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Have You Been Told That USDA Is “Out Of Money”?

September 16th, 2022 by Sean Stephens

Have You Been Told That USDA Is “Out Of Money”?

Is it true that USDA Why do lenders say USDA out of money? is “Out of Money”?  Well, if you have heard that then this is exactly how rumors get started!

Each year around this time we receive calls asking if USDA is out of money and because there is so much misinformation about this subject, today’s short video will share the facts that you need to know and help set the record straight.

Also, don’t forget to download our USDA Blueprint for Success. This is a great educational resource for the real estate community and is designed for both homebuyers and their Realtors alike!

Have You Been Told That USDA Is “Out Of Money”?

As a staring point, the USDA Single Family Housing Guaranteed Loan Program fiscal year runs from October 1st until September 30th and at the beginning of each fiscal year, funding for the guaranteed loan program is not available for a short period of time –approximately two weeks. However, as many have been led to believe, this does not mean that that the USDA program is stopped in its tracks, but instead during this temporary lapse in funding,  USDA Rural Development will issue Conditional Commitments “subject to the availability of commitment authority” for purchase and refinance transactions.

What is a USDA Conditional Commitment and why is it important?

The USDA Conditional Commitment is “Rural Development’s agreement that a proposed loan will be guaranteed if all conditions and requirements established by Rural Development are met.”

As a USDA Approved Lender we are responsible for underwriting and approving the loan application in accordance with agency guidelines and then submitting the loan package to USDA in order to receive their Conditional Commitment. This is a step that is taken prior to closing and demonstrates that the loan will be guaranteed by USDA provided all conditions and requirements are met.

USDA guidance provides for the following: “During the temporary lapse in funding, Rural Development – Rural Housing Service (RHS) will issue Conditional Commitments (Form RD 3555-18/18E) “subject to the availability of commitment authority” for purchase and refinance transactions.”

What this means it that USDA will continue to issue their USDA Conditional Commitments to approved lenders with the only difference being  that they are “subject to the availability of commitment authority”.

Tampa Florida USDA Loans - Have You Been Told That USDA Is

What does this mean to homebuyers and Realtors?

I know, I know, but Sean, what does that really mean to us?

Quite simply, because USDA issues continues to issues those Conditional Commitments, this permits lenders to continue closing loans on time without interruption. Thus, depending on your lender’s experience and how they are set to do business during this brief time period, it will determine if they are able to continue processing and closing USDA loans without delay.

Just to confirm, if your lender is blaming USDA for a delayed closing, it is not an issue with USDA but instead the lender. If this is the case, it may be time to look for another USDA lender who is experienced and understands the process!

The good news is, that it is business as usual for Metroplex Mortgage Services and we continue to accept applications, process, close, and fund USDA loans without delay!

Here is an overview of what to expect at this time of the year:

  1. As a USDA Approved Lender,  we will continue to submit applications for purchase and refinance loan transactions to USDA;
  2. USDA Rural Development will process, approve, and issue Conditional Commitments for those applications that are eligible “subject to the availability of commitment authority”;
  3. Upon receipt of the USDA conditional commitment, loans will continue to close as scheduled;
  4. At this point your loan has closed and Steps 5 and 6 below will happen directly between USDA and the USDA Approved lender after closing.
  5. Then, when funds become available, USDA Rural Development will obligate (reserve) funds for Conditional Commitments that were issued for loans subject to the availability of commitment authority; and
  6. Once these loans are obligated, USDA Rural Development may process lender’s Loan Note Guarantee requests when the loan closing is verified and all conditions of the Conditional Commitment are satisfied;

Schedule your FREE USDA Loan Consultation

Remember, 2nd opinions are always important (especially around this time of year), so if you have USDA financing questions or are working with another lender, we offer this complimentary service where you can get access to an expert 2nd opinion which is great for both pre-qualifications and those loans that are already in progress.Sebring Florida Highlands County USDA Loans

As a USDA approved lender, Metroplex Mortgage Services has expertise with this unique program, and we are able to walk both homebuyers and Realtors through the process step by step! Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

(800)806-9836 Ext. 280
SeanS@MPLX.org

Make it a great day and I look forward to seeing you right here again for our next USDA video quick tip!

Don’t forget, here is the link to our USDA Blueprint for Success:

 

Tampa FL USDA Approved Lender

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