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USDA Housing Administrator Tammye Trevino announced on August 23, that implementation of the new funding fees for the Section 502 Single Family Loan Guarantee Program is expected by mid-September.

Legislation was recently signed into law giving USDA the authority to increase the up-front fee to up to 3.5 percent of the principal obligation and to charge a new annual fee of up to .5 percent of the outstanding principal balance. USDA's office of Rural Development expects to complete an interim enhancement to its electronic systems by mid-September to accommodate the increase. When this interim enhancement is complete, Rural Development will process all Conditional Commitments issued after May 26, 2010, that had the proviso "subject to the availability of funds." These Conditional Commitments will be processed in the date order by which they were received. As soon as the program is implemented, Rural Development will resume issuing standard commitments without the special "subject to" condition.

In the meantime, Rural Development will continue to accept completed loan applications and issue Conditional Commitments; however, no loan funds will be reserved for applications during this timeframe. Lenders may close the loan as scheduled but will assume all risk of loss for the loan until funds are obligated and the loan is actually guaranteed. Click here for a copy of the USDA August 23rd memorandum.

While the new law also gives lenders the authority to waive the fees for low income and very low income borrowers, USDA will not implement this provision in the near future. However, borrowers may be eligible for USDA's Section 502 Direct Loan Program.

If you are a member and have questions, contact MHI Vice President of Regulatory Affairs Lois Starkey at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

On August 23, 2010, MHI submitted comments to HUD's proposed rule to establish a procedure allowing manufacturers to deviate from the existing alternative construction (AC) requirement to conduct on-site completion of aspects of construction that cannot reasonably be completed in the factory.

In its comments, MHI said, "while we are pleased that HUD has issued a proposed rule to amend the current AC process, we strongly believe that a number of changes are necessary to ensure a more streamlined process for on-site construction." MHI said that significant changes are needed in order to achieve HUD's stated goal to "simplify the process and obviate the need for HUD approval" and to "expand regulatory flexibility and facilitate the timely completion of manufactured homes on-site."

MHI proposed that HUD adopt the following procedures for on-site completion of construction for manufactured homes:

• Incorporate the existing procedural and enforcement regulations for on-site inspections and consider the on-site work as an extension of the factory inspection process.
• Maintain current procedures for certain types of hinged roofs, which don't require on-site inspection of each installation.
• Prohibit State Administrative Agencies that are not approved State-IPIAs from inspecting on-site work.
• Adopt a more streamlined, less redundant labeling and reporting system to ensure that the buyer has complete knowledge of the status of the home's construction and completion and rely on existing requirements for a "certificate of occupancy" to be provided to the buyer at closing.

Click here to view MHI's comments to HUD.

If you are a member and have questions, contact MHI Vice President of Regulatory Affairs Lois Starkey at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .