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The Rural Housing Service published a proposed rule that implements four changes to the Single Family Guaranteed Loan Program:
“Qualified Mortgage” definition: Under the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) published a “qualified mortgage” rule which became effective January 10, 2014. The rule, also known as the “ability to repay rule,” limits points and fees which lenders can charge loan applicants. USDA proposes adopting the CFPB definition of a qualified mortgage.
Principal Reduction: USDA proposes adding a principal reduction feature as a last resort to its existing foreclosure prevention techniques for loans guaranteed from January 1, 2001 through January 1, 2010.
Indemnification: This proposal extends the indemnification period from two to five years during which the Agency can seek indemnification from originating lenders whose non-compliance with program guidelines and regulations causes the Agency to pay a loss claim.
Super streamlined refinance: USDA proposes making the streamlined refinance pilot a permanent feature of the guaranteed loan program and extend its benefits to all states as well as remove the pilot requirement that borrowers reduce their current interest rate by one-percent. Borrowers can refinance their existing guaranteed loans without the need for an appraisal or a credit report as long as they have paid their mortgage on time for the past twelve months.
Written or email comments are due May 4, 2015.