 502 direct loan. I was on the home stretch and got bad news today that usda is out of funding for my particular loan. They said in the letter that it would delay it by 1 month. Problem is my lease runs out in April and I'm not sure if I'll be able to find a property in time to close on. So I'm not sure what to do. I went and qualified for a traditional mortgage with nfcu but my buying power is significantly reduced when I got outside of the usda loan by about 70k. This might not seem like a lot but when you're working with a budget of 220k or less it makes a big difference. Anybody experience usda with running out of money and still getting a loan from them? I don't even now how they run out of money and the next month they are suppose to have more? I thought they got a budget on a yearly basis?

Re: Usda is out of money

Anonymous — Fri, 12 Jan 2018 20:42:19 GMT

I've never had a mortgage but I know others who have qualified for USDA and this does seem to happen regularly every year. Their website even talks about it here: https://www.fsa.usda.gov/programs-and-services/farm-loan-programs/funding/index

From the link: "Each year Congress appropriates money for FSA farm loans as part of the USDA budget. The funds are appropriated for the Government's fiscal year, which runs from October 1 until September 30 of the following year. The amount of money appropriated by Congress does not always meet the demand for loan funds and the Agency may run out of money for some programs."

New funds are available the next fiscal year. You can still apply for a loan now and get approved and they will hold the loan until funds are available. In the mean time, pack up your apartment, sell what you can, put the rest into storage and rent a cheap kitchenette style apartment if that works for you, otherwise negotiate with your landlord for a month-to-month lease extension if available.

One of my tenants negotiated a month-to-month extension with me due to loan snags (not USDA) and ended up staying 14 months more (at 20% more rent) but I was fine with it. Your landlord might be OK with it, too.

Re: Usda is out of money

Anonymous — Sat, 13 Jan 2018 15:06:02 GMT

Wow. This is disappointing. When you finally think you've made some progress, They pull the rug from under you. I'm gonna assume I received the same letter. I'm in vacation so I haven't checked the mail as yet. My lease is up next month. Month to month is about $80 more a month. I thought I was applying too early in September. Smh

Re: Usda is out of money

Anonymous — Sat, 13 Jan 2018 15:10:34 GMT

@Anonymous wrote:
Wow. This is disappointing. When you finally think you've made some progress, They pull the rug from under you. I'm gonna assume I received the same letter. I'm in vacation so I haven't checked the mail as yet. My lease is up next month. Month to month is about $80 more a month. I thought I was applying too early in September. Smh

The "out of money" might be regional or it might be national. Hard to say. Applying and getting approved for the loan matters because if they're out of money you go on a waiting list AND they notify government to clear up more funds sooner.

Month to month is worth it to wait out funding. Or even work out a deal with the sellers to "rent" the home you're buying.

Re: Usda is out of money

svtthis — Sat, 13 Jan 2018 16:29:44 GMT

Yea I wondered if you got the same letter I did since you applied before I did. It's frustrating because like you said we were told the process would take 3 months max.

Furthermore I seem to be getting conflicting info when I ask questions specifically about a pool. I was under the impression that you could purchase a pool with usda loan but my specialist said:
No, a home can’t have a pool nor can it exceed 1800 square feet. It also must be located in an eligible rural area. The property in which you select must not be able to be subdivided.

Also info about funding when I asked about a Coe:
Currently our office isn’t issuing any Certificates of Eligibility’s, a letter explaining why was mailed to you. Once our office resumes issuing them that does not guarantee funds are readily available for you. Funding timeframes are dependent on the availability of funding for the program. We request funds once a file has a contract and appraisal.

At this point I'm not sure what I can do. I've reached out to my landlord to see if I can go month to month but I haven't heard back yet.

Re: Usda is out of money

Anonymous — Sat, 13 Jan 2018 17:21:42 GMT

If your landlord says no to month-to-month, offer 5% more in rent for that option. Also offer a 60-day notice if that helps (meaning, you give him TWO months to find a new tenant).

For me, my tenants almost never move out and if they do it's usually because I've been helping them qualify for a mortgage so they can move out. I also have waiting lists for all of my rentals with people who want to snag one, so I don't care if anyone moves out without any notice.

But some landlords have it difficult in finding new tenants, so the easier you make it for your landlord, the more likely they are to approve a month-to-month extension.

I generally ask for 5% more for month-to-month on top of any annual increase that would occur when I got a new tenant.

Re: Usda is out of money

ucdcrew — Sat, 13 Jan 2018 20:11:04 GMT

I wonder if its a byproduct of the continuing resolution. Budget uncertainty can do some interesting things to federal programs, and Congress keeps kicking the can down the road on trying to pass a budget.

Re: Usda is out of money

Anonymous — Sat, 13 Jan 2018 20:16:31 GMT

It happens every year with this loan. See the link I posted.

Nothing to do with politics per se, just underfunded and waiting for new funds but no different now than any time past!

Re: Usda is out of money

pipeguy — Mon, 15 Jan 2018 04:55:45 GMT

@ucdcrew wrote:
I wonder if its a byproduct of the continuing resolution. Budget uncertainty can do some interesting things to federal programs, and Congress keeps kicking the can down the road on trying to pass a budget.

Although USDA obligations do tend to "run out" toward the end of a fiscal year (Federal), the lack of a budget approval or end of year Continuing Resolution Appropriation Bill is the current factor - no doubt.

In September the short-term CR was kicked to December 22nd, that was kicked forward to January 19th, 2018 and THAT date will be kicked forward until March 5th or so. A signed "Continuing Resolution Appropriation Bill" is usually long-term meaning until the end of the fiscal year. A "basic CR" is short-term which is what we are operating on now, kicking the can down the road for a few weeks or months. To understand the complete Federal Budget and then Authorization-Appropriation process will give you a migraine and I'm not going to even try to explain it here - let alone the politics - just know that a CR continues forward current budget-appropriations (meaning you can actually spend the money) based on what was previously approved during the previous "approved" spending levels.

As far as USDA approved mortgages, this is a program funded by the Department of Agriculture at X dollars per fiscal year. If X dollars are already obligated by say July of a given year, no additional loans can be offered until the next bucket of money is available (start of the new fiscal year as long as there is an actual appropriation approved - think of Appropriation = Budget, it's not USGov speak accurate, but it'll ease a pending headache). With a short-term CR even if it's a series of short-term CR's that bucket of money is NOT authorized or appropriated except for 3 weeks or a month going forward so it's next to impossible to fund mortgage loans 3-4-6 weeks in advance.

This is not "politics" per say, but because of politics (no matter what you read in the news as far as the cause), the ongoing CR is about budget issues sidetracked by "other factors" such as immigration, healthcare, etc. - its a distraction and delay but in reality makes little difference in actual funding for programs . 2018 is an election year meaning the ever pending CR is going to get extended fairly soon through election day - it's going to become more and more of a distraction as Congress gears up for elections and that factor alone will get the "budget" passed.

Bottom line, USDA funds will be flowing again pretty soon - the rest is just a sideshow.

Note: I've stayed away from the blame game and the who/what for special interest issues (aka politics) and used briefly only the how/why of CR's and budget issues - politics do play a role but please that's not where I hope the discussion will go.

Re: Usda is out of money

svtthis — Mon, 15 Jan 2018 14:18:01 GMT

Pipeguy that's a great post and goes into great detail. Question for you is why would usda specifically tell me to wait 1 month before they can resume my file if the funding won't be available until the next fiscal year which I believe is in October?

Re: Usda is out of money

ucdcrew — Mon, 15 Jan 2018 17:23:22 GMT

Because they haven't appropriated the FY18 funds yet - so once those funds have be appropriately appropriated (ha) they'll be available. They're waiting to see what level they can spend at with rumors of a budget cut coming to USDA. I work for a different federal agency, and we're kind of in the same boat. You're waiting on the FY18 funds, not the FY19 funds. It does sound like they are going to kick the can again though.

Re: Usda is out of money

pipeguy — Mon, 15 Jan 2018 18:02:57 GMT

Funding will be available once Congress passes the Fiscal Year 2018 "Budget" - actually a consolidated combined continuing resolution appropriation bill (don't ya love gov-speak).

The current short-term CR runs out January 19th - this will be extended again until March 5th (that's the date I am hearing right now). Hopefully by March 5th Congress will finally approve a FY18 budget through the end of September - THAT"S when USDA and other funds will flow, until that time its "pause" for major obligations on USGov spending.