Single Family Housing Guaranteed Loan Program

The Rural Housing Service (RHS or Agency) published a proposed rule on June 20, 2018 to amend the current regulation for the Single- Family Housing Guaranteed Loan Program (SFHGLP) Single Close Combination Construction to Permanent Loans (aka "single close loans"), and now adopts the proposed changes in this final rule with some modifications. As proposed, the Agency will amend the regulation to ease the financial costs of interim construction financing for non- depository lenders (warehouse line of credit lenders or warehouse lenders) by allowing a temporary interest rate higher than the permanent note rate for interim construction financing, remove the requirement for loan modification or re-amortization once construction is complete, and allow for the reserve of regularly scheduled principal, interest, taxes and insurance (PITI) payments during the construction period. The final rule clarifies that the PITI reserve is an eligible use of single close loan funds. In addition, based on comments received, the Agency will allow single close loans for the rehabilitation of existing dwellings upon their purchase and eliminate maximum interest rate cap requirements for all SFHGLP loans. For clarity and completeness, the final rule also provides a definition of a warehouse lender and updates lender mortgage record retention requirements.