REMINDER - USDA Final Rule – Single Close Construction, Elimination of Interest Rate Cap

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SFH Guaranteed Origination

September 24, 2019

REMINDER:  Final Rule - Single Close Construction, Elimination of Interest Rate Cap

On June 20, 2018, the Single-Family Housing Guaranteed Loan Program (SFHGLP) published a proposed rule with changes to the Single-Close Construction program.   After considering public comments on the proposed rule, a final rule was published in the Federal Register on July 22, 2019, that will adopt the proposed changes. The effective date has been extended until October 1, 2019. The regulation and changes to Hand Book-1-3555 will be revised with the following:

 

  • Single-Close Construction
    • The pilot program which has been in effect in 27 states will now be permanent on a nationwide basis. The final rule allows lenders who use warehouse line of credit to charge a temporarily higher interest rate during construction to recoup financing costs. It also provides lenders the option to establish a reserve account for principal, interest, taxes and insurance (PITI) payments during the construction period. In addition, it expands the single-close process to include rehabilitation loans with the purchase of an existing dwelling. The revisions to the new rule will be published under 7 CFR 3555 §3555.104, §3555.105, and §3555.202.
  • Elimination of Maximum Interest Rate Cap
    • The final rule eliminates the maximum interest rate cap for all SFHGLP loans effective October 1, 2019.

  • Form RD 3555-21, Request for Single Family Housing Loan Guarantee
    • Form RD 3555-21, with revision date of October 2019, eliminates the fields for the interest rate, lock and floating dates. An advance copy of the form has been posted to the USDA LINC Training and Resource Library under Loan Origination – Document and Resources. USDA will discontinue use of the Form RD 3555-21 (revision date October 2018) 30 days after the effective date.
  • HB-1-3555 Chapter Revisions
  • Sample Worksheet for Calculating Maximum Loan – Rehabilitation Single Close Loans

 

USDA will issue a Procedure Notice (PN) when Chapters 5, 6, 7 and 12 are published prior to the date of publication.

 

Questions regarding this announcement may be directed to the National Office Division at (202) 720-1452.

 

Thank you for your support of the Single Family Housing Guaranteed Loan Program!