Washington, DC – Michael Bennet, U.S. Senator for Colorado, today urged the House to pass key provisions that mirror legislation Michael Bennet, U.S. Senator for Colorado, introduced to bolster Rural Housing Service loan programs on the brink of insolvency.
In a letter to Chairman Dave Obey and Ranking Member Jerry Lewis of the House Appropriations Committee, Bennet called on the House to keep these provisions in the Supplemental Appropriations Bill. The Senate passed its version of the Supplemental Bill which included the rural housing provisions last month.
Bennet’s legislation would extend the life of the U.S. Department of Agriculture Rural Development’s loan guarantee program without cost to taxpayers by changing the program’s fee structure to make it self-funding. It also would ensure that families in Colorado’s rural communities have the access to the credit they need to buy, build and repair their homes.
“With the economy continuing to lag, credit is difficult to obtain,” Bennet wrote in the letter. “Accessing capital is a critical component of being able to realize the American dream of homeownership. In this economy, there remain a significant number of rural Americans who are otherwise qualified and willing to purchase an affordable home, but who need a loan to do it. Action will translate into homeownership opportunities for thousands of households across rural America.”
The Rural Housing Preservation and Stabilization Act increases the maximum loan guarantee fee that USDA’s Rural Housing Service has authority to charge for new housing purchases from 2.0 to 3.5 percent and allows an annual fee of not more than 0.5 percent per year on the balance of the loan. The bill would also enable the Rural Housing Service to waive these fees for low-income borrowers for up to $679 million in loans. Together, these changes will enable the USDA-Rural Development’s Rural Housing Service to continue offering loan guarantees through the duration of the year and to become self-funding.
The USDA’s Rural Housing Service Loan Guarantee Program (Section 502 loans) provides loan guarantees to private lenders for low- and moderate-income families to purchase housing. Applicants for loans may have an income of up to 115 percent of the median income for the area. Families must be without adequate housing, but be able to afford mortgage payments, including taxes and insurance. Applicants must have solid credit histories.
The full text of the letter is included below.
Dear Chairman Obey and Ranking Member Lewis:
I write to call your attention to Section 1477 of the Senate-passed version of H.R. 4899, the Supplemental Appropriation Act of 2010 set for House consideration in the coming days. Section 1477 makes a few key modifications to a critical rural housing loan guarantee program that will enable thousands of rural households to become homeowners. I urge you strongly to retain this provision in the House version of the FY10 Supplemental.
With the economy continuing to lag, credit is difficult to obtain. Accessing capital is a critical component of being able to realize the American dream of homeownership. In this economy, there remain a significant number of rural Americans who are otherwise qualified and willing to purchase an affordable home, but who need a loan to do it.
The Rural Housing Service of the U.S. Department of Agriculture operates a loan guarantee program that provides this access to credit, but due to the credit crunch and unprecedented demand for the program, without swift action the Section 502 Loan Guarantee program will cease and would-be-homeowners will be left in a lurch.
Section 1472 of the Senate-passed version of H.R. 4899 is comparable to a bipartisan, zero-cost bill I introduced earlier this year to address this problem–The Rural Housing Preservation and Stabilization Act, S. 3266.
Section 1472 would increase the maximum loan guarantee fee that USDA’s Rural Housing Service has authority to charge for new housing purchases, from 2.0 to 3.5 percent. This section would also allow an annual fee of not more than 0.5 percent per year on the balance of the loan. This provision would also enable the Rural Housing Service to waive these fees for low-income borrowers for up to $679 million in loans. Together, these changes will enable the USDA-Rural Development’s Rural Housing Service to continue offering loan guarantees through the duration of the year and to become self-sustaining.
Again, as you finalize H.R. 4899, the House version of the Emergency Supplemental, I urge you to retain Section 1472 in H.R. 4899, the FY10 Supplemental appropriations bill and urge swift passage of the Supplemental appropriations bill. Action will translate into homeownership opportunities for thousands of households across rural America.