The Official Online Weekly Newspaper of NAHB
With funding for a key rural housing program nearly depleted, Congress recently approved legislation to ensure that home buyers in rural areas have continued access to affordable mortgages through the U.S. Department of Agriculture (USDA) 502 loan guarantee program.
An NAHB-supported provision to give the USDA the authority to increase the upfront premium for 502 guarantees — making the program self-sustaining at no cost to the American taxpayer and providing families in rural communities with a vital source of mortgage credit — was included in a broader $58.8 billion supplemental bill (H.R. 4899) to pay for the wars in Afghanistan and Iraq and provide emergency funding for other programs.
NAHB lobbied on behalf of this important rural housing program for several months, and urged Congress to finalize the legislative fixes needed to put the program back on a solid financial footing.
The program guarantees loans to applicants who have incomes no higher than 115% of the median income for the area. The loans are funded by private lenders and can be used to build, buy, repair or renovate homes.
As a result of the current mortgage credit crisis, demand for the loans has spiked since 2006 and the number made annually has tripled, depleting current federal funding.
The legislation will correct the funding shortfall by enabling the Section 502 Single Family Housing Guaranteed Loan program to pay for itself, rather than relying on federal funding. It will allow participating lenders to increase their current 2% fee on mortgages to as high as 3.5% and allow an annual fee of up to 0.5% on the balance of the loan.
To read the legislation, click here and enter H.R. 4899 in the box at the upper center of the page.
For more information, contact Scott Meyer at 800-368-5242 x8144.