WASHINGTON The Rural Housing Service has said it will stop accepting new mortgage applications for one week starting Nov. 21 while it attempts to deal with a huge backlog at 13 of its state offices.
"We must eliminate as much of the conditional commitment backlog nationwide as possible," the agency said in a Nov. 6 message to lenders.
The RHS guarantees single-family loans in designated rural areas for low- and moderate income borrowers. When RHS-approved lenders submit an application, agency staff must review it before issuing preliminary approval in the form of a conditional commitment.
But the system appears to be stretched thin at the moment. In Kansas, for example, there is a 70-day backlog in issuing conditional commitments, according to a source with knowledge of the matter. Other states with serious backlogs include Texas, Florida, Oregon and Washington. The source indicated the average backlog is 30 to 45 days.
To address this problem, RHS Administrator Tony Hernandez decided to stop accepting loan applications and assign all available staff at other state offices to work through the backlog.
"We will focus on eliminating the backlog during the week applications are not accepted," the RHS message says.
A spokesman for the agency did not comment by presstime.
Lenders support the push to resolve the backlog, according to sources. RHS is taking an aggressive approach to this problem because the backlog is "actually harming the program in those states," according to one lender who spoke on condition of anonymity. Home sales are being cancelled and the borrowers have to seek alternative financing.
