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Support Rural Economies

By any measure, most of rural America has still not recovered from the Great Recession. According to the Economic Research Service, since 2007, rural median income has averaged 20 percent below the urban median. Over 15 percent of all rural counties, more than 300 across the country, are persistently poor with at least 20 percent of the population living in poverty over the last 30 years.

By any measure, most of rural America has still not recovered from the Great Recession. According to the Economic Research Service, since 2007, rural median income has averaged 20 percent below the urban median. Over 15 percent of all rural counties, more than 300 across the country, are persistently poor with at least 20 percent of the population living in poverty over the last 30 years.

Now, with a new crisis looming, the National Rural Housing Coalition urges Congress to take action aimed at protecting current rural housing borrowers and helping to jump-start rural economies by investing in housing programs and water and wastewater financing.

Short Run:

USDA has some 200,000 low-income homeowners.  Over 10,000 have requested a moratorium on their loans.

Congress should authorize USDA to provide refinancing to borrowers up the statutory limit for section 502 loans.  Under current law, a section 502 direct borrower may only receive a loan for a period of 33 or 38 years, depending on income.  While USDA has tools at its disposal – including reducing the interest rate on a loan – in some cases, low-income families may need more time than is available on their current mortgage to afford monthly payments.

This will allow USDA to better tailor loans to the need of current borrowers in order to weather these new challenging economic times:

The proposed amendment to the Housing Act of 1949:

 SEC XXX.  Section 505 of the Housing Act of 1949 is amended by replacing the heading with “Loss Mitigation and Foreclosure Procedures,” renumbering subsection (b) as (c), and inserting a new subsection (b) as follows:

“(b) Loan Modification

Notwithstanding any other provision of this title, for any loan made under Sections 502 and 504, the Secretary may modify the interest rate and extend the term of such loan for up to 30 years from the date of such modification.”

Appropriations Amendment – In the end, granting moratorium and revise loan modifications is unlikely to be adequate to save most low-income homeowners.  Therefore, Congress should provide an appropriation that covers the cost of interest and principal repayments.

      RURAL HOUSING INSURANCE FUND PROGRAM ACCOUNT

For an additional amount for ‘‘Rural Housing Insurance Fund Program Account’’, $90,000,000, to remain available until September 30, 2021, for the cost of direct loans, including the cost of modifying loans as defined in section 502 of the Congressional Budget Act of 1974, as follows:  section 502 loans [42 U.S.C. 1472] to assist families impacted by coronavirus: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.

USDA has some 14,000 rental developments with some 400,000 units.  Of this number, approximately 270,000 receive rental assistance.  Another 40,000 households live in USDA financed housing without a rental subsidy.  Congress should provide an appropriation of rental assistance that is adequate to assist residents of USDA financed rental housing impacted by COVID-19, and those funds should be available through September 30, 2021.  Congress should make a similar adjustment to USDA’s voucher program to ensure that voucher holders impacted by the COVID-19 can receive relief.

Invest in Rural America

Including:

  • Providing an additional $1 billion in direct loans for homeownership.  This amount should be available for 2020 and F.Y. 2021.  Every year, USDA receives over 15,000 home mortgage loan applications and funds only about 7000. 
  • Appropriating $50 million for Mutual Self Help Housing, which encourages self-reliance and hard work, helps families build wealth, stimulates local economies, and is in high demand with over 30,000 families currently on waitlists for the program;
  • Addressing the need to preserve the USDA multi-family portfolio by providing $100 million for multi-family preservation demonstration and $33 million in additional budget authority for $200 million in section 515 loans.  USDA has a backlog of some $200 million in rental housing preservation applications;
  • Increasing Available Financing for Rural Water and Waste Water Facilities: By providing $3 billion in loans and $1.2 billion in grants for financing for water and wastewater facilities in small communities  Congress will address the backlog of applications on hand at USDA and finance close to 1,000 facilities that will improve water quality and waste disposal in small towns and farming communities across rural America; and

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