I was told by a mortgage broker that the USDA loan has run out of money. Can anyone confirm or deny this?

Asked by Runamok, Warminster, PA Fri Sep 30, 2011

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, ,
Fri Sep 30, 2011
They haven't run out of money, but funding will not be available for a short period of time after the new fiscal year 2012 (which starts October 1st). During this temporary lapse of funding, they will still be issuing conditional commitments "subject to the availability of commitment authority" and lenders are still fine to close this loans as scheduled, however USDA will not "obligate" the loans until funds become available. This means the lender will assume all default risk (and not sharing it with USDA) until the funds become available.

What does it mean to you, as the consumer? That because the lender has to assume all the risk, there may be some lenders who will shy away from funding loans until funding becomes available again, which from my discussions with a few different USA offices has been anywhere from a week to 2-3 weeks. Shy away could mean stop funding them all together or only funding a certain dollar amount (i.e. $50,000,000 in USDA loans for conditional commitments which have that "subject to" verbiage). There are many lenders who have indicated no interruptions are expected with their USDA loans.
1 vote
, ,
Tue Nov 15, 2011
Hello Runamok,

Rural development funding is now available.

Best Regards,
Alan Openshaw
Cornerstone Lending
Southampton Pa
267 992 7276
0 votes
Gita Bantwal, Agent, Jamison, PA
Tue Nov 15, 2011
Before looking for homes look on USDA web site to see if location of property quailfies it for loan. You can also ask your agent to check it.
Web Reference:  http://www.gitabantwal.com
0 votes
, ,
Sun Oct 2, 2011
Shane's reply is spot on.
0 votes
, ,
Sat Oct 1, 2011
I Have to give credit to Shane Miller,

A great source of information all of the time

0 votes
, ,
Fri Sep 30, 2011
Hi Runamok,

Um not true and I close a lot of USDA loans.
0 votes
Frank Dolski, Agent, Lahaska, PA
Fri Sep 30, 2011
I have not heard this but I would suggest confirming this with another mortgage broker. Feel free to check my website and contact Christa Kusler from Mortgage Mobility with the same question.
Web Reference:  http://www.FrankDolski.com
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