CUs would benefit from USDA single family loan program stability

January 20, 2021

Many credit unions would benefit from improved efficient and effectiveness of the U.S. Department of Agriculture’s Single-Family Housing Guaranteed Loan Program, CUNA wrote to the USDA this week. CUNA’s comments were sent in response to a USDA proposal that would mandate use of certain underwriting and closing systems for the program.

Specifically, it proposes to eliminate inefficiencies by mandating the use of the Guaranteed Underwriting System (GUS) and Lender Loan Closing System (LLCS) for applications and loan closing files, including for conditional commitments and loan guarantees.

It also proposal also defines two types of loans that will remain subject to manual underwriting, including streamlined-assist refinance transactions and loans downgraded in the agency’s automated origination.

“A substantial number of credit unions and their members stand to greatly benefit from improved efficiency and effectiveness of the Rural Housing Service’s Single-Family Housing Guaranteed Loan Program,” CUNA’s letter reads. “That said, small rural lenders are more likely to need to utilize manual options, particularly for low-income borrowers whose lack of credit profile may require manual underwriting based on alternative data that is not currently contemplated by automated systems.

“As a result, the Rural Housing Service should review and update its underwriting and guidance to ensure that such circumstances are captured by those automated systems or amend this rule to provide lenders with flexibility under similar limited circumstances,” it adds.