Rep. Courtney Takes Action To Preserve Critical Rural Housing Program

Press Release

Congressman Joe Courtney announced today that he joined fellow lawmakers in taking action to save the United States Department of Agriculture (USDA) Single Family Housing Loan Guarantee Program. On Wednesday, he joined several of his colleagues in introducing the Rural Housing Preservation and Stabilization Act (H.R. 5017) that will improve the loan program by making it self-sustaining, rather than reliant on annual federal appropriations. While the program has assisted homebuyers across eastern Connecticut in recent years, it is expected to run out of funds at the end of the month without Congressional action.

"After hearing the concerns of local homebuyers and housing experts in eastern Connecticut, it is clear that action must be taken to ensure the continued viability of this program and the help it provides," stated Courtney. "That is why I am pleased to help introduce legislation which will preserve this affordable option for hundreds of Connecticut homebuyers that could otherwise come to a grinding halt. In addition, the sensible approach of this bill will not cost the taxpayers of this country one additional dollar."

Demand for the USDA Single Family Housing Loan Guarantee Program has dramatically increased in the past few years as a result of the economic downturn. Connecticut saw the number of approved loan guarantees triple over the previous three years -- from 40 single-family rural loan guarantees in FY 2007, to 149 in FY 2008, 378 in FY 2009, and 278 in the first half of FY 2010 alone. The national trend has taken a similar path -- increasing from 35,332 in FY 2007 to 133,045 in FY 2009. However, as a result of the increased demand for assistance through the program, it will soon run out of federal funding if legislation is not enacted.

"I am deeply concerned with the unfortunate timing of this problem," Courtney added. "April is not only the beginning of the home buying season, but those wishing to utilize the homebuyer tax credit must also commit before April 30th and close by June 30th. The homebuyer tax credit has contributed immensely to increasing home sales, stabilizing house prices and the general recovery of our economy. The untimely end of the loan guarantee program could terminate the process for thousands of homebuyers who are pushing to close before the tax credit expires."

The Rural Housing Preservation and Stabilization Act, H.R. 5017 was introduced on Wednesday by Representative Paul E. Kanjorski (D-PA) along with Rep. Courtney and Representatives Ruben Hinojosa (D-TX), Paul W. Hodes (D-NH) and Charles A. Wilson (D-OH). The bill will ensure the program's continued viability. If passed, the bill would require the lender to pay up to a 3.5 percent upfront fee on the loan at origination and permit the Secretary of the USDA to assess an annual fee of 0.5 percent on the outstanding balance of the loan. As a result of these small fee increases, thousands of home buyers in rural areas like eastern Connecticut and across the nation will continue to have access to a more affordable mortgage.

The USDA's Rural Housing Service manages the Single Family Housing Loan Guarantee Program to provide a necessary source of mortgage credit for homebuyers in specified rural communities, including 59 of the 65 towns in the 2nd Congressional District. The USDA Rural Housing Service helps to lower the cost of homeownership in rural areas where less lending options are available. Click here to see map of eligible communities in Connecticut.

Low- and moderate-income individuals and families can qualify for the program if they meet credit and other eligibility standards. More details can be found at the USDA's Rural Housing Service website.

Source