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Rural Housing Service Testing Automated Underwriting
If a pilot program now underway is successful, lenders will soon be able to underwrite Section 502 Guaranteed Rural Housing single-family loans using a new automated underwriting tool.
The new Guaranteed Underwriting System (GUS) was developed by U.S. Department of Agriculture Rural Development to automate a task that’s currently being handled manually. A unique feature of the system is that while performing the credit evaluation it determines if a borrower meets the program’s income restrictions and that a property is located in an eligible area.
Section 502 Guaranteed Loans are made to qualifying low- and moderate-income families to purchase modest homes in rural areas. The loans are made by mortgage lenders — such as banks, credit unions and mortgage companies — and can be made for up to 100% of the appraised value of the property.
“We have been looking forward to the implementation of this system for some time,” said Jess Hall, a home builder from Palmer, Alaska. “It gives lenders yet another tool to meet the borrowing needs of rural home buyers.” The underwriting system will enable participating lenders to receive faster loan decisions, streamlined documentation requirements, better quality loans and more consistency in program delivery.
Access to reasonably-priced mortgage credit for low- to moderate-income home buyers who live in rural areas is essential for meeting their housing needs, and NAHB has long advocated increased funding for the single-family and multifamily loan programs provided through the USDA Rural Housing Service.
A market test of GUS began on Aug. 1 with a limited number of lenders. Participating lenders in the pilot phase are: First National Bank of Columbus, Neb.; Allied Mortgage Capital Corporation of Rockwell, Texas; American Southwest Mortgage Corp. of Oklahoma City, Okla.; Central National Bank of Junction City, Kan.; Guaranty Trust of Murfreesboro, Tenn.; State Bank of Lincoln of Lincoln, Ill.; The Mortgage Company of Junction City, Kan.; and Virginia Housing Development Authority of Richmond, Va.
Additional lenders will be added to the market test later this year in preparation for full GUS implementation in January.
For information on Rural Development loan programs, click here.
For more information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597.
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