Housing Assistance Council

SENATE COMMITTEE SUPPORTS USDA RURAL HOUSING PROGRAMS FOR 2011

July 20, 2010 - The text of the Senate Appropriations Committee's USDA funding bill for FY 2011 is now available. S. 3606 boosts Section 502 single-family loans and holds most other rural housing programs level. The Committee rejected the Obama Administration’s proposed elimination of USDA’s rural rental preservation demonstration program, known as MPR, and also kept Section 515 rental housing at its FY 2010 level of $69 million. The most significant increase was a doubling of the loan level for Section 502 guaranteed loans to $24 billion. Section 502 direct loans received a modest increase to $1.2 billion, the Administration’s request.

The Committee bill would impose fees on Section 502 guaranteed loans (a 3.5 percent origination fee and 0.5 percent servicing fee), making the program self-financing. The Committee’s summary of the bill notes that “in the face of the recession private mortgage lenders have retrenched leaving Rural Development’s loan programs as a principle [sic] source of home financing in rural areas. . . . Regarding guaranteed loans, a fee increase is authorized which will allow the Agency to provide $24 billion in new loans at no cost to the government.”

The table below has more details.

a. Includes Recovery Act funds.

Posted: July 22, 2010

SENATE COMMITTEE VOTES TO INCREASE SECTION 502 FUNDS

July 16, 2010 - On July 15 the Senate Appropriations Committee reviewed and approved a USDA appropriations bill for FY 2011 that would increase funds for Section 502 direct and guaranteed loans. The Committee's summary of the bill does not indicate whether it restores funding for rental preservation efforts, which were zeroed out in the Administration's budget proposal. (For details on the budget, scroll down.)

The entire Rural Development section of the Committee's summary states:

The bill includes $2.768 billion in discretionary budget authority for rural development programs, which is a decrease of $168 million from the fiscal year 2010 enacted level and an increase of $85 million above the President's request. Generally, the bill provides level funding for water and waste water, community facilities, business, renewable energy, and electric and telecommunications loans and grants.

Increases are provided for both direct and guaranteed single family housing loans. In the face of the recession private mortgage lenders have retrenched leaving Rural Development's loan programs as a principle source of home financing in rural areas. An additional $34 million is provided for direct loans, which will support a total program level of $1.2 billion in new loans. Regarding guaranteed loans, a fee increase is authorized which will allow the Agency to provide $24 billion in new loans at no cost to the government.

The House Appropriations Subcommittee on Agriculture passed a bill on June 30, which funds rural housing loans and grants at $1.322 billion, $101.8 million below the 2010 level but $71.9 million above the President’s 2011 budget request. Rural housing programs will most likely stay at 2010 levels.

The full House and Senate bills have not yet been made public. HAC will post additional information here as it becomes available.

Posted: July 16, 2010

Budget Proposes Level Funding for Most USDA Rural Housing Programs,
None for Rental Preservation Demo

February 1, 2010 - The Obama Administration’s budget for fiscal year 2011, released February 1, zeroes out initiatives that were created in past appropriations legislation but never authorized, including USDA’s rural rental preservation demonstration program, known as MPR. Section 515 rental housing would be increased from $69 million to $95 million; Section 515 funds can be used for some preservation activities, but not all that were available through MPR.

The budget does fund vouchers for tenants whose rents rise because of rental prepayment, because Section 542 authorizes a USDA voucher program. Without MPR, Section 521 Rental Assistance for preserved properties would not be needed, so there is no set-aside for preservation RA. The budget does propose to provide RA for newly constructed Section 515 rental and Section 514/516 farm labor housing.

Most other USDA rural housing programs would remain at FY 2010 levels, although Section 523 self-help technical assistance would be reduced somewhat to $37 million.

The budget documents explain the proposed termination of the MPR program this way:

The 2011 Budget does not fund the . . . multifamily housing demonstration program because there is no authority for the demonstration program. Moreover, the program primarily serves developers of multifamily housing properties, rather than the low- and very-low income tenant base that it is intended to help.

. . . For the multifamily housing programs, the 2011 Budget for USDA's Rural Housing Service focuses assistance on the low- and very-low income tenant population. While repair and rehabilitation of the portfolio is important, funding through an open-ended demonstration program has been carried out since 2006 and the most cost-effective and justified repairs hae been achieved. At this point, additional funding in the demonstration program could be seen as over-subsidizing the multifamily housing property owners. Meanwhile, the traditional way to fund revitalization has been through the multifamily housing direct loan program with rehabilitation loans. While the 2011 Budget proposes to terminate funding for the multifamily housing revitalization demonstration program, it proposes to increase the multifamily housing direct loan program from $70 million to $95 million, ensure that more affordable rental housing opportunities are created for the very-low income tenant base in rural America.

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Posted: February 1, 2010
Updated: July 22, 2010

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