Was there a Procedural Notice or something that came out allowing people to pay off their bills with excess savings? I’m not sure where I thought I saw something about being able to pay off bills with savings that was over the allowed limit of 15,000.
Sincerely, Excess Savings to Pay Down Debt
Dear Excess Savings to Pay Down Debt,
Kind of … there wasn’t a Procedural Notice or anything so specific that I’m aware of (there were changes to assets based on the Final Rule but less in this area). But what has happened is that Rural Development and the Section 502 Certification Training started emphasizing that assets can be used to pay non-housing debts or purchase things that are not considered assets in Exhibit 4-3 (personal property). Here’s the reference in the handbook that states the eligible uses of assets:
HB-1-3550, 6-16, Paragraph 6.10 Use of Assets [7 CFR 3550.64]
B. Eligible Uses of Assets
Eligible uses for excess assets or assets the applicant has elected to contribute include making
- Reduce the principal balance;
- Pay architectural, engineering, inspection, or testing fees related to new construction or repairs;
- Establish the escrow account for taxes and insurance;
- Pay closing costs and related fees;
- Reduce non-housing debts;
- Contribution to a retirement asset; or
- Purchases not considered a net family asset (Exhibit 4-3).
C. Ineligible Uses of Assets
If an applicant has excess assets, those assets cannot be used for purposes other than those listed in Paragraph 6.10 B.
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