NEWS RELEASE WASHINGTON, D.C.

By Under Secretary Thomas C. Dorr

USDA RURAL DEVELOPMENT INTRODUCES MARKET TEST OF GUARANTEED UNDERWRITING SYSTEM (GUS)

     The single largest, most expensive purchase many Americans make is buying their own home. That's especially true in rural America.

     But the process of buying a home can be tedious, complicated and time consuming. However, for lenders and buyers using the USDA Rural Development Single Family Housing Guaranteed Loan Program (SFHGLP), the loan approval process is about to get a lot easier.

     Recently, USDA Rural Development began a market test of the electronically-based Guaranteed Underwriting System (GUS), to expedite loan approvals. GUS automates the old manual underwriting process. Lenders in the market test can now electronically enter a homebuyer's loan application information into the GUS online program and within seconds get a loan decision. That's at the very least two days shorter and less expensive than using the manual process and having to use overnight delivery of documents.

     Once the applicant's information is entered into the system, it runs through a series of electronic calculations and considerations that weigh various credit factors and then determines, again, in a matter of seconds, a borrower's and the property's eligibility for a USDA Rural Development guaranteed loan. For a lender and a buyer, that's lightning speed that minimizes the stress and pressure of the wait. Families will know right away whether they can buy their home and can start planning their future.

     Through the use of cutting-edge technology, GUS will advance President George W. Bush's commitment to increase homeownership. This program offers a full service automated underwriting system which will be made available in the future for other private sector lenders participating in the Rural Development guaranteed loan program.

     The idea that led to GUS came out of a discussion I had three years ago with then-Federal Housing Administration Commissioner John Weicher on ways we could work together, through the sharing of knowledge resources, to automate USDA Rural Development's manual underwriting process. As a result, one of the critical components in GUS is FHA's mortgage scorecard, known as TOTAL (Technology Open to Approved Lenders), which has been modified in GUS for rural, moderate- to low-income home loan purposes. Among the items TOTAL evaluates are a loan applicant's credit score, debt ratios and other factors.

     Lenders participating in Phase I of the market test include: Allied Mortgage Capital Corporation of Rockwell, Texas; American Southwest Mortgage of Oklahoma City, Okla.; Central National Bank of Junction City, Kan.; First National Bank of Columbus, Neb.; Guaranty Trust of Murfreesboro, Tenn.; State Bank of Lincoln, Ill.; The Mortgage Company of Junction City, Kan. and Virginia Housing Development Authority of Richmond, Va. Additional lenders will be added to the market test later this year in preparation for full GUS implementation in January 2007.

     President Bush, this Administration, and USDA Rural Development are committed to helping more Americans become homeowners. Home ownership is part of the American dream. It strengthens family and communities. For millions of Americans, it is the first big step on the ladder to financial security-to building assets that benefit their families for years to come.

     This year, USDA Rural Development will likely invest about $15 billion in direct loans and guarantees for rural housing, infrastructure, community facilities, business development and entrepreneurial activity. At USDA Rural Development, we want to streamline our efforts to help more Americans realize their dreams by becoming homeowners. GUS is one of the many ways we can help both lender and potential home buyer with faster and more efficient service. With GUS, Rural Development continues leading the way to making rural America a more energetic and vibrant place to live and work.

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USDA Rural Development is an Equal Opportunity Lender, Provider, and Employer. Complaints of
discrimination should be sent to: USDA, Director, Office of Civil Rights, Washington, D.C. 20250-9410

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