For Rural Development (RD) Single Family Housing Guaranteed Loan Program loans, we provide duplicates of the FNMA/FHLMC Uniform Security Instruments, pursuant to 7 CFR § 1980.333(a) and soon-to-be-effective Ibid. § 3555.51(b)(13).
“Applicants must agree to personally occupy the dwelling as a principal residence throughout the term of the loan.” (RD HB-1-3555, ch. 8.2[C])
The borrower agrees, in Uniform Covenant 6 of the FNMA/FHLMC security instruments, to occupy the subject property as his primary residence for at least one year, which runs afoul of the requirements in the RD Handbook.
In order to comply with the Handbook, as well as to follow strictly with the requirements of Supra § 3555.51(b)(13) which requires lenders to use “Fannie Mae, or Freddie Mac forms,” we will begin providing a new RD Rider (Cx19099) which will modify the uniform instruments to be compatible with specific RD requirements.
This Rider will, at the present time, be used to amend Uniform Covenant 6 so that it states the following:
“Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence throughout the term of the Loan, unless and while extenuating circumstances exist which are beyond Borrower’s control which prevent the Borrower from occupying the Property.”
This Rider will print under the following conditions:
- Loan Type = RD
- Document Package Type = Closing
- Use USDA 3555 Forms Effective 12/01/2014 = Yes
As outlined in the announcements linked above, the U.S. Department of Agriculture informed DocuTech that complete loan applications “received by the Agency from the Lenders” on or after 12/01/2014 will be subject to the new 3555 rules. As part of the effort to more accurately establish when clients will need to trigger the new documents, we will be globally prompting for new field 82109 “Date Application Package Submitted to USDA/RD”. This will be integrated with the field “Use USDA 3555 Forms Effective 12/01/2014” to provide the correct disclosures at the appropriate time. The field prompt will be optional and will begin appearing November 18, 2014. If not completed, the Application Date will be used to make the determination of which documents print. If both the new field and the Application Date are empty, the current date (when the documents print) will be used instead.
In addition, we will be modifying the Owner Occupied text of the Occupancy Statement (Cx15) to more closely match the occupancy terms set forth in the security instrument which prints in the same package (i.e., if the loan is Conventional, the Primary Residence text will match the terms of the FNMA/FHLMC uniform instrument; if the loan is RD, the text will match the terms in the RD Rider, etc.).
Of particular note with this update for Cx15 is the fact that different text will print for FHA loans depending on the case number assignment date, due to upcoming changes to FHA’s policies as set forth in their new handbook (FHA Single Family Handbook 4000.1). For loans with case number assignment dates before June 15, 2015, the text will more accurately reflect the occupancy terms set forth in FHA Uniform Covenant 5 in the current FHA Model Mortgage. For loans with assignment dates on or after June 15th, the language will reflect the terms set forth in FHA Uniform Covenant 6 in the new FHA Model Mortgage (a copy of which is available online at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/model_documents).
These changes will take effect on November 18, 2014. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
November 13, 2014
The updated text on Cx15 for FHA loans will be triggered for FHA case number assignment dates on or after September 14, 2015, instead of June 15, 2015, due to the postponement of the new FHA handbook effective date.
May 27, 2015