Last month the U.S. Department of Agriculture (USDA) issued an Administrative Notice (AN) shifting a portion of the upfront fee it charges for the Single Family Housing Guaranteed Loan Program (SFHGLP) to the annual fee.
The two fees, part of Public Law 111-212 are an attempt to make the popular loan program self-sustaining and to eliminate or at least minimize the frequent interruptions suffered by the program. Under the legislation the Secretary of USDA is authorized to collect an upfront fee from lenders of up to 3.5 percent for its guarantee of a loan or modification of a loan and an additional annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan. The annual fee is applicable to purchase and refinance loan transactions.
When the bill was passed an upfront fee of the full 3.5 percent rate authorized by Congress was put into effect. The AN issued on February 3, notifies lenders that USDA will be lowering the upfront fee to 2 percent of the loan amount and implementing an annual fee of 0.3 of the unpaid principal balance for all purchase loan transactions. The changes will go into effect on October 1, 2011.
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Source: http://www.mortgagenewsdaily.com/03072011_usda_rural_loans.asp
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