Nashville Mortgage News- USDA Loan Program Running Out of Funds

Nashville Mortgage News- USDA Loan Program Running Out of Funds

The Department of Agriculture, which oversees the USDA loan program has recently announced that its Guaranteed Loan Program will run out of funds by the end of April 2010.  While this does happen every year, it’s usually not until the fall (August/September).  Furthermore, this notice has a lot more serious tone than in the past because USDA will not be issuing “conditional commitments” subject to funding this time, because they have stated that they are not sure when new funds will be appropriated by Congress.  And just like clockwork, multiple  lenders announced they have stopped taking mortgage applications for USDA loans, and the remaining ones said they will continue as long as they can get conditional commitments from USDA offices. 

Having said this, if you are planning on using USDA for your (metro) Nashville mortgage and do not know if you will get final lender approval by mid-April (at which point it is sent to the USDA office to get the conditional commitment), I would urge  you to start making backup plans to use FHA or other mortgage financing in case funds dry up more quickly than outlined in the USDA notice.  

 Final thought:  the tax credits being offered to purchase homes have most likely been the cause for the accelerated depletion of funds.  Congress allocates money every October for this program, which is a month or two after typically run out of funds, and we’re no where near October 2010!  We’re very hopeful that Congress will be able to quickly address this issue well in advance of their normal timeframe.  Otherwise, it’s certain to dampen the housing recovery across the nation, particularly in the more rural counties.