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The Rural Housing Service (Agency) is proposing changes to the SFH Guaranteed regulations at 7 CFR 3555 to update the maximum principal, interest, taxes, and insurance (PITI) ratio for all non-Guaranteed Underwriting System (GUS) Accept files; eliminating the availability of a PITI ratio waiver for some files; and providing clarification on interested party concessions to adjust to the current mortgage environment and industry standards.  The proposed rule is intended to apply only to lenders. All lenders are required to follow underwriting guidance when underwriting any mortgage loan product, and this action is completed in a lenders’ normal course of business. This requirement is consistent with standard mortgage industry practices and is required regardless of the size of the entity. The proposed rule is not expected to result in any increase in costs or prices to small entities.

Consistent with current Executive Orders and Administration directives to improve housing affordability, it is expected that the proposed changes would benefit the public with increased buying power” (i.e., buy a bigger home, more money available for closing) with a higher PITI ratio. The ability to exclude real estate commission fees from the seller concession limitation allows the buyer more flexibility in negotiating with the seller to pay closing costs and prepaids. Stakeholders will be able to assist more applicants by providing more options in financing with more flexible ratios and concession calculations.

Discussions have taken place at the SFHGLP’s monthly joint housing calls with FHA, FHFA, CFPB, VA, and Ginnie Mae.  During these  tri - annual calls, stakeholders have   expressed concerns regarding the   PITI ratio , stating it does not coincide with typical industry standards .  Additional input is expected during the comment period once the proposed rule is published.