The Rural Housing Service said it is working on implementation of a new premium structure that Congress approved in July and hopes to start approving loans once the system updates are ready.
"We are moving forward now," said RHS administrator Tammye Trevino said.
In a statement, the RHS administrator stressed that changes are being made to internal underwriting systems and the agency hopes to provide additional guidance on these changes in the near future. RHS did not provide a timeline, but some sources expect the updates will not be ready until sometime in the fourth quarter, possibly by the end of October.
Once the system is updated RHS might have the potential to guarantee up to $24 billion of rural housing loans a year, double its current capacity.
"In the meantime, lenders will be provided with commitment letters to honor loan guarantee requests upon completion of the internal system updates," Trevino said.
President Obama signed an emergency supplemental appropriations bill (H.R. 4899) on July 29, authorizing the U.S. Department of Agriculture to increase the RHS upfront premium to 3.5% for homebuyers and 2.25% for refinancings to make the program self-funding. The current upfront premium is 2% for homebuyers and 0.5% for refinancings.
National Mortgage News previously reported concerns that RHS would drag its feet in implementing the premium structure because the authority to charge higher premiums in the appropriations bill technically expires September 30.
However, the RHS administrator dispelled that concern.
"Congress has re-affirmed its commitment to homeownership for America's rural families through permanent authority to assess increased origination fees, allowing USDA's single-family housing guaranteed loan program to be self-funding in the future," Trevino said.
