Wholesale ALERT – Guideline Updates for USDA

Effective immediately, Arc Home will align with the guidance provided by USDA in Updated HB-1-3555, Chapters 9 and 10. Nearly all of the updates are a clarification of requirements, with the exception of the topics noted below. The full USDA Single Family Home Guaranteed Loan Program Handbook (HB-1-3555) is available HERE on the USDA website.

Income Analysis (Chapter 9.4)

The Calculating Income from Assets topic was revised to clarify that in cases where a borrower owns a business or is self-employed, the asset accounts must be reviewed to verify that assets are not transferred between a personal account and business account, or vice versa. If the accounts are commingled (not functioning separately), the assets must be included in the calculation of net family assets.

Credit Analysis (Chapter 10, Attachment 10-A)

A new Overdraft/Non-Sufficient Funds (NSF) topic was added to define both overdraft and non-sufficient funds (NSF). Because reoccurring overdraft/NSF fees could have a negative impact on the borrower’s repayment of the proposed mortgage debt, guidance was provided to indicate that a credit decision should take these events into consideration and to specify that it is acceptable to include regular NSF fees in the qualifying monthly debt.