Home Buyer Tax Credit Snafu: No USDA Loans

“The federal mortgage program from the U.S. Dept. of Agriculture for rural home buyers, guarantees low and even no down payment, low interest loans to rural buyers, but the lines between rural and urban were getting a bit vague. The tight mortgage lending conditions today have pushed thousands more buyers into the program. In 2006, the USDA program backed about 31,000 loans or $3 billion worth. In 2009, that had grown to 133,000 loans worth $16.2 billion. The good news is the standards are tight and the default rates far better than the FHA. The bad news is the program wasn't meant to handle that many loans, and it ran out of money. Congress is in the process of appropriating more money for the program. The House passed a bill sponsored by Congressman Paul Kanjorski (PA).
The Senate passed a bill out of the Appropriations Committee, as part of agriculture appropriations. It was sponsored by Sen. Michael Bennet (CO). But you still can't get a loan now. There is a far smaller program for direct loans from the USDA, but it is barely a blip compared to the guarantee program. So we're all sitting here waiting for Congress to get the program more money, and it's all expected to pass, but that still presents a big timing problem: The home buyer tax credit. Buyers have to close by June 30th, and many of them were depending on USDA loans. They signed contracts by the end of April, and now they're stuck. Despite the promise of the funds, big lenders are holding off until the new appropriations are a done deal. Keith Wilcox of 1st American Home Loans says by the time the Congress passes the new funding, there will be such a backlog of borrowers, they'll never get the loans done by closing June 30th. He's not the only mortgage broker lighting up my phone  this week. So not only are these borrowers missing out on the USDA loans, they're also missing out on the opportunity to get the tax credit and at the very least lock in today's nearly historically low interest rates. In other words, the government is holding up its own housing stimulus.”
http://www.assetunlimitedfinancial.com/

Best regards
Martin Crawford