COVID-19 Pandemic for Kentucky USDA Mortgage Loans
Extension of Temporary Exceptions: The temporary exceptions originally issued on March 27, 2020,
pertaining to appraisals, repair inspections, and income verifications for the Single Family
Housing Guaranteed Loan Program (SFHGLP) due to the COVID-19 pandemic have been extended until
February 28, 2021 and apply to the requirements in the program handbook HB-1-3555 for new loans,
described below.
Residential Appraisal Reports – Existing Dwelling
For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an
interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic,
an “Exterior-Only Inspection Residential Appraisal Report”, (FHLMC 2055/FNMA 2055) will be
accepted. In such cases, appraisers are not required to certify that the property meets HUD HB
4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of
Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).
This exception is not applicable to existing manufactured housing pilot program, new construction
properties, or construction to permanent loans. As a reminder, appraisals are not required for
streamlined and streamlined-assist refinance transactions.
Repair Inspections – Existing Dwelling
Loans for which a completion certification is not available due to issues related to the COVID-19
pandemic, a letter signed by the borrower confirming that the work was completed is permitted.
Lenders must also provide further evidence of completion, which may include photographs of the
completed work, paid invoices indicating completion, occupancy permits, or other substantially
similar documentation. All completion documentation must be retained in the loan file.
This exception is not applicable to rehabilitation and repair loans noted in section 12.28 of HB-1-
3555
Verbal Verification of Employment
Lenders should use due diligence in obtaining the most recent income documentation to verify the
borrowers repayment ability prior to closing. When the lender is unable to obtain a Verbal
Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary
closure of the borrower’s employment, alternatives should be explored. For example, email
correspondence with the borrower’s employer is an acceptable alternative to a VVOE. If the lender
is unable to obtain a VVOE or acceptable alternative, the requirement will be waived when the
borrower has a minimum of 2 months cash reserves.
In the case of a reduction of income, the borrower’s reduced income must be sufficient to support
the new loan payment and other non-housing obligations. Borrower’s with no income or those
receiving unemployment benefits at the time of closing are not eligible for SFHGLP loans regardless
of available cash reserves.
Links to websites:
SFHGLP Lending Partner Webpage: https://www.rd.usda.gov/page/sfh-guaranteed-lender
SFHGLP webpage: https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-
USDA LINC Training and Resource Library:
https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library
