Section 502 Single Family Housing Options to Refinance Direct and

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Section502SingleFamilyHousing

OptionstoRefinanceDirectandGuaranteedLoans

Requirementsforallrefinanceloans

 Currentloanmustbea502directorguaranteed

loan

 30yearloanterm

 Fixedinterestrateatorbelowthe currentinterest

rateandmustnotexceedthemaximumlimitset

forthin3555.104(a)

 Latefeesarenoteligibletobeincludedinthenew

loan

amount

 Subsidyrecapturemaybepaidorsubordinatedto

thenewfirstlien(directloansonly)

 Cashoutfromcollateralequityisnotaneligible

loanpurpose.

 Theloanmusthaveclosed12monthspr ior to

loanapplicationfortherefinance

 Propertymustbeowneroccupied

 Householdmustmeetapplicableadjustedannual

householdlimit

 Propertieslocatedinineligibleruralareasremain

eligibleforrefinance

 USDALeveragedLoansareineligible

 Remainingfundsatloanclosingthatmayoccur

duetofinalrealestatetaxand/orinsurance

calculationsmaybereturnedtotheborrowerat



loanclosing.

Requirement Non‐streamlined Streamlined Streamlined‐assist

Appraisal Yes

 Onlyfordirectloansthat

receivedsubsidyto

calculaterecapture

 Onlyfordirectloansthat

receivedsubsidyto

calculaterecapture



MaximumLoan

Amount,eligibleloan

costslisted

Cannotexceednew

appraisedvalue.

 Principal&Interest

 Closingcosts

 Fundstoestablishtax

andinsuranceescrow

 Upfrontguaranteefee

 Subsidyrecapturedue

Cannotexceedoriginalloan

amount.

 Principal&Interest

 Re‐conveyancefee

 Upfrontguaranteefee

Newloanamountmay



include:

 Principal&Interest

 Closingcosts

 Fundstoestablishtax

andinsuranceescrow

 Upfrontguaranteefee



Add/Remove

Borrowers(one

originalborrowermust

remain)

Yes Yes

 Addborrowersonly

 Onlydeceased

borrowersmaybe

removed



Credit

 Loanpaidasagreed180

dayspriortoloan

application

 Requirementsof

Chapter10

 Loanpaidasagreed180

dayspriortoloan

application

 Requirementsof

Chapter10

 Loanpaidasagreed12

monthspriortoloan

application

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Requirement Non‐streamlined Streamlined Streamlined‐assist

Ratios

 GUSAccept,nodebt

ratiowaiverrequired

 GUSRefer,debtratio

waivertomeetHB

Chapter11

 GUSAccept,nodebt

ratiowaiverrequired

 GUSRefer,debtratio

waivertomeetHB

Chapter11

 Noratiocalculation

required

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CanGUSbeutilized? Yes Yes No

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Includesubsidy

recapture?

 Yes,ifappraisedvalue

supports

No No



Nettangiblebenefit

required?

No No Yes

 $50orgreaterreduction

innewPITI(including

annualfee)ascompared

tocurrentPITIpayment



Subordinate“silent”

secondsorsubsidy

recapturedue?

Yes Yes Yes

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Resources

Thefollowingresourcesareavailable:

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7CFRPart3555:https://www.rd.usda.gov/files/3555‐1appendix01.pdf

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HB‐1‐3555:https://www.rd.usda.gov/publications/regulations‐guidelines/handbooks#hb13555 

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USDALINCTrainingandResourceLibrary:

https://www.rd.usda.gov/programs‐services/lenders/usda‐linc‐training‐resource‐library

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PropertyandIncomeEligibility:http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

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ListofUSDAStateOfficee‐mailboxestodelivermanuallyunderwrittenloanfilesormanualloanclosingsubmissions:

https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/lenderloanclosing/lender/Electronic_Doc_Delivery_Non_GUS_loans.pdf

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QuestionsregardingdirectloansubsidyrecapturemaycontacttheUSDACustomerServiceCenter(CSC):1‐800‐414‐

1226

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3

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Section502DirectandGuaranteedLoanRefinance

CompleteRefinanceLoanApplicationSubmission

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HB‐1‐3555,Chapter15Attachment15‐Amustbeutilizedtosubmitcompleterefinanceloanapplications

toUSDAforreview.



GUSACCEPTUWRECOMMENDATION

LoanDocumentation Non‐streamlined Streamlined Streamlined‐assist

FormRD3555‐21 X X

 Ineligibletobe

processedinGUS.



FinalGUSUWFindings

Report

X X



Evidence of qualified

alien,ifapplicable

X X



Appraisal X Onlyfordirectloansthat

receivedsubsidytocalc ulate 

recapture



Creditreport X X



CreditreportforNon‐

purchasingspouse,if

applicable

X X

 

GUSREFER,REFERWITHCAUTION,GUSACCEPTw/fulldocumentationrequirementUWRECOMMENDATIONS,AND

MANUALLYUWLOAN

LoanDocumentation Non‐streamlined Streamlined Streamlined‐assist

FormRD3555‐21 X X X



FinalGUSUWFindings

Report

X X 



Underwritinganalysis X X

 $50nettangiblebenefit

(principal,interest,and

annualfee)may

documentedonthis

formorelsewherein

application.

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

GUSREFER,REFERWITHCAUTION,GUSACCEPTw/fulldocumentationrequirementUWRECOMMENDATIONS,AND

MANUALLYUWLOAN(c ontinued)

LoanDocumentation Non‐streamlined Streamlined Streamlined‐assist

Evidenceofqualified

alien,ifapplicable

X X X



Appraisal X

 Onlyfordirectloansthat

receivedsubsidyto

calculaterecapture

 Onlyfordirectloansthat

receivedsubsidyto

calculaterecapture



Creditreport X

Reviewcreditandverify

mortgagepaymenthistory.

X

Reviewcreditandverify

mortgagepaymenthistory.

 Notrequired,butcredit

reportmaybeusedto

documentprevious12

monthpaymenthistory

ofmortgage.

 AVerificationof

Mortgagecompletedby

theservicinglenderis

alsoacceptable.

 No

additionalcredit

reviewisrequired.



CreditreportforNon‐

purchasingspouse,if

applicable

X X



Creditwaiver X

Ifapplicable

X

Ifapplicable



Debtratiowaiver X X

 Nodebtratio

calculations



UniformResidential

LoanApplication

X X X



FullIncome

Documentationforall

adulthousehold

members(includes

4506‐T)

X X X



Assetdocumentation X

Ifapplicable

X

Ifapplicable

X

Ifapplicable

