New Life for USDA Funds? Congress is Trying

By
Mortgage and Lending with Ruoff Home Mortgage 234777

 

With everyone watching the countdown to the expiration of the USDA Section 502 funds, a glimmer of hope appeared today

Not one but two House Bills were introduced on the floor of the house today in hopes of keeping this program from fund depletion.

Hopefully they can speed this legislation through both houses and save this program from ceasing.

Below are the two press releases:

Apr 14 2010

Capito Introduces Bill to Continue Access to Home Ownership in Rural Communities

Legislation Would Increase USDA Rural Housing Loan Guarantee Program's Capital Reserve

Washington-Rep. Shelley Moore Capito, R-W.Va., the Ranking Republican Member of the House Financial Services Subcommittee on Housing and Community Opportunity, yesterday introduced legislation in the House Financial Services Committee to shore up funds for the U.S. Department of Agriculture 502 Rural Housing loan guarantee program.  Capito's bill, H.R. 5003, The Rural Housing Improvement Act, would ensure that responsible families in rural communities continue to have access to the credit market to finance their homes. 

"I have received hundreds of letters, emails and calls from my constituents, including home buyers and sellers, who are concerned that the 502 loan guarantee program will soon run out of funds," said Capito.  "My legislation would continue to assist thousands of responsible, low to moderate income West Virginians who otherwise wouldn't h ave access to home ownership."

 

4/14/10: Kanjorski Introduces Bill to Save Rural Home Loan Guarantee Program and Preserve Access to Affordable Mortgages for America's Heartland | Print |

  

Instead of Relying on Appropriations, H.R. 5017 Creates Permanent Self-Funded Program at No Cost to Taxpayers

WASHINGTON - Today, Congressman Paul E. Kanjorski (PA-11), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, introduced H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010.  This legislation ensures the continued access of low- and moderate-income rural households to affordable mortgages through the U.S. Department of Agriculture's loan guarantee program.  The economic turmoil of the past two years has led to a significant increase in demand for USDA's Section 502 home loan program and federal funding has failed to keep up.  To fix the problem, Chairman Kanjorski's bill makes the program self funded, enabling families living in rural communities to continue to access these much needed home loan guarantees at no cost to the taxpayers. Without Congressional action, the program will exhaust its federal funding within days. 

"Many families have relied on the affordable rural loan guarantee program to buy their homes, particularly during these tough economic times, when other traditional lenders have turned their backs," said Chairman Kanjorski.  "While the Section 502 program has for many years helped many rural homeowners to achieve the American dream of homeownership -- including in my Congressional District in Northeastern Pennsylvania -- more and more people have needed to use these guarantees during these difficult economic times.  As a result, the program will soon run out of funding, stranding rural families who want to buy homes and unnecessarily creating turmoil for our rural housing markets.  Rather than relying on ad hoc federal funding, my bill would transform the Section 502 program and allow it to pay for itself.  This change will cost taxpayers nothing and ensure that families in rural areas can continue to access affordable mortgages.  As our economy recovers, we cannot allow rural America to get left behind."

"I applaud Chairman Kanjorski for his leadership in taking on this issue and helping to ensure that individuals and families in rural areas continue to have access needed to home loan guarantees," said Congressman Barney Frank (D-MA), Chairman of the House Financial Services Committee.  "This program has seen unprecedented demand in the last several years, and the Kanjorski legislation provides a positive solution to help to address the funding shortfall.  I hope to bring up this bill for consideration in the Financial Services Committee as soon as possible."

"As a result of this program, I was able to purchase my first home which I have wanted all my life," said Virgie Spruiell from Bushkill, Pennsylvania.  "I enjoy it every day and it is a blessing.  I greatly appreciate Chairman Kanjorski's efforts to enable the program to continue so that other people can access these guaranteed home loans just as I did.  It has had helped me tremendously."

The USDA's Rural Housing Service manages the Section 502 Single Family Housing Guaranteed Loan Program to provide a necessary source of mortgage credit for consumers in specified rural communities.  Low- and moderate-income individuals and families in rural communities often have fewer mortgage credit options than those households in urban areas.  The Section 502 program aims to fill that void and lower the costs of homeownership by giving rural areas access to a home loan guarantee program.  To qualify for the program, borrowers must have good credit and have reliable incomes to sustain homeownership.

Demand for the Section 502 program has dramatically increased in the past few years as a result of the economic downturn.  As a result, the program will soon run out of federal funding if legislation is not enacted.  Chairman Kanjorski's legislation would permanently correct this problem by enabling the program to pay for itself.  In order to pay for the Section 502 program, the lender would pay as much as a 3.5 percent upfront fee on the loan at origination.  The Kanjorski bill also gives the Secretary of the Department of Agriculture the authority to assess an annual fee of 0.5 percent on the outstanding balance of the loan.  As a result of these small fees to support federal home loan guarantees, rural America would continue to have access to affordable mortgages.  Congressmen Ruben Hinojosa (D-TX), Paul W. Hodes (D-NH), Charles A. Wilson (D-OH), and Joe Courtney (D-CT) joined Chairman Kanjorski in introducing H.R. 5017.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gerry Suarez Jr. 04/16/2010 01:24 AM
  2. Kim Lee Bussan 05/01/2010 02:48 AM
  3. Kim Lee Bussan 05/01/2010 02:49 AM
  4. Kim Lee Bussan 05/01/2010 02:49 AM
  5. Kim Lee Bussan 05/01/2010 02:49 AM
  6. Kim Lee Bussan 05/01/2010 02:49 AM
  7. Kim Lee Bussan 05/01/2010 02:49 AM
  8. Kim Bussan 05/02/2010 10:40 AM
  9. Kim Bussan 05/02/2010 10:40 AM
  10. Kim Bussan 05/02/2010 10:41 AM
  11. Kim Bussan 05/02/2010 10:42 AM
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Rainer
30,618
Mike Wilbur
Guild Mortgage Company and Oregon Homes For Heroes - Salem, OR

This is great news Greg.  I received information from Chase today that said there would be no interruption in fundings. 

Apr 15, 2010 02:54 PM #1
Rainmaker
99,185
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Great news Greg and thanks for posting it on here, and thanks for allowing the re-blog. It sure does provide some hope to know the Hill is taking notice of the USDA's plight.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Apr 16, 2010 01:21 AM #2
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Good news indeed guys. Hopefully they will not debate these to death and one of them will get a quick thumbs up vote..

Apr 16, 2010 04:18 AM #3
Anonymous
Lisa Gergets

Will that 3.5% fee get passed down to the homebuyer?

Apr 23, 2010 08:01 AM #4
Ambassador
680,728
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Greg: Thanks for the update. I believe a bill will pass this next week. That's good news!

Apr 24, 2010 03:10 AM #5
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

The beleive you are correct Paul. Think they will also!

Apr 26, 2010 01:33 PM #6
Rainer
75,326
John Cassels
Sterling Savings Bank - Tacoma, WA
NMLS #197076

Greg have you heard any updates on this? 

May 04, 2010 11:10 AM #7
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

John, I have heard that a new bill has went through the House and passed. It is in the Senate as we speak. Funds are below  a Billion and projectected to run out within the week>

May 05, 2010 12:13 AM #8
Rainer
75,326
John Cassels
Sterling Savings Bank - Tacoma, WA
NMLS #197076

We got an update yesterday from our local office

Our FY10 funds have been exhausted and we will not be issuing any new Conditional Commitments until we have further instructions from our National Office. We will continue to review files which have been received to date however we cannot guarantee funding at this time.

 

Lets hope the Senate comes thru

May 18, 2010 06:27 AM #9
Rainer
75,326
John Cassels
Sterling Savings Bank - Tacoma, WA
NMLS #197076

We got late notice yesterday that we would be able to submit new loans

May 29, 2010 08:59 AM #10
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Thanks John, We also got a notice that The USDA will start issuing conditional commitments.Thanks for the update

May 29, 2010 12:09 PM #11
Anonymous
Marc

When do you think the bill will be passed and the fund released. 

Jun 03, 2010 07:50 AM #12
Anonymous
Laura Bishop

Hi Greg,

I stumbled onto your website and it has helped me to feel a little better. My husband and I are waiting to close on our loan but we are waiting on the funds to be guaranteed by the USDA. The sellers have moved out of our house due to the fact that we were set to close on June 4th. That day came and went. They are now paying two mortgages, ours and their new one until we can close on this loan. The bank has two mortgages that they are holding on this house that we are buying. We have asked for an extension on closing, hoping the USDA will come through for us. Only one extension was approved so far.

My husband and I took vacation from work to pack and move, but are forced to return to work to save our leave time until we close. Meanwhile, we sit and wait. The longer we have to stay in our rental the more money we have to fork out. We are so frustrated and nervous about this. Our $ 8,000 tax credit hangs in the balance while we hope and pray that this bill passes.

Do you have any updated news regarding the USDA Guaranteed funding?

Thanks so much.

Jun 11, 2010 02:25 AM #13
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Laura, I'm so sorry to hear of your situation. I pray this works out for you soon. I am sure that there are many in your same situation.

First,USDA has started issuing conditional commitments in anticipation of the Senate approving new funding.In short,this means they approve a loan subject to funds. There are lenders out there that will fund(close) a loan with just this commitment. We are closing USDA loans now. Unfortunately, a lot of lenders are not so those people are at a halt. The new bill was passed by the House and is awaiting approval in the Senate. They just came back from a recess this week so I am hopeful in the next week or so, this will come to the floor for a vote.

I wish you luck with this sad & helpless situation.

 

Jun 11, 2010 02:39 AM #14
Anonymous
Aimee

Any new word on anything yet? My husband and I are in a similar situation to Laura and are just waiting on approved funding for everything to go through.

Jun 21, 2010 10:46 AM #15
Anonymous
Tammy

I too am in the same situation with Laura and Aimee, my husband and I are in limbo waiting for an answer.  We have been approved, USDA has approved our loan and we are waiting.  Our big concern is that we need the $8,000 tax credit, so we need to close no later than 6/30.  We are scheduled to close on 6/29 so I hope and pray we get a definite answer by Fri. of this week.

I wish you luck Laura and Aimee.

Tammy

Jun 23, 2010 05:50 AM #16
Rainmaker
171,122
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Tammy, While there has been no  scheduled vote for bill HR 5017(USDA funds) and it is in committee , there is also a bill in the works to extend to the closing date from 06/30 to 09/30 for those loans to qualify for the tax credit. I think this bill will also get passed in the next week.

 Good luck to you.

Jun 23, 2010 06:30 AM #17
Anonymous
kara gomez

We are in the same situation just waiting are house was finished being built 3 weeks ago and now we wait so frustrating. any new answers ?

Jul 06, 2010 06:30 AM #18
Rainer
327,200
Mark Robinson
Geneva Financial, LLC - Beachwood, NJ
Honesty, Integrity, Service

This is good new. We need all the lending programs we have left to remain intact.

Aug 19, 2010 11:28 PM #19
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Greg Miller

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