Broker Bulletin: 2012-1080
Attention: Broker Correspondents July 9, 2012
Topic: UPDATED - USDA Rural Refinance Pilot Program
The United States Department of Agriculture (USDA) Rural Development (RD) is now
offering the opportunity for current USDA Section 502 Direct and Guaranteed borrowers
to refinance their existing USDA loans through the recently announced Rural Refinance
Pilot program. The Rural Refinance Pilot program allows borrowers in 19 states to take
advantage of the historically low interest rates with reduced documentation requirements.
UNM Wholesale is proud to support this program introduced by the USDA, and we are
pleased to assist current USDA Section 502 Guaranteed and Direct homeowners in taking
advantage of current refinance opportunities.
When processing and submitting your USDA Rural Refinance Pilot loans for sale to
UNM Wholesale, as outlined in Administrative Notice (AN) 4615, the closed loan file
does not require: a new appraisal, the HUD Handbook certifications, or any additional
*** EW - Additionally, U M Wholesale allows eligible closing costs to be
included in the refinance loan amount without a new appraisal. ***
However, Lenders must be able to document that the borrower’s existing mortgage has
been current for the previous 12 months. Lenders may utilize a Verification of Mortgage
(VOM) for evidence of mortgage payment history. However, UNM Wholesale will pull
a current copy of the borrower’s credit report to assess the proper risk based scoring
pricing adjustments. The tri-merge credit report must be dated within 30 days of
application and is used to validate the clean mortgage history and credit scoring for
pricing. No further review of the credit report will be required, except for review of the
borrower’s credit score and mortgage history.
*Only the mortgage liability needs to populate the liabilities section.
Components of the USDA Rural Refinance Pilot program include:
Broker Bulletin 2012- 1080
• New loan may include the principal balance of the existing loan plus accrued
interest, and any eligible closing costs, and the upfront guarantee fee.
• The interest rate on the new loan must be a minimum of 1.00% lower than the
existing USDA loan.
• UNM Wholesale Pilot States: CA, FL, IN, KY, MI, NC, OH, SC & TN.
• All Rural Refinance Pilot loans must be manually underwritten. GUS is not
available for the Rural Refinance Pilot loans.
• The new term of the refinance loan must be 30 years.
• The upfront USDA guarantee fee will be 1.50%.
• The applicable Annual Fee will be .30%.
• No cash out is permitted.
• Reasonable and customary closing costs and other fees may be collected from the
borrower by the originating lender. However, the origination fee charged to
the borrower may not exceed one percent of the total loan amount. As a
reminder, none of these charges may be financed into the new loan amount.
*The loan origination fee cannot exceed 1% in any instance, not to be
confused with lender charges on the RESPA GFE which can exceed 1%
with underwriting, employment verification, etc.
• A fully executed RD Form 1980-21 “Request for Single Family Housing Loan
Guarantee” is required.
• Income verification for all adult household members is required for income
eligibility determination. Household income is necessary for determining
program eligibility only, not for determining repayment ability. Therefore, ratio
waivers are not required. *Standard income information is required to
determine eligibility (Tax Returns, Pay-Stubs, etc.) but will not be factored
into underwriting, that’s purely for USDA eligibility. *The borrower’s
employment and income is listed on the 1003, any family income must be
documented and when the party is not an applicant, listed in detail in
• UNM Wholesale will require all borrowers to be employed at the time of the
closing on the refinance transaction or have alternate sources of income, such as:
Broker Bulletin 2012- 1080
retirement income, social security income, disability income, alimony or child
support. *All loans will require a full commitment from USDA.
*The main benefit of the program is the lack of an appraisal and lack of
income and debt ratio qualifying. The credit is graded by the mortgage
history solely (and credit score for pricing).
In order to clearly identify your Rural Refinance Pilot loans, please clearly mark the
U M Wholesale Loan Submission Form as a Rural Refinance Pilot Loan upon
Please contact your locally assigned Account Executive with any questions.
Loans sold to Union ational Mortgage Co. Wholesale must comply with all federal and state
regulations as well as Union ational Mortgage Co. Wholesale guidelines. This information is for
guidance purposes only and should not replace consultation with your Legal and Compliance
Equal Housing Lender: Union National Mortgage Co. Wholesale. Corporate Office: 8241 Dow Circle West, Strongsville, OH 44136. All rates and
programs are subject to change at any time without notice. Please contact UNM Wholesale Underwriting for further clarification of any Underwriting
related topics or your Account Executive about other topics addressed in this bulletin. This information should not be considered as all-inclusive
Guidelines. For mortgage originating professionals only; not authorized for distribution to consumers.
Broker Bulletin 2012- 1080