Loan Leverage Program

Rural Development Loan Leverage Program (RD)

Brief Description : MBOH partners with RD to provide homeownership opportunities to families in rural areas that don't qualify under the regular programs. The homebuyer takes out two loans - the first loan is from MBOH for 10-50% of the purchase price, and the second loan is from RD for the remainder of the purchase price. The interest rate on the RD loan is subsidized as low as 1% to meet the borrower's need. It is important to remember that while the rate on the MBOH loan is fixed for the life of the loan, the RD rate is re-evaluated annually.

Borrower Eligibility Criteria:
Income limits set by RD http://www.rurdev.usda.gov/mt/RHS/rhs.htm
First-time homebuyer(s); waived for targeted area; displaced homemaker; or single parent
Home must be primary residence as long as the loan remains in place
No asset limitations
Must have approved homebuyer education

Property Criteria:
Purchase Price Limit of $237,031
Limit of 15% use of the property for business
Land limited to 35% of value of total financing, 40-acre limit, with no subdivision or sale of land possible
New manufactured homes only from approved dealer
Must be in rural area eligible for RD loans

Loan Criteria:
Total loan limit of $237,031 between the two loans
Fixed rate, 30-year term (MBOH portion)
Hazard insurance $1,000 deductible all peril
Taxes and insurance must be held in escrow on MBOH loan

Underwriting Criteria:
Underwriting to RD standards

Mortgage Insurance Information:
 No mortgage insurance required on MBOH portion of the loan, as long as the MBOH portion constitutes 50% or less of the total loan amount

Lender Reservation and loan info:
Fees allowed are 1.5% of MBOH loan amount
MBOH purchases its portion of the loan at 102%
Rate can be reduced 0.125% if buyer chooses to pay 2 points at closing and MBOH purchases loan at par
Reservations valid 120 days for existing homes/ 180 days for new construction
0.25% fee charged for extensions, 0.50% for cancellation
Need any multi-lot/repair issues on appraisal addressed before closing

Reservations Process

PREFER
Input on Lender On Line web based reservation system

OR
Fax reservation to MBOH including:
Reservation cover sheet and required documentation listed

Special Criteria:
Loan reservation is not automatic - must submit copy of RD commitment sheet for review by MBOH prior to reservation approval. See Exceptions on Lender on Line to check status.

updated 9/27/2007

This is a summary of the MBOH program only. For a complete copy of the terms and conditions see Mortgage Purchase and Servicing Guide and the Terms and Conditions of the set-aside