From: Reynolds, Benjamin - Olympia, WA [benjamin.reynolds@wa.usda.gov]
Sent: Thursday, May 08, 2008 3:28 PM
To: Cheryl Orr
Subject: FW: Press Release - 'Zero Down' Home Loan Available To Rural
Residents With USDA Rural Development Loan Guarantee 

This is the most recent press release.

Ed

Benjamin E. (Ed) Reynolds
GRH, Rural Development, USDA
(360) 704-7765
(360) 704-7742 (fax) 

 
Olympia, March 31, 2008 - Many first-time homebuyers, despite good
incomes, are not able to save the traditional 20 percent down payment
for a house. However, more rural families and individuals may be
eligible to become homeowners with the help of a USDA Rural Development
guaranteed home loan.

"As mortgage lenders are forced to limit available credit and tighten
eligibility criteria, we want rural residents to know they still have
affordable options available if they want to own a home," said Jon
DeVaney, Rural Development Washington State Director. "Our guarantee
program allows lenders to offer zero-down fixed rate loans backed by the
USDA.  This allows more rural residents to buy homes and it also helps
to stabilize the housing market." 

"These are guaranteed loans made by private sector lenders," According
to Ed Reynolds, USDA Rural Development Housing Specialist, these are
guaranteed loans made by private sector lenders. "A loan guarantee means
that, should the individual borrower default on the loan, we will pay
the bank for the loan," he said. "Otherwise, the individual works with
the private lender and makes his or her payments to that lender."

Since a common barrier to owning a home for many low-income people is
the lack of funds to make a down payment (most lenders require 20
percent), the availability of the loan guarantees from USDA Rural
Development makes the reality of owning a home available to a much
larger percentage of Americans.

Under the terms of the program, rural households may borrow up to 100
percent of the appraised value of the home, which eliminates the need
for a down payment, and "we do not require private mortgage insurance
(PMI) if you don't have 20 percent to put down you," said Reynolds,
explaining that PMI, which protects the lender against non-payment
should a borrower default on the loan, can cost up to $200 a month
depending on the size of the loan.

Additionally, Reynolds said that many major insurance companies have
stopped underwriting loans that are above 97 percent loan to value of
the home. "There will be no more 100 percent financing on homes, meaning
traditional borrowers will have to come up with the three percent
difference," he said. 

Reynolds said that Loans may be for up to 102 percent of appraised value
with no down payment if the two percent guarantee fee is included in the
loan. Additionally, loans may include funds for closing costs, the
guarantee fee, legal fees, title services, and cost of establishing an
escrow account and other prepaid items, if the appraised value is higher
than sales price.

To be eligible, applicants must purchase in a rural area; have an
adequate and dependable income; be a U.S. citizen, qualified alien, or
be legally admitted to the United States for permanent residence, and
have an adjusted annual household income that does not exceed the 115
percent of the moderate income limit established for the area. A
family's income includes the total gross income of the applicant,
co-applicant and any other adults in the household. USDA Rural
Development field offices can determine eligible areas. There is an
automated rural area eligibility calculator at:
http://eligibility.sc.egov.usda.gov .

"There is still hope out there for people who do not have 20 percent to
put down on a conventional loan," Reynolds said. "The mortgage industry
is tightening its belt but we have not changed anything.  We have
funding and we really want to help rural Americans get into their own
home.  

"We keep it simple and there are over 3,000 approved lenders nationwide
and the list is growing every day," he added.

Interested home buyers should email benjamin.reynolds@wa.usda.gov or
call (360) 704-7765.  Lenders interested in becoming approved to
participate in the program may also contact USDA Rural Development for
further information at (360) 704-7765.  

USDA Rural Development's mission is to deliver programs in a way that
will support increasing economic opportunity and improve the quality of
life of rural residents. As a venture capital entity, Rural Development
has invested over $91 billion since the beginning of the Bush
Administration to provide equity and technical assistance to finance and
foster growth in homeownership, business development, and critical
community and technology infrastructure. As a result, over 1.7 million
jobs have been created or saved through these investments. Further
information on rural programs is available by visiting the USDA Rural
Development website at http://www.rurdev.usda.gov. 

####

USDA Rural Development is an equal opportunity lender, provider and
employer

Release by
Phil Eggman (360) 704-7709