Brian Anderson - SEO and Social Media Marketin

As many people are aware, the USDA offers an outstanding loan product to help low to moderate income borrowers in in rural areas of Georgia to purchase homes. The product is so good, that in the last 18 months, mortgage companies have flocked to this loan to help their clients.

Unfortunately, the available funds that the USDA had for this program are quickly drying up! The USDA has announced effective the end of April, they would be out of money to continue this program.

A quick recap on Georgia USDA loans:

USDA Loans - The Good

The program offers up to 102% LTV financing, no PMI, and even allows you to include cosmetic repairs into the purchase price (provided you stay under the loan-to-value). Perhaps best yet, it is available to all borrowers who income qualify, and whom have a 620 credit score or better.

What are the rates like you ask...? They range between a 4.75 and 5.25 at wholesale. Unbelievably good!

There is really nothing close to this product out there.

USDA Loans - The Bad

Income restriction -- it is possible to make too much. It's not overly restrictive though, as with a family of 4, you can earn up to 82k in most parts of Georgia.

Slow to underwrite.

Geographic areas (only rural) -- this isn't that bad, as the vast majority of Georgia qualifies outside of the Atlanta metro area.

Yep...you get the picture. There really isn't any truly bad things about USDA loans!

Georgia USDA -- An Uncertain Future??

In the next 3-4 weeks, many lenders will cease writing USDA loans. Wells Fargo has already stopped as of 3/15/2010.

This is extremely distressing to me personally, as I feel this loan product allows me to help many Georgia borrowers who otherwise would be forced to rent. My own bank has stopped doing the loans, and many other large banks. Fortunately there are still a handful that are underwriting these, so if you are interested in the product, now is your time!

We can only hope that the USDA gets additional funding from the government and is able to continue offering their Rural Development loan.

USDA Loans seem to be mystery, both to Georgia borrowers and other real estate professionals. One area of confusion is around credit history. While most lenders now require a 620 credit score for approval, the following are the basic credit guidelines from the US Department of Agriculture given to mortgage lenders.

Applicants must have a credit history that indicates a reasonable ability and willingness to meet obligations as they become due. A credit history reflecting any or all of the following is considered unacceptable credit history:

• More than one 30-day late within the past 12 months.
• Bankruptcy or foreclosure discharged less than 36 months
• Outstanding judgments within the past 12 months
• Two or more rent payments 30 days late within the past 3 years.
• Outstanding collection accounts with no payment arrangements
• Outstanding tax liens or delinquent federal debt with no payment arrangements
• Accounts converted to collections in the past 12 months.

The USDA will allow sub-620 credit scores, but unfortunately very few lenders will offer this program. The reluctance here is due to the high failure rate of these loans. My bank does not allow USDA loans for under 620 scores, and I don't currently have a channel to broker these "sub-prime" borrowers to.

If you have a credit score of 620, the USDA instructs lenders to utilize what they call "Streamlined Underwriting Criteria". These guidelines are a little more lenient than the above.

• Lender shall not be required to document adverse credit history except for those involving a delinquent federal debt or previous agency loan.
• Lender shall not be required to obtain a rental history rating
• No action will be necessary for any derogatory items, (i.e. no letters of explanation, unpaid collection accounts not required to be paid off, etc...

Unlike FHA loans which have strict requirements for documenting adverse credit history, USDA loans can help Georgia borrowers in qualified zip codes obtain the dream of home ownership with very little hurdles and a great rate!

Let me preface this BLOG post with the following:

I'm not involved in short sales or loan modifications

When an investor client sent this to me, I almost cancelled the video right after it started to move on and do something else. I'm glad I listed to the whole thing. If you are a homeowner involved in a short sale or loan modification, or are a professional working in the industry -- you have to spend 5 minutes and listen to this video. This will blow your mind!

http://www.thinkbigworksmall.com/mypage/archive/1/29027

The net of this whole video -- OneWest, who took over the failed IndyMac loans, has an incentive to NOT do loan modifications for customers but instead to force short sales. They are making $50-100k or more with their insurance from the FDIC when they do a short sale, and then....get this.....

they then hit the financially devasted mortgage customer with a 1099-C !!!

This video blew me away, and I think you will agree that it is a disgusting example of how average homeowners are being victimized by large banks with sweet heart deals with the FDIC.

I read this article today and almost flipped out. It describes a 41-year old family practioner who is saddled with 555k of student loan debt! As a mortgage professional, I've seen my share of lingering student loan with incredible payments. I've never seen anything even close to this amount. I don't know what the fix is for the student loan situation, but it is obviously a major problem.

Lesson -- don't borrow a ton of money, whether in public or private school to go into a low earning discipline. You could end up paying ... your entire life!

When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

Read more.....

http://online.wsj.com/article/SB10001424052748703389004575033063806327030.html

Any agents experienced anything like this?

www.cnbc.com/id/34877347

In essence, the 2nd lien holders are hitting up agents and even buyers for money to help decrease the costs of their releasing the seller from paying the 2nd lien on the subject property.

Besides RESPA violations, I'm sure there are numerous other crimes being committed by these banks.

I haven't personally seen this in any transaction, but wouldn't be surprised. After the last 24 months, nothing phases me!