The federal Department of Agriculture is efficiently helping to facilitate the purchase of new housing in rural areas but could do better by implementing a “preferred lenders” program.
So says David Battany, an industry lender speaking on behalf of the Mortgage Bankers Association in testimony before the Senate Banking, Housing, and Urban Affairs Committee.
Battany contends that by delegating approval authority to preferred lenders, the Agriculture Department – but more specifically the department’s Rural Housing Service – could better facilitate funding for home building.
The ongoing lack of a preferred lending policy, said Battany, is a “major barrier to more robust lender participation and puts the Rural Housing Service out of alignment with the processes available in FHA and VA lending.”
“The existing processes require a conditional commitment from USDA staff, and while such commitments are rarely denied, there are instances in which delays in receiving such commitments can cause problems for borrowers and lenders,” remarked Battany, who is also the vice president of capital markets for the San Diego-based Guild Mortgage Company.
Continued Battany: “Market participants have noted that, in some cases, these delays can extend as long as ten days. In such cases, borrowers often have missed their closing dates, causing significant problems with their transactions.”
Despite his preferred lenders proposal, Battany lauded the Rural Housing Service for recent efforts to “better serve consumers and industry participants alike.”
Noting that the nation’s current rural market is “constrained by its very nature with limited housing supply, much of which is aging single-family houses,” Battany also observed that “rural communities face a well-documented shortage of suitable housing stock and underproduction of homes that meet the needs of the rural workforce.”
Battany additionally suggested that “borrowers in rural areas would be well-served by greater access to remote online notarization. As the federal investment in broadband access reaches rural communities, they will be able to use a remote online notary in the loan closing process.”
Currently, remote online notarization is available in only 41 states.
By Garry Boulard
