rfrederick on PROD1PC67 with CFR
RHS, RBS, RUS, FSA, USDA
§ 1980.347
the applicant provides documentation
that:
(i) The circumstances were of a temporary nature, were beyond the applicant’s control, and have been removed
(e.g., loss of job; delay or reduction in
government benefits or other loss of income; increased expenses due to illness, death, etc.); or
(ii) The adverse action or delinquency was the result of a refusal to
make full payment because of defective
goods or services or as a result of some
other justifiable dispute relating to the
goods or services purchased or contracted for.
(e) Previous RHS loan. RHS shall determine whether the applicant has had
a previous RHS debt which was settled,
or is subject to settlement, or whether
RHS otherwise suffered a loss on a loan
to the applicant. If RHS suffered any
loss related to a previous loan, a loan
guarantee shall not be issued unless
RHS determines the RHS loss was beyond the applicant’s control, and any
identifiable reasons for the loss no
longer exist.
(f) Other Federal debts. The loan approval official will check HUD’s Credit
Alert Interactive Voice Response System (CAIVRS) to determine if the applicant is delinquent on a Federal debt.
The Lender will clearly document both
its CAIVRS identifying number and the
borrower and coborrower’s CAIVRS access code near the signature line on the
mortgage application form. No decision
to deny credit can be based solely on
the results of the CAIVRS inquiry. If
CAIVRS identifies a delinquent Federal debt, the Lender will immediately
suspend processing of the application.
The applicant will be notified that
processing has been suspended and will
be asked to contact the appropriate
Federal agency, at the telephone number provided by CAIVRS, to resolve the
delinquency. When the applicant provides the Lender with official documentation that the delinquency has
been paid in full or otherwise resolved,
processing of the application will be
continued. An outstanding judgment
obtained by the United States in a Federal court (other than the United
States Tax Court), which has been recorded, shall cause the applicant to be
ineligible to receive a loan guarantee
until the judgment is paid in full or
otherwise satisfied. RHS loan guarantee funds may not be used to satisfy
the judgment. If the judgment remains
unsatisfied or if the applicant is delinquent on a Federal debt and is unable
to resolve the delinquency, the Lender
will reject the applicant.
§ 1980.346 Other eligibility criteria.
The applicant must:
(a) Be a person who does not own a
dwelling in the local commuting area
or owns a dwelling which is not structurally sound, functionally adequate;
(b) Be without sufficient resources to
provide the necessary housing and be
unable to secure the necessary conventional credit without an RHS guarantee upon terms and conditions which
the applicant could reasonably be expected to fulfill.
(c) Be a natural person (individual)
who resides as a citizen in any of the 50
States, the Commonwealth of Puerto
Rico, the U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth
of the Northern Marianas, Federated
States of Micronesia, and the Republics
of the Marshall Islands and Palau, or a
noncitizen who resides in one of the
foregoing areas after being legally admitted to the U.S. for permanent residence or on indefinite parole.
(d) Possess legal capacity to incur
the loan obligation and have reached
the legal age of majority in the state
or have had the disability of minority
removed by court action.
(e) Have the potential ability to personally occupy the home on a permanent basis. Because of the probability
of their moving after graduation, fulltime students will not be granted loans
unless:
(1) The applicant intends to make the
home his or her permanent residence
and there are reasonable prospects that
employment will be available in the
area after graduation, and
(2) An adult member of the household
will be available to make inspections if
the home is being constructed.
§ 1980.347 Annual income.
Annual income determinations will
be thoroughly documented in the Lender’s casefile. Historical data based on
the past 12 months or previous fiscal
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§ 1980.347
7 CFR Ch. XVIII (1–1–08 Edition)
year may be used if a determination
cannot logically be made. Annual income to be considered includes:
(a) Current verified income, either
part-time or full-time, received by any
applicant/borrower and all adult members of the household, including any
coapplicant/coborrower.
(b) If any other adult member of the
household is not presently employed
but there is a recent history of such
employment, that person’s income will
be considered unless the applicant/borrower and the person involved sign a
statement that the person is not presently employed and does not intend to
resume employment in the foreseeable
future, or if interest assistance is involved, during the term of the Interest
Assistance Agreement.
(c) Income from such sources as seasonal type work of less than 12 months
duration, commissions, overtime, bonuses, and unemployment compensation must be computed as the estimated annual amount of such income
for the upcoming 12 months. Consideration should be given to whether the
income
is
dependable
based
on
verification by the employer and the
applicant’s history of such income over
the previous 24 months.
(d) The following are included in annual income:
(1) The gross amount, before any payroll deductions, of wages and salaries,
overtime pay, commissions, fees, tips,
bonuses, and other compensation for
personal services of all adult members
of the household.
(2) The net income from operation of
a farm, business, or profession. Consider the following:
(i) Expenditures for business or farm
expansion and payments of principal on
capital indebtedness shall not be used
as deductions in determining income. A
deduction is allowed in the manner prescribed by IRS regulations only for interest paid in amortizing capital indebtedness.
(ii) Farm and nonfarm business losses
are considered ‘‘zero’’ in determining
annual income.
(iii) A deduction, based on straight
line depreciation, is allowed in the
manner prescribed by IRS regulations
for the exhaustion, wear and tear, and
obsolescence of depreciable property
used in the operation of a trade, farm,
or business by a member of the household. The deduction must be based on
an itemized schedule showing the
amount of straight line depreciation
that could be claimed for Federal income tax purposes.
(iv) Any withdrawal of cash or assets
from the operation of a farm, business,
or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by a
member of the household.
(v) A deduction for verified business
expenses, such as for lodging, meals, or
fuel, for overnight business trips made
by salaried employees, such as longdistance truck drivers, who must meet
these expenses without reimbursement.
(3) Interest, dividends, and other net
income of any kind from real or personal property, including:
(i) The share received by adult members of the household from income distributed from a trust fund.
(ii) Any withdrawal of cash or assets
from an investment except to the extent the withdrawal is reimbursement
of cash or assets invested by a member
of the household.
(iii) Where the household has net
family assets, as defined in § 1980.302(a),
in excess of $5,000, the greater of the
actual income derived from all net
family assets or a percentage of the
value of such assets based on the current passbook savings rate.
(4) The full amount of periodic payments received from social security
(including social security received by
adults on behalf of minors or by minors
intended for their own support), annuities, insurance policies, retirement
funds, pensions, disability or death
benefits, and other similar types of
periodic receipts.
(5) Payments in lieu of earnings; such
as unemployment, disability and worker’s compensation, and severance pay.
(6) Public assistance except as indicated in paragraph (e)(2) of this section.
(7) Periodic allowances, such as:
(i) Alimony and/or child support
awarded in a divorce decree or separation agreement, unless the payments
are not received and a reasonable effort
has been made to collect them through
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RHS, RBS, RUS, FSA, USDA
§ 1980.348
the official entity responsible for enforcing such payments and they are
not received as ordered; or
(ii) Recurring monetary gifts or contributions from someone who is not a
member of the household.
(8) Any amount of educational grants
or scholarships or VA benefits available for subsistence after deducting expenses for tuition, fees, books, and
equipment.
(9) All regular pay, special pay (except for persons exposed to hostile
fire), and allowances of a member of
the armed forces who is the applicant/
borrower or coapplicant/coborrower,
whether or not that family member
lives in the unit.
(10) The income of an applicant’s
spouse, unless the spouse has been living apart from the applicant for at
least 3 months (for reasons other than
military or work assignment), or court
proceedings for divorce or legal separation have been commenced.
(e) The following are not included in
annual income but may be considered
in determining repayment ability:
(1) Income from employment of minors (including foster children) under
18 years of age. The applicant and
spouse are not considered minors.
(2) The value of the allotment provided to an eligible household under
the Food Stamp Act of 1977.
(3) Payments received for the care of
foster children.
(4) Casual, sporadic, or irregular cash
gifts.
(5) Lump-sum additions to family assets such as inheritances; capital gains;
insurance payments from health, accident, hazard, or worker’s compensation
policies; and settlements for personal
or property losses (except as provided
in paragraph (d)(5) of this section).
(6) Amounts which are granted specifically for, or in reimbursement of,
the cost of medical expenses.
(7) Amounts of education scholarships paid directly to the student or to
the
educational
institution
and
amounts paid by the Government to a
veteran for use in meeting the costs of
tuition, fees, books, and equipment.
Any amounts of such scholarships or
veteran’s payments, which are not used
for the aforementioned purposes and
are available for subsistence, are con-
sidered to be income. Student loans are
not considered income.
(8) The hazardous duty pay to a service person applicant/borrower or spouse
away from home and exposed to hostile
fire.
(9) Any funds that a Federal statute
specifies must not be used as the basis
for denying or reducing Federal financial assistance or benefits. (Listed in
exhibit F of FmHA Instruction 1980–D,
available in any RHS office.)
(f) Income of live-in aides who are
not relatives of the applicant or members of the household will not be counted in calculating annual income and
will not be considered in determination
of repayment ability.
§ 1980.348
Adjusted annual income.
Adjusted annual income is annual income as determined in § 1980.347 less
the following:
(a) A deduction of $480 for each member of the family residing in the household, other than the applicant, spouse,
or coapplicant, who is:
(1) Under 18 years of age;
(2) Eighteen years of age or older and
is disabled as defined in § 1980.302(a); or
(3) A full-time student aged 18 or
older.
(b) A deduction of $400 for any elderly
family as defined in § 1980.302(a).
(c) A deduction for the care of minors
12 years of age or under, to the extent
necessary to enable a member of the
applicant/borrower’s family to be gainfully employed or to further his or her
education. The deduction will be based
only on monies reasonably anticipated
to be paid for care services and, if
caused by employment, must not exceed the amount of income received
from such employment. Payments for
these services may not be made to persons whom the applicant/borrower is
entitled to claim as dependents for income tax purposes. Full justification
for such deduction must be recorded in
detail in the loan docket.
(d) A deduction of the amount by
which the aggregate of the following
expenses of the household exceeds 3
percent of gross annual income:
(1) Medical expenses for any elderly
family (as defined in § 1980.302(a)). This
includes medical expenses for any
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