USDA UPCOMING IMPLEMENTATION OF ANNUAL FEE

Public Law 111-212, Section 102 (July 29, 2010) granted the United States of Agriculture (USDA) authority to collect from lenders an annual fee not greater than 0.5% of the outstanding principal balance of the loan for the life of the loan. The intent of the annual fee is to eliminate the need for taxpayer support of the Single Family Housing Guaranteed Loan Program (SFHGLP). A new annual fee of 0.3% is effective on loans obligated on or after October 1, 2011. Implementation of the annual fee also allows the USDA to reduce the upfront guarantee fee. So, starting October 1, 2011, the upfront guarantee fee drops from 3.5% to 2 percent on purchase transactions. The upfront guarantee fee on refinance transactions will remain 1%. USDA offers a helpful Guarantee Fee Calculator as part of their online training and resource library.

The new USDA Annual fee is in final testing in ProClose. Its release is scheduled prior to the October 1, 2011 effective date.

Please Note: some investors are suspending USDA loans (in particular with conditional commitments) effective October 1, 2011. Double check your particular investor guidelines for recent USDA updates and changes.