Congressman Rubén Hinojosa

 COLLABORATES WITH  USDA TO SAVE THE

 SECTION 502 SINGLE FAMILY HOUSING GUARANTEED LOAN PROGRAM

Washington, DC – U.S. Rep. Rubén Hinojosa (TX-15) was informed by the United States Department of Agriculture (USDA) that Secretary Tom Vilsack has authorized the issuance of Conditional Commitments for USDA’s Section 502 Single Family Housing Guaranteed Loan Program beginning immediately and continuing until $2.5 billion in loan limit is exhausted.  

Hinojosa, Chairman of the Congressional Rural Housing Caucus, has been requesting additional funding from Congress for the program or for additional commitment authority from USDA upon learning that existing Section 502 commitment authority would be exhausted by the end of April or May of this year. 

“Affordable rural housing is needed now more than ever as job losses and home foreclosures reduce the already inadequate housing options for rural Americans”, said Hinojosa.  “The serious economic downturn and the demand for this program nearly exhausted its funding despite a nearly three-fold increase in its loan authority since Fiscal Year 2006”.  

USDA’s Section 502 Single Family Housing Guaranteed Loans are funded by private lenders, and insured by the Rural Housing Service under the supervision of Administrator

Tammye Treviño.

“As private mortgage markets have dried up, many rural families would have been left out in the cold without this action by the USDA”, said Hinojosa.

The decision to increase the commitment authority even conditionally will provide the guarantees needed to assist rural families, local housing markets, create jobs and generate new tax revenues.  

“Access to affordable lending capital is key for organizations such as ours that depends on programs such as the 502 guarantee program”, said Bobby Calvillo, Executive Director of the Affordable Homes of South Texas, Inc., a non-profit housing initiative.

 Calvillo added “By making these funds available via conditional commitments, this certainly re-opens the door to more low and moderate income families that may not have qualified for other conventional mortgage loan products”.

USDA’s Section 502 Single Family Housing Guaranteed Loan Program is one of several sources of financing for rural homebuyers.  It guarantees loans to applicants who have incomes no higher than 115 percent of the median income for the area.   Section 502 Guaranteed loans can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

“I commend Secretary Vilsack and Administrator Treviño for their wise decision to extend commitment authority for the Section 502 program as it will ensure the program continues to help build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities,” said Hinojosa.  “I look forward to a continued dialogue with USDA on several rural housing issues”.

“By taking this step, Secretary Vilsack will provide vitally important homeownership resources to rural America,” said Moises Loza, Executive Director of the Housing Assistance Council.  Loza added, “HAC congratulates Congressman Hinojosa for his leadership on this issue and strongly urges USDA to continue to support rural housing programs that provide opportunities for low-income families to attain decent, affordable housing”.

Legislative Update

USDA Funding

The USDA extension has been attached to an Appropriations bill (we have been told it is a Defense Authorization bill).  While the extension of the program still appears likely prior to Memorial Day, it is a volatile situation in light of the uncertainty surrounding the timing of  financial reform legislation currently being debated in the Senate.  

We have also been told that USDA is no longer leaning toward continuing to issue commitments at this time.   

• No action yet on USDA legislation.  Interim guidance is now unlikely.
  • RHS publishes proposed rule permitting lender indemnifications.
  •  http://edocket.access.gpo.gov/2010/pdf/2010-11383.pdf

This is only temporaity and it is expected Congress will refund the program by month end.  Stay tuned for continued updates.