Shutdown Impacts Rural Housing

As the budget stalemate in Washington drags on the consequences and impacts are becoming clearer and increasingly disturbing. Without any justification, the Administration has closed 25 percent of the federal government and among the casualties are agencies with the responsibility for financing affordable housing, clean drinking water, and community opportunity.

NRHC members have reported about one small but important agency – the Rural Housing Service – and the recent absence of its housing assistance. Families waiting to close their home mortgages are hung out to dry, families building their homes are stymied, and hundreds of thousands of families receiving rental subsidies may soon lose that assistance if the government shutdown goes on for “months or years.”

Below is a compilation of information supplied by NRHC members on the impact of the shutdown on rural housing efforts in their states and communities.

Section 502 Direct

• Fahe – working in Appalachia — reports that they are currently holding on 424 loans, across 18 states, in the 502 Direct pipeline that either cannot be submitted to USDA or are sitting idle at USDA.
• Fahe reports that 15 second mortgages that are operating on a funding timeline tied to 502 Direct loans that are held up now as well.
• Rural Community Assistance Corporation (RCAC) reports that the organization has already accumulated 15-20 Section 502 home ownership loan applications from the packaging program in Alaska, Colorado, Oregon, and Washington that are awaiting submission.
• In California, Self-Help Enterprises reports 18 families have been impacted and a total loan obligation of $3.3 million.
• In Oregon, NeighborWorks Umpqua reports that 7 families are waiting for a loan specialist to issue a Certificate of Eligibility (COE) so they can go shopping.
• In Oregon, NeighborWorks Umpqua reports that 4 families in contract cannot close their section 502 loans, have their inspections reviewed, or appraisal ordered.
• In Delaware, Milford Housing Development Corporation (MHDC) reports that the organization has 3 Direct clients under construction that may be paused.
• In Delaware, MHDC reports on home ownership loans:
  • 1 client at USDA ready to close on their construction loan;
  • 1 client at USDA with contract and leveraged money waiting to be reviewed so they can be approved and close; and
  • 2 clients will have plans and specs submitted soon so they can go to closing.
• PathStone reports that 2 first time homebuyers, from New York and Pennsylvania respectively, were scheduled to close of 502 mortgages in early January and both deals are now in jeopardy.
• In Washington, Catholic Charities Housing Services (CCHS) reports a halt to 502 loan underwriting resulting in 2 week delay and counting for a group of 7 families (523 program/502 loans) which impacts CCHS performance measurements on the 523 program.
• In Utah, Self Help Homes reports 20 Section 502 loan closings are delayed and by the end of January 29 inspections will be needed
• In Indiana, Pathfinder Homeownership Center reports:
  • 12 homes that are ready to close in January;
  • 6 files that need appraisals and all but one of those are existing;
  • 13 files that are either at the USDA or FAHE
• In Kentucky, Frontier Housing reports that the organization has 7 Section 502 Direct homebuyers whose loans are on hold because of the shutdown.
  • One homebuyer has a house under contract, and is waiting for RD’s sign-off. If the shutdown drags on too much longer, the buyer runs the risk of the seller walking away from the deal.
• In New Mexico, Tierra del Sol Housing Corporation reports that 16 families have been delayed in receiving or getting approval for their 502 Loans.
• In New Mexico, Tierra del Sol Housing Corporation reports construction delays due to lack of mortgage funds for 9 projects with 502 funding.
• In Missouri, Tierra del Sol Housing Corporation reports that that 3 Section 502 borrowers received letters from Centralized Services Center (CSC) in St. Louis that show their insurance has not been paid and CSC will provide forced insurance coverage if not paid by a specific date to prevent any lapse of coverage on the home financed by RD.
• In California, Coachella Valley Housing Coalition has heard from 12 families that have had difficulty dealing with Centralized Services Center (CSC) in regards to their insurance that has not been paid, inability to make payments, and reporting tax information.
• In California, Coachella Valley Housing Coalition has heard from 5 families that were unable to make USDA loan house payments through automated system.
• In Oklahoma, Deep Fork Community Action Foundation, Inc. reports that 3 applicants are delayed in receiving 502 loans.
• In Oklahoma, Deep Fork Community Action Foundation, Inc. reports that 5 applicants have construction delays due to lack of funds and 2 from lack of inspectors.
• NeighborWorks America reports no RHS staff available to discuss coordinating 502 Direct loan packaging trainings, as an example, nor available to design pilots for rural housing rehab.

Single Family Housing Guaranteed Loan Program

• In Oregon, NeighborWorks Umpqua reports 1 family can’t get the guaranteed commitment issue because USDA is closed
• Fahe reports that they have 12 Section 502 Guaranteed loans in a holding pattern.

Section 514/516 – Farmlabor Housing

• In California, Peoples’ Self Help Housing (PSHHC) reports that the first construction billing for one new construction USDA Section 514 project will likely occur in January. If the USDA inspector cannot approve the payment request, then PSHH will be forced to advance payments to the subcontractors to remain on schedule.  The subs payments will be due on February 18, 2019, so it is likely PSHHC could obtain approval prior to that date.
• In California, PSHHC reports that the organization has 10 new constructions slated to start in February that are now delayed.
• In California, PSHHC reports that the organization is about to begin working with USDA on a newly completed USDA Section 514 project, to convert the construction loan to permanent financing. If the shutdown continues PSHHC could find itself having to extend the construction loan and paying more fees and interest, simply because USDA cannot finalize 514 loan documents.
• In Oregon, NeighborWorks Umpqua reports that 1 family is going to return their loan docs to USDA but no one will be there to receive it and there will no funds to start construction.
• In Washington, Office of Rural Farmworker Housing (ORFH) reports that the organization is awaiting final approval of a relatively minor architectural change on new farm worker housing.

Section 515

• In Washington, Office of Rural Farmworker Housing (ORFH) reports that the organization cannot close two construction contracts covering the rehabilitation of 515 units because RD staff are not available to sign off on it. Among other impacts is a delay of payment to the contractor.

Self Help Housing

• In California, Coachella Valley Housing Coalition (CVHC) reports that the organization took a draw before the shutdown for the 80+ houses CVHC has in various stages of construction. However, if the shutdown goes on longer, CVHC may not have the funds to buy the next round of materials and will have to shut down construction for those families.
  • Assuming that USDA will continue to accrue interest on their 502 construction loans so their costs will go up.
• In California, CVHC reports that the organization has in escrow for 64 lots in the town of Imperial and had families ready to be submitted to USDA for the first group to begin building on those lots. With the closure, CVHC will not be able to qualify those families and close their loans to begin construction.
• In California, PSHHC reports that the construction starts for 10 families slated to start in February will be delayed.
• In California, PSHHC will have to advance funds to pay contractors to remain on schedule for completion of 29 self-help homes. The advance could be in excess of $300,000 per the December costs. The advance will likely be extended for at least 30 days if the shutdown ends as scheduled.
• In Hawaii, Self-Help Housing Corporation of Hawaii (SHHCH) reports that the organization is unable to get 13 loans closed, and start construction with the Pokai Bay Team 4 Project.
• In Delaware, Milford Housing Development Corporation (MHDC) reports that the organization has 17 homes under construction.
  • 4 of those families are running low on their SH Construction loan funds. MHDC will need to pause their construction.
  • The other families have some money but those funds will dwindle as we then concentrate on those homes with the others paused.
• In Delaware, MHDC reports that the organization has 3 files at USDA preparing to close but can’t and 6 files at USDA that can’t be reviewed for eligibility if no one is there.
• In Utah, Mountainlands Community Housing Trust reports that Section 523 Mutual Self Help Housing Grants are not being processed.
• In Washington, Catholic Charities Housing Services (CCHS) reports that projects involving 5 families have no availability of funding to pay subcontractors for current construction – forcing CCHS to go out of pocket to pay these invoices to help small business owners make payroll.
• In Washington, CCHS reports no availability of funding for quarterly 523 grant reimbursement which further constrains agency cash flows as CCHS is waiting on reimbursement of expenditures.
• In Alaska, Rural Alaska Community Action Program reports 10 impacted families.
• In Kentucky, Frontier Housing reports that the organization has its first self-help build group that is about to start construction, and only 2 of the 5 homebuyers will have USDA financing.  Frontier Housing is weighing whether or not to start construction and retain ownership of all the lots, or wait for USDA to be available to close their loans.  If construction start, and then subsequently In Arkansas, financing, which may include Frontier carrying some of the mortgages ourselves.
• Little Dixie Community Action Agency reports:
  • In Arkansas, 43 families have been impacted with homes are under construction but payments to contractors and vendors are delayed, USDA certifications are on hold, and certified cannot have surveys ordered due to USDA employees not being available to sign checks or order surveys.
  • In New Mexico, Grantee is waiting on final inspection for 3 participants.
  • In Oklahoma, 10 families have been impacted. Grantee has one family ready for a final inspection, one waiting on loan certification, and four waiting on loan processing in order to close the loan. Grantee has four homes under construction but contractors and vendors payments are delayed due to no USDA employees available to sign checks. Another five certified families are looking for land but surveys cannot be ordered due to no USDA employees available to order them and one application for certification at USDA that cannot move forward.

Rental Assistance

Provides a rental housing subsidy to very low income households, elderly households, and persons with disabilities.  Over 270,000 families receive this assistance from USDA. The last rental assistance payments were made in December 2018.  There is not any information available for January payments.  Without those payments, housing for these families will be in jeopardy.

• In New York, PathStone reports that rental assistance for farm labor housing will be a major problem later in January if USDA doesn’t come up with a stop gap measure for getting that paid out.
• In Washington, CCHS reports that if rental assistance is not available, then it will significantly impact the organization’s ability to pay vendors in a timely manner.
• In California, Self-Help Enterprises reports the organization has 315 units of 514 housing that have rental assistance. A conservative estimate is that the 521 RA payments each month are at least $100,000 in aggregate are at risk.

Home Safety and Maintenance Repair Grants

• In Kentucky, Housing Development Alliance reports 1 home repair delay for an elderly lady who is line to get a 504 grant because she has no functioning heat system. Her application is on hold so she goes without heat.
• In Kentucky, Frontier Housing reports that the organization is working with 1 elderly and disabled homeowner whose 504 grant/loan deal is on hold. Her roof leaks, and that has damaged the attic insulation, drywall on the ceiling, and her floors. Frontier is currently looking at what they can do to help at least make her home dry, while she waits for USDA to fund the whole project.
• In New Mexico, Tierra del Sol Housing Corporation reports that 11 families face delays in receiving or approving Section 504 Loans/Grants

Operation Issues

• In Hawaii, Self-Help Housing Corporation of Hawaii (SHHCH) reports that if the shutdown lasts more than a month, SHHCH will have to take out an operating loan to make payroll since no Section 523 grant draws will be forthcoming. An extended delay would also impact their ability to attain construction draws; thereby affecting future deliveries of material.
• In Kentucky, Housing Development Alliance reports the organization was supposed to sell two houses next week. That will not happen now.  That mean two families not only have to wait on their home, but also either convince their landlords to let the stay in the current home a little longer or find temporary housing.
• In California, Peoples’ Self Help Housing (PSHHC) reports that the organization will not receive 523 grant funds which run about $60,000 per month.
• In Kentucky, Frontier Housing reports that the organization closed on its 523 grant in mid-December and now has to decide whether to press forward with the self-help program, or wait until Frontier can draw 523 funds. If they go ahead, Frontier risks incurring staff and admin costs without being able to draw on the 523 grant.
• In California, Self-Help Enterprises is depending on a 523 Grant draw of approximately $200,000 for February.
• In Oklahoma, Deep Fork Community Action Foundation, Inc. reports they are not able to get checks signed to pay contractors or to order draws for the Homeowners before the Gov’t shut down.