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II. RHS RURAL HOUSING PROGRAMS A. Using RHS Rural Housing Programs RHS rural housing programs are relatively easy to use. While land and housing development are complicated processes with complex governmental involvement, use of the RHS programs as financing vehicles should not add roadblocks to a project’s success. They are very close to "do it yourself" programs for which the informed person or organization can apply without extensive use of expensive consultants. There are five "basics" to understanding and properly using RHS housing programs:
Given a working knowledge in these basics, anyone can become reasonably proficient in using the RHS programs. B. RHS Service Area RHS rural housing programs are available to eligible applicants (see Sections III.C and III.D, regarding eligibility) in places considered to be "rural areas" under the agency’s unique statutory definition of "rural." The definition is explained below, but the easiest way to know whether a particular place is "rural" is to consult the map on display in each Rural Development County Office showing eligible rural areas within its jurisdiction. Political boundaries (boundaries of counties, incorporated towns, and the like) are not necessarily relevant. "Rural" areas include open country that is not part of or associated with an urban area. Also included are any town, village, city or place, including places which are not part of or associated with an urban area but immediately adjacent to densely settled areas, with a population not in excess of 10,000 and rural in character. Areas with populations in excess of 10,000 but not in excess of 20,000 that are not contained within a Metropolitan Statistical Area (MSA), and have a serious lack of mortgage credit as determined by the Departments of Agriculture and Housing and Urban Development, are eligible. Areas presently classified as rural or areas classified as rural prior to October 1, 1990, and areas determined not rural in character as a result of the 1990 decennial Census will continue to be eligible if they have a population between 10,000 and 25,000, are rural in character, and have a serious lack of mortgage credit for low- and moderate-income families. A determination that open country or any town, village, city, or place is not part of or associated with an urban area must include a finding that any densely populated section of the area in question is separated from the densely populated section of any adjacent urban area by open spaces. These open spaces must be undeveloped, agricultural, or sparsely settled. These spaces may not be due to physical barriers, commercial or industrial developments, public parks, areas reserved for recreation, or similar open spaces. This determination should also consider such other factors as the existence of known plans for development within the near future (three to five years) of a substantial portion of the intervening land between the area in question and an urban area. The latest official Bureau of the Census data or more recent official population counts (U.S. Census of Population or other governmental official counts) is used in determining population. Two or more towns, villages, cities, and places may have contiguous boundaries and still be considered separately provided they are not otherwise associated with each other and their densely populated areas are not contiguous. The Rural Development State Director is responsible for determining boundaries of rural areas and will issue an appropriate State Supplement to identify such areas by list and maps. Areas in excess of 10,000 population will be identified as "rural areas" in a State Supplement only after written authorization by the National Office. When a change of designation from rural to nonrural is anticipated, the general public in the affected area is notified. If any area designation is changed from rural to nonrural, loans may be made there only in the following instances: applications received by Rural Development prior to the designation change may be processed; new conditional commitments may be issued and existing conditional commitments will be honored only in conjunction with the approval of loan applications received prior to the date the area was designated nonrural; credit sales and transfers with assumptions may be processed; and subsequent loans may be made on property in an area where the designation was changed from rural to nonrural after the initial loan was made where the subsequent loan will be used to make necessary repairs, or to pay equity in connection with an assumption and transfer of a Section 502 direct loan. C. RHS/Rural Development Organization RHS is a federal agency and is part of the Rural Development mission area within the U.S. Department of Agriculture. Most of its loan programs are processed directly by Rural Development or RHS employees. Its organization is as follows:
Recently, Rural Development State Directors have been given considerable authority and discretion on organizational make-up and location of offices. Consequently, the type and name for offices described in numbers 3 and 4 above may vary from state to state. The restructuring process was not complete as this text was being prepared. The staffing situation has also been affected by Rural Development/RHS’s implementation during Fiscal Year 1997 of a new computerized centralized servicing system, known as DLOS, which includes escrow for taxes and insurance. Establishing DLOS also involves transfer of an additional 600 staff from field positions to DLOS positions. The decentralization of authority often provides local (including Area) offices with the flexibility to consider unique local factors. The best way to insure success with RHS programs is to be well informed. D. Locating Rural Development County Offices After full implementation of DLOS, Rural Development will maintain more than 800 County (local) Offices serving all rural areas of the United States, Puerto Rico, the Virgin Islands, Guam, American Samoa and the Western Pacific Territories. Offices are usually located in county seats, with many offices serving several counties. County Offices serving large areas may maintain sub-offices in other locations, where Rural Development staff interview applicants during scheduled office hours. To locate the Rural Development County Office serving a particular area:
The regulations for the Section 502 rural housing program are set out in Title 7, Part 3550 of the Code of Federal Regulations (7 CFR Part 3550). Part 3550 is supplemented by two handbooks that provide procedural guidance to Rural Development employees: HB-1-3550, the "Direct Single Family Housing Programs Field Office Handbook" and HB-2-3550, the "Direct Single Family Housing Loans and Grants Centralized Servicing Center Handbook." The handbooks are not published in the Federal Register or the Code of Federal Regulations, but are available from the agency. HAC believes program users will need the "Field Office Handbook." Its table of contents is 25 pages long, and is very useful, providing ready access to almost any 502 loan-making topic or requirement. Also, RHS has developed a computer program enabling the user to locate instructions by indexed topic. The following are other agency instructions with which the reader should become familiar:
These regulations can be found in Title 7 of the Code of Federal Regulations (CFR). For example, Instruction 1924-A is located in 7 CFR Part 1924 Subpart A. While perhaps convenient, the CFRs are updated annually only, and may not reflect key changes or revisions made during the interim. Some of these basic instructions (regulations) are labeled RHS Instruction XX, but others are still titled as FmHA or RHCDS Instructions, so this guide will refer to instructions simply as "agency instructions" or as "Instruction XX." Rural Development State Offices may issue relevant state instructions as well. State instructions are not discussed in this guide. In this guide, instructions are often referenced by section number such as 3550.53. Unless otherwise noted, those numbers refer to sections of 7 CFR Part 3550. Public entities and nonprofit organizations can obtain one copy of a limited number of instructions free. Others can obtain a copy or copies for a copying charge. Instructions may be ordered from Rural Development County, State or Area Offices by requesting the instruction by name and number. If the needed instruction is unavailable from those offices, write to:
RHS regulations and the Section 502 handbooks can also be downloaded from http://rdinit.usda.gov/regs/.
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