On June 20, 2018, the Single-Family Housing Guaranteed Loan Program (SFHGLP) published a proposed rule with changes to the Single-Close Construction program. After considering public comments on the proposed rule, a final rule was published in the Federal Register on July 22, 2019, that will adopt the proposed changes. The effective date has been extended until October 1, 2019. The regulation and changes to Hand Book-1-3555 will be revised with the following:
- Single-Close Construction
- The pilot program which has been in effect in 27 states will now be permanent on a nationwide basis. The final rule allows lenders who use warehouse line of credit to charge a temporarily higher interest rate during construction to recoup financing costs. It also provides lenders the option to establish a reserve account for principal, interest, taxes and insurance (PITI) payments during the construction period. In addition, it expands the single-close process to include rehabilitation loans with the purchase of an existing dwelling. The revisions to the new rule will be published under 7 CFR 3555 §3555.104, §3555.105, and §3555.202.
- Elimination of Maximum Interest Rate Cap
- The final rule eliminates the maximum interest rate cap for all SFHGLP loans effective October 1, 2019.
- Form RD 3555-21, Request for Single Family Housing Loan Guarantee
- Form RD 3555-21, with revision date of October 2019, eliminates the fields for the interest rate, lock and floating dates. An advance copy of the form has been posted to the USDA LINC Training and Resource Library under Loan Origination – Document and Resources. USDA will discontinue use of the Form RD 3555-21 (revision date October 2018) 30 days after the effective date.
- HB-1-3555 Chapter Revisions
- The SFHGLP will publish a revised HB-1-3555, Chapter 6 “Loan Purposes” and Chapter 12 “Property and Appraisal Requirements”. The proposed changes will coincide with revisions to the regulation that will include guidance for the single-close construction feature for the repair and rehabilitation with the purchase of existing dwelling. A recorded webinar provides an overview of the specific revision highlights for the new feature. Chapter 5, “Origination and Underwriting Overview”, and Chapter 7, “Loan Terms and Conditions” have also been revised to remove language regarding the maximum interest and interest rate lock dates.
- Advance copies of these chapters are posted to the USDA LINC Training and Resource Library under “7 CFR 3555”.
- Sample Worksheet for Calculating Maximum Loan – Rehabilitation Single Close Loans
- A Sample Worksheet for Calculating Maximum Loan Amount for the rehabilitation and repair single-close construction loans will be available as an optional resource tool. The form will be posted to USDA LINC Training and Resource Library under “Documentation and Resources”.
Joel Lobb
Senior Loan Officer
(NMLS#57916)
American Mortgage Solutions, Inc.
10602 Timberwood Circle, Suite 3
Louisville, KY 40223
text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
