1. Stellar Capital, Rural Development WWW.STELLARMTG.COM

2. Homeownership Beats Renting in 74% of Major U.S. Cities
Source: trulia.com

3. Stellar Capital Rural Housing
The USDA Guaranteed Rural Housing program is dedicated to the preservation of rural communities. We partner with Rural Development, a division of the US Department of Agriculture, to help thousands of mortgage originators throughout the country put their customers into a Guaranteed Rural Housing (GRH) loan.
This program, administered through the US Department of Agriculture, provides long term financing for qualified moderate-income families in order to promote long term homeownership in rural communities.

4. Stellar Capital Rural Housing
7,631 loans for $562 million
2000
9,866 loans for $791 million
2001
10,951 loans for $918 million
2002
17,038 loans for $1.6 billion
2003
16,536 loans for $1.6 billion
2004
15,174 loans for $1.5 billion
2005
14,633 loans for $1.5 billion
2006
21,310 loans for $2.3 billion
2007
41,189 loans for $4.7 billion
2008
86,438 loans for $10.6 billion
2009
79,295 loans for $9.9 billion
2010
65,448 loans for $8.4 billion
2011

5. Focus
Expertise
Knowledge

6. Overview Guaranteed Rural Housing Program Highlights
Things you may not know about the USDA Guaranteed Rural Housing Program
Ensuring your insurability
Working with Stellar Capital Rural Housing
Stellar Capital Rural Expresssm
Marketing the Guaranteed Rural Housing Program

7. Guaranteed Rural Housing Program Highlights

8. Up-Front & Annual Guarantee Fee
Program Features
Financing
Term
Up-Front & Annual Guarantee Fee
Down Payment
First time Homebuyer
Financing – 100% LTV based on appraised value
Term – 30 year fixed
G Fee - PurStellar Capital 2%
Refi 1.5%
30 bps annual
Down Payment - none required
1st Time Homebuyer – allowed but not required

9. Income and Ratios Ratios Non-occupant Co-borrowers Installment Debt
Primary Income
Self-employment
Alimony/Child Support
Part-time, Over-time & Bonus
Disability Benefits
Social Security Income
Maximum Income
Use Rural Development Moderate Income Limits
Primary Income – two year history req.
Self Employed – 2 years 1040s plus ytd P & L
Alimony / Child Support – 12 mth history & 3 year continuance
Part time/Overtime & Bonus – 24 mth history
Disability Benefits – benfits letter, 3 year continuance, gross up on tax bracket
Social Security – Award letter, 3 years, gross up on tax bracket

10. Credit Credit Score Late Payments Bankruptcy and Foreclosure
Collections
Judgments
Verification of Rent (VOR)
Previous Housing Payment
Non-Traditional Credit
Credit Report
Homebuyer Education
2/1 Temporary Buydowns
Credit score – no minimum, 640=streamline
streamline = No credit waiver req., no lox req.
Late payments – 1 x 30 within 12
BK & FC – 3 years
Collections – none in 12 months
Judgments – paid for 12, none placed in 36
VOR - < 640 need VOR
Non traditional Credit – allowed
Credit Report - RMCR or Tri-Bureau merged

11. Funds for Closing Closing Costs Payment Reserves Seller Concessions
Gifting
Cash Contribution
Unsecured Funds
Closing Costs – all can be financed into the loan except discount points
Seller Concessions – standard 6%, above appraiser to note common for area and supply comp
Gifting – 100% gift from disinterested 3rd party allowed
Cash contribution – none req. from borrower
Unsecured funds – allowed > 660 credit score, include payment

12. Property Requirements
Eligible Areas
Property must be located in a Rural Development eligible area
Other Real Estate Owned
Occupancy
Property Type
Manufactured Homes
Swimming Pools
Thermal Certification
Home Inspection Adequacy Certification
Termite Inspection
Well & Septic Inspections
New Construction Requirements
Repairs
Refinance
Other real estate owned – no adequate housing
Property Types – SFR, Condo, TH , Pud
Condo-must be fannie, freddie, Hud or VA approved
Home Inspection – & – OH has state specific form
Well & Septic inspection req.
Septic – by appriaser
Well – state certified lab
New Construction – End Loan
Certified Plans & Specs – permit, CO or plan cert.
Inspections – CO or footing, framing & final
Builder warranty – 1yr or 10 yr
10 yr – only need plan cert.

13. Things you may not know

14. Guaranteed Underwriting System (GUS)
Loan amount and/or interest rate changes?
Is there a ratio threshold or tolerance?
Is GUS required?
Are ratio waivers required with a GUS accept?
If lowering loan amount or rate nothing is required
2% threshold – more than 2% must relaease GUS & update
No, states prefer it
No, with a GUS accept no ratio waiver required

15. Things to Keep in Mind HUD Requirements
HUD handbook guidelines must be clearly notated as and on appraisal
Private Wells
Safe drinking water test required for private well
Water must be tested by a state certified lab
Community Wells
Property is served by a community well or more than 4 homes share well
Excess Land Value
Properties with land value in excess of 30% of the appraised value cannot be sub-dividable and must be common for the area
Private Wells – Maximum 4 homes
Community Well – Typically maintained by a gov. entity with the results posted online

16. Things to Keep in Mind, cont.
MCCs and DPAs
Mortgage Credit Certificates are acceptable for USDA financing
Down Payment Assistance programs may be used
Cash Back
Cash back at closing only applies if funds are contributed prior to closing and can be validated
No cash-out permitted for refinances
RESPA cures are acceptable as cash back to the applicant
Private Roads
Private road maintenance agreements are not required unless USDA lists as a condition on the
Subject property must have deeded ingress and egress
Mortgage Credit Certificate – obtain MCC cert. and fully executed W-4 from the employer
DPAs – can have –no special servicing required
No special approval by Stellar Capital req.
Must meet USDA guidelines
Cash Back – Have a copy of the invoice in the file

17. Get Out your Pencils… How are non-arms length transactions handled?
What are the property seasoning requirements?
How long must borrower own property before they can sell?
Can a borrower qualify for USDA financing if they currently own a home?
How do you qualify a recently divorced borrower – if ex-spouse keeps home but mortgage remains in both names?
Does the USDA allow unique properties? What is a unique property?
How are short sales treated?
Is there a maximum acreage?
Non arms length - defining a “non-arms” length transaction. Typically, a non-arms length scenario would involve a transaction between two related parties such as family members. A child buying a house from a parent, for example.
Answer to this question: The USDA guidelines do not specifically address “non-arms” length transactions and Stellar Capital Rural does not have an overlay to this guideline. The biggest risk associated with “non-arms” length transactions would be a “straw borrower” scenario where the borrower is trying to purStellar Capital a property but not move into the property – most often associated with a seller who is financial distress / delinquent on their mortgage. Smart idea to verify the current status of the seller’s mortgage and include the paperwork with the file.

18. Marketing the Guaranteed Rural Housing Program

19. Relationship Marketing
Realtors
Host realtor roundtables to introduce program
Provide USDA flyers and signage
Builders
Educate builder on program and its advantages
Host First Time Homebuyer seminars for builder
Awareness
Promote program through:
Website
Social media outlets
signature
Business card
Personal greeting

20. Marketing to Borrowers
External Marketing
Signage
Billboards
Radio commercial
Newspaper advertisement
Write an article for your local paper
Target Rental Communities
Familiarize yourself with monthly rent costs for the community you are targeting
Compare rental vs. ownership costs
Feature no money down option
Partner realtor to cut costs and feature a sample of the realtor’s listing with payments that are relative to current rental payments
Host Homeownership Luncheon or Seminar
Invite realtors to showcase some listings and meet potential buyers
Use free credit report as a draw
Reach out to local employers
Network with HR Managers and Chamber of Commerce