topic I think my USDA loan is set up wrong!!!! in Mortgage Loans

I think my USDA loan is set up wrong!!!!

Anonymous — Tue, 04 Oct 2011 18:39:44 GMT

Ok hey everyone!!! This is only my second post so i'm long sorry!!! Ok we are preapproved for a USDA Guaranteed loan for 120,000 through Wells Fargo and locked in at 4% till 11/15. It says on our GFE our anticipitated closing date is 10/20. We are under contract for a house for 108,000. While going through the process we were told we could add in the guarantee fee to our mortgage. This has been a long drawn out process bc we had to go through manual underwriting. Now, our LO is telling us that unless the house appraises for more we will have to pay the guarantee fee upfront. That doesn't make sense. Also, there is a rural development annual fee in our closing, plus a monthly fee. Our loan app was submitted before 10/1/11 so LO says we are under the old rules. I think she is making a mistake and combining the old and new rules charging us 3.5% plus annual fee.So I called rural development and they told me that I can borrow 100% of the appraised value plus guarantee fee, which is what I thought! So i've brought this up to her and she disagrees. Does anyone know the right answer???And if shes wrong can we fix this or will we get stuck paying too much????

Re: I think my USDA loan is set up wrong!!!!

Anonymous — Tue, 04 Oct 2011 20:56:51 GMT

You can borrow 103.5% of the appraised value of the home... 100% for the actual home value plus 3.5% for the guarantee fee. Now let's say you're paying $103,500 for a house that only appraises at $100,000... you're already at your limit of borrowing 103.5% which means you'll have to pay that 3.5% guarantee fee up front. As far as the annual fee... THAT sounds wrong. I know that went into effect Oct. 1 but I don't know why that would be included in your loan.... ???? It should either be 3.5% with no annual fee or 2% WITH an annual fee as far as I know!

Re: I think my USDA loan is set up wrong!!!!

Anonymous — Wed, 05 Oct 2011 00:29:38 GMT

Well our LO is telling us we can only borrow 100% of the appraised value. She said the only way we can add the guarantee fee into our loan is if the house appraises $3780 higher than the sales price. I know she is wrong and that we can finance 103.5% but she is adamant. Also, on the GFE is the fee effective10/1 I don't know what to do. Is it possible that we can get stuck with this or will the underwriter see it and make it right?? I know it must get signed off by USDA do surely the bank can't just make up it's own rules and fees right?? Help

Re: I think my USDA loan is set up wrong!!!!

Anonymous — Wed, 05 Oct 2011 00:42:29 GMT

OH... I understand now. Oh boy, yeah that doesn't sound right at all. I'm far from an expert, but hopefully ShaneTheMortgageMan will see this - he's very knowledgeable and will have good advice for you.

Re: I think my USDA loan is set up wrong!!!!

Anonymous — Wed, 05 Oct 2011 00:45:24 GMT

I'm hoping the same thing!! Shane help!!

I know our house appraised for something like $86,500 and...

Anonymous — Wed, 05 Oct 2011 12:33:56 GMT

I know our house appraised for something like $86,500 and our loan total was around 90K. We did have the seller paying all closing costs so that may have helped, we thought it would appraise for more but our LO said they usually appraise for almost exactly what you offer.

Shane the mortgage man pls read me!!

Anonymous — Wed, 05 Oct 2011 12:55:09 GMT

Well our appraisal was on Monday. The home were buying is a fsbo. My mother in law knows the owner also. The owner said the appraiser was a really nice guy and said it definitely was worth 108 and he would see what he could do above and beyond that. But if my loan is structured wrong, I'm in trouble because the whole point of going USDA was to
Minimize out of pocket. What my LO is saying kind of defeats that purpose. We also are having the seller pay majority of closing $3500 to be exact. But how do I fix this? Does anyone know??

Re: Shane the mortgage man pls read me!!

ShanetheMortgageMan — Mon, 10 Oct 2011 05:37:36 GMT

USDA has a calculator where you can calculate your new loan amount given the appraised value and financing all/a portion of the guarantee fee.

https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/loanorigination/Guarantee%20Upfront%20and%20Annual%20Fee%20Calculator%20pv1.1.xlsm is the Excel calculator itself. If that link doesn't work then use https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do and go down to the Guarantee Fee & Annual Fee Calculator under "Loan Origination".

With a $108k sales price, financing the entire 2% guarantee fee, the loan amount would actually come out to be $110,204.08. $108k for the base loan amount + $2,204.08 for the guarantee fee.

Re: Shane the mortgage man pls read me!!

BrianB_The_Loan_Professor — Tue, 11 Oct 2011 17:15:58 GMT

Sounds like your LO is incompotent in USDA loans - this is not at all how it works - in fact if your home appraises for more than the contract price you can add in the closing costs up to the appraised value BEFORE adding in the upfront fee......

To fix this you may need to speak to their manager/supervisor.......

Someone at Wells Fargo has to understand how this works

Re: USDA FUNDING FOR FY 2012

Anonymous — Thu, 13 Oct 2011 21:15:32 GMT

I have a question aside from the loan ~ You said yall were set to close on 10/20 will yall still be able to close on that date with funding not being available? Reason I ask we are set to close on 10/24 and we were told last week if funding is still not available we will not be about to close our lender will not take a conditional statement from USDA. As of this afternoon there still are no funds since FY2012 started on Oct. 1. I am so stressed we have to be out of our rental by Oct. 31.

ANYONE HAVING ANY INFO ON THIS WOULD BE APPRECIATED!

Re: USDA FUNDING FOR FY 2012

Anonymous — Fri, 14 Oct 2011 01:12:59 GMT

We haven't heard anything like that from our lender. However, I will say we've been going through the process since august and our loan was sent to USDA on 9/7. We had to do the whole manual underwriting thing so it's taken forever. Who is your lender? I know that our loan officer said she had to call USDA to fix our loan because it was wrong but she said nothing about no funds. I thought the purpose of the USDA restructuring the fees was so the program was self sufficient. Thats why now you pay the annual fee amount. At least I read that somewhere. I hope everything works out for you guys!!! I am dying here waiting to close!!

Re: USDA FUNDING FOR FY 2012

Anonymous — Fri, 14 Oct 2011 13:10:26 GMT

I think you will be fine then since your loan was sent to underwriting before Oct. 1. Our LO said seens our loan was not submitted unless after the new FY we had to want on funding to become ready. So it is just a waiting game...Last yr funds weren't avaiable until Nov. 3. Hoping that isn't the case this yr. Now that they are also charging a PMI they seem to think after a while they should be about to hand on their own, just not yet .

Re: USDA FUNDING FOR FY 2012

Anonymous — Fri, 14 Oct 2011 14:07:25 GMT

I hope that you don't have to wait until November!!! That is awful!!! We are supposed to close on Thursday and as far as i know our loan is still with the processor, or at least it was on tuesday. Does anyone know if it has to go back to the USDA again? Our processor told us it had to go to a special underwriter for wells Fargo in like Minnesota or something! I am crossing my fingers and hoping they have it and we can close Thursday!!! Good luck to you with you loan!!

Re: USDA FUNDING FOR FY 2012

ShanetheMortgageMan — Sat, 15 Oct 2011 16:14:11 GMT

Yes one of the final steps before closing is for the loan to go to USDA for their conditioanl commitment, without a conditional commitment there is no funding of your USDA loan. Wells Fargo has a big underwriting center in Minneapolis, so that is probably why it is being sent there. If your loan hasn't been sent to USDA for the conditional commitment yet then I do not think there is a great chance you'll be closing on Thursday as USDA's review often takes 2-3 days.

Re: USDA FUNDING FOR FY 2012

Anonymous — Sat, 15 Oct 2011 17:14:43 GMT

omg this is a nightmare! we asked our lo on wed if we'd still be closing on the 20th and she said tentatively, yes. I am worried that our loan is going to have to wait for the funding to become available or does anyone know if wells fargo accepts these without it??? how long is my loan going to be with the underwriter now??? we have got to move soon or well have no place to go!!

Re: USDA FUNDING FOR FY 2012

ShanetheMortgageMan — Sat, 15 Oct 2011 17:45:35 GMT

On Wells Fargo's wholesale website it says:

Summary
As a reminder, we’ll be temporarily unable to accept new USDA Guaranteed Rural Housing/Rural Development (RD) transactions until Monday, Nov. 14.

Effective date
Monday, Aug. 15 through Sunday, Nov. 13, 2011.

Key dates
Thursday, Sept. 1
All RD loans must be underwritten and approved. All prior to doc conditions must be cleared.
Friday, Sept. 30
Must receive conditional commitment from RD. Loans with no conditional commitment or an expired conditional commitment on or after Oct. 1 will be canceled.
Monday, Nov. 14
Wells Fargo will again accept RD transactions.

That doesn't mean the retail side is the same though, and if your loan is being processed by Wells Fargo right now then obviously the above timeframes didn't apply to your loan... are you going through a broker or directly with Wells Fargo?

Re: USDA FUNDING FOR FY 2012

Anonymous — Sat, 15 Oct 2011 17:49:19 GMT

We are going directly through wells Fargo. So could that mean our loan could get cancelled?

Re: USDA FUNDING FOR FY 2012

ShanetheMortgageMan — Sat, 15 Oct 2011 18:25:50 GMT

You'd have to ask your Wells Fargo loan officer what it means.

Re: USDA FUNDING FOR FY 2012

Anonymous — Wed, 19 Oct 2011 20:48:27 GMT

Yes, if your loan had not been sent in for USDA's conditional commitment before funds ran out, you will not be funding until funds are available. Also, if you do not have the USDA's conditional commitment before October 1, 2011, then the lender needs to redisclose to you the new changes to the loan. The Guarantee fee was lowered to 1% but there is now an added monthly fee, similar to mortgage insurance

Re: USDA FUNDING FOR FY 2012

Anonymous — Wed, 19 Oct 2011 20:58:49 GMT

Here so far is what is going on with the budget

FY12 RD Budget and Appropriations

ADMINISTRATION ASKS SENATE TO CUT RURAL HOUSING SPENDING

On October 17, 2011, the Obama Administration issued a Statement of Policy (SOP) setting forth its position on the FY12 appropriations bill covering USDA, HUD, and other agencies that is currently under consideration in the Senate. While the SOP generally supports funding for housing programs - and even requests increases in some, including CDBG and HOME - it singles out the USDA rural housing programs for cuts:

Program Terminations and Reductions. The Administration urges the Senate to accept additional savings from terminations and reductions proposed in the President's Budget for USDA, including termination of Rural Housing Services small loan and grant programs and reductions in single family housing direct loans and housing repair grants. Adopting these terminations and reductions will free up scarce resources for higher-priority needs and more effective programs such as food safety.

The President's budget, summarized below, proposed elimination of Section 504 repair loans, Section 523 self-help grants, Section 533 Housing Preservation Grants, Section 538 rental housing guarantees, the Multifamily Preservation and Revitalization program, and the Preservation Revolving Loan Fund. It suggested major reductions in funding for Section 502 direct loans and Section 504 repair grants.

There was no immediate response to the SOP from Senators; such statements usually do not have an impact on legislation that has already been approved by a committee, as this bill has. The Senate is expected to begin consideration of the bill - H.R. 2112, a "minibus" that combines the appropriations bills for USDA, HUD, and Commerce/Justice - on October 18 and to vote by the end of the week.