The Rural Housing Service (RHS) intends to issue a proposed rule to make the following changes to 7 CFR 3555:

(1)  Amend the current regulation for 7 CFR 3555.151(i)(3)(iv) to add a seven-year timeframe when a prior Agency loss is considered significant derogatory credit. The Agency believes the proposed timeframe is reasonable to allow former borrowers the opportunity to create a better financial situation for themselves and their family by re-establishing credit and providing evidence of acceptable payment histories.

(2)  Amend 7 CFR 3555.101(d)(3)(i)(A), (B), and (C) to clarify the streamlined and non-streamlined refinanced loan options do not have a 12-month seasoning requirement, to change the current 12 month seasoning requirement for streamlined-assist refinance loans to a six month seasoning period, and specify the borrower must have no delinquencies greater than 30 days on the mortgage account being refinanced for 180 days prior to loan application.  The intent of the proposed change would allow borrowers to refinance their current, eligible Rural Development loan when it is most beneficial for the borrower to do so.  Limiting the borrower to a 12-month time frame to refinance their current USDA mortgage debt may be detrimental when the economic environment may be favorable to refinance the debt now.  By lowering the mortgage payment for the borrower, it would put them in a better financial situation, allowing the borrower additional financial resources to save or spend on improvements to their home.

(3) Amend 7 CFR 3555.101(d)(3)(iii) to clarify the streamlined, non-streamlined, and streamlined-assist refinance loans must all maintain the current mortgage account for the 180 days prior to loan application. However, if the streamlined and non-streamlined mortgage accounts have not been opened for 180 days prior to loan application, no defaults must have occurred since the mortgage account was opened. The changes are intended to align the Agency with similar federal agencies’ refinance seasoning requirements.  It would also allow our current applicants to take advantage of favorable economic markets to refinance their homes.