Great News On USDA Rural Housing

This information is straight from the House Committee on Financial Services, not rumor or third party information, this came straight from the committee this afternoon.

Today, the House Financial Services Committee unamimously passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010. This action clears the bill for consideration by the U.S. House of Representatives, which is expected to take up the bill as early as next week. The bill ensures the continuation of the USDA loan guarantee program.

Since the financial crisis has spiked consumer interest in this program, the number of loans made annually have tripled since 2006. With continued demand, the program was slated to have exhausted its funds within the next few days. The new bill would solve this problem by making the program self funded.

The bill, introduded by Congressman Paul Kanjorski (D-PA), will correct the original program shortfall by enabling the program to pay for itself. To pay for the program, lenders will pay up to a 4% fee on new home mortgages. As a result of that change, financing of the program will move from a combination of government funding and industry fees to a self-sustaining initiative.

The USDA program is designed to be a vital source of mortgage credit for people living the rural communities. The program aims to lower the costs of homeownership by giving rural area access to a home loan guarantee program for those with low to moderate income with good credit. These guarantees decrease the exposure of home lenders to defaults so that they will underwrite more mortgages. In 2009, loans made under the program averaged $112,000.

Once again, that was directly from the House Committee that is chaired by Congressman Barney Frank and the same committee that local Congressman Joe Donnelly is part of. This is just the first step, but thoughts are that this will pass through Congress.