Many states have experienced delayed processing times for the Single Family Rural Housing Direct and Guaranteed Loan Programs. The delays are due to budget cuts and reductions in rural housing staff. Delays have caused many homebuyers to lose locked-in interest rates and sometimes prevent settlements from occurring. Sellers are hesitant to accept offers with rural housing financing due to delays.
Last spring, NAR sent a letter to both the House and Senate Appropriations Subcommittees on Agriculture urging members to approve a legislative fix allowing RHS to approve Direct Endorsed lenders, similar to the process used by FHA and VA. This would greatly speed processing of these loans, which have seen significant delays in recent years due to federal budget cuts. NAR also submitted testimony to the House Agriculture Subcommittee on Livestock, Rural Development, and Credit stressing the importance of access to credit for all homebuyers, and described the specific challenges for rural communities.
Note: On October 1, 2014 the annual fee for both purchase and refinance rural housing loans will increase from .4 percent to .5 percent. Rural Development State Offices that are working through a backlog of applications will need to process loans using the .5 percent annual fee if they cannot issue a conditional commitment prior to the close of business on September 30, 2014. For a borrower with a loan balance of $150,000, the increase in the monthly payment would be approximately $12.50 a month