Congress has passed legislation to restart the Rural Housing Service's single-family program, but it appears the agency may keep the loan guarantee portion of it on hold for a few more months.
The emergency appropriations bill (H.R. 4899) that President Obama signed on July 29 authorizes the U.S. Department of Agriculture to increase the RHS upfront premium to 3.5% for homebuyers, which should make the program self-funding. The current premium is 2%.
But the authority to charge a higher premium expires after September 30 when the 2010 fiscal year ends. One source said USDA officials are wary of implementing the changes for such a short period. They would prefer to wait until Congress passes a USDA appropriations bill or a continuing resolution to keep the new premium structure in place for the entire FY 2011.
USDA officials did not respond to requests for comment.
Meanwhile, it will take several weeks for RHS just to make changes to GUS (Government Underwriting System) to implement the new premium structure.
"These updates could take up to four weeks to complete," one RHS state office says in a memo to lenders.
Meanwhile, RHS offices are telling lenders they cannot approve loans until they receive guidance from the Washington office.
