RURAL
HOUSING SERVICE (RHS), DEPARTMENT OF AGRICULTURE
AUTHORIZATION:
Housing
Act of 1949, Title V, Section 502, as amended, Public Law 89-117,
42 U.S.C. 1471 et seq.; Public Law 92-310, 42 U.S.C. 1480, 42 U.S.C.
1472; Public Law 98-51; Public Law 100-233; Amendment of Consolidated
Farm and Rural Development Act of 1987, Section 601.
To
assist very low, low-income, and moderate-income households to obtain
modest, decent, safe, and sanitary housing for use as a permanent
residence in rural areas.
TYPES
OF ASSISTANCE:
Direct Loans. Place Cursor Here for Definition
Guaranteed/Insured Loans. Place Cursor Here for Definition
USES
AND USE RESTRICTIONS:
Loans
and loan guaranteed may be used to buy, build, or improve the applicant's
permanent residence. Funds may be used for certain improvements
to the dwelling. Manufactured homes may be financed when they are
newly on a permanent site, purchased from an approved dealer or
contractor, and meet certain other requirements. Under special circumstances,
homes may be re-financed. Dwellings financed must be modest, decent,
safe, and provide sanitary housing. The cost of a home financed
with a direct loan is limited to the most current amount authorized
by the Agency. The property must be located in an eligible rural
area. Assistance is available in the States, the Commonwealth of
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the
Commonwealth of Northern Mariana's, and the Trust Territories of
the Pacific Islands. Direct loans are made at the interest rate(s)
specified in RD Instruction 440.1, Exhibit B (available in any Rural
Development local office) for the type of assistance involved, and
are repaid over an amortization period of up to 33 years for regular
loans and 38 years for loans to applicants whose adjusted annual
income do not exceed 60 percent of the area median income, if necessary
to show repayment ability. Payment assistance is granted annually
on direct loans which could reduce the monthly installment on the
note to an amount equal to what it would be if the note were amortized
to as low as one percent, depending on the loan amount, the size
and income of the family. Payment assistance is subject to recapture
by the government when the customer no longer resides in the dwelling.
There is no funding provided for deferred mortgage authority or
loans for deferred mortgage assumptions. Loans may be made to refinance
either existing RHS Guaranteed Housing loans or RHS Section 502
Direct Housing loans. Guaranteed loans are amortized over 30 years.
The interest rate is negotiated with the lender.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Applicants must have very low,
low or moderate incomes. Very low income is defined as below 50
percent of the area median income (AMI); low income is between 50
and 80 percent of AMI. Moderate income is below 115 percent of AMI.
Families must be without adequate housing, but be able to afford
the mortgage payments, including taxes and insurance. Qualifying
ratios range from 29 percent for PITI to 41 percent for total debt.
In addition, applicants must be unable to obtain credit elsewhere,
yet have reasonable credit histories.
Beneficiary
Eligibility: Applicants and borrowers must
meet applicant eligibility requirements.
Credentials/Documentation:
Applicants may need to submit evidence of inability to obtain
credit elsewhere, verification of income and debts, plans, specifications,
and cost estimates. This program is excluded from coverage under
OMB Circular No. A-87.
Pre-application
Coordination: None. This program is excluded
from coverage under OMB Circular No. A-102 and E.O. 12372.
Application
Procedure: For direct loans, applicants must
file loan applications at the Rural Development field office serving
the county where the dwelling is or will be located. For guaranteed
loans, applicants must contact a local lender. This program is
excluded from coverage under OMB Circular No. A-110.
Award
Procedure: Local field offices generally have
the authority to approve most Section 502 loan requests. Requests
for guarantee are handled differently in each State. Contact your
Rural Development State Office, listed in the telephone directory.
If no backlog exists, decisions on direct applications should
be made within 30 to 60 days of receipt of the application. Request
for guarantees are generally acted upon within 1 to 2 days.
Deadlines:
None.
Range
of Approval/Disapproval Time: For direct loans
from 30 to 60 days subject to availability of funds, from the
time the application is filed if no backlog of applications exists.
For guarantees generally within 1 to 2 days.
Appeals:
Agency regulations providing customers with the rights for an
informal review, mediation or alternative dispute resolution (ADR),
or appeal to the National Appeals Division (NAD) are contained
in 7 CFR Part 3550. NAD regulations are found at 7 CFR Part 11.
Requests for an informal review, mediation and ADR must be received
within 30 days from the date of the adverse decision. Requests
for an appeal to NAD must be received within 30 days of receipt
of the adverse decision.
Renewals:
Applicants may reapply at any time.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: This program has
no matching requirements. This program has no statutory formula.
A basic formula is used to allocate program funds to various States.
The criteria used in the basic formula include the States percentage
of the National: Number of rural occupied substandard units, rural
population, rural population in places of less than 2500 population,
number of rural households between 50 and 80 percent of the area
median income, and number of rural households below 50 percent of
the area median income. The data source for each of these criteria
is based on the latest census data available.
Length
and Time Phasing of Assistance: This assistance
is available throughout the year by means of quarterly allocations
of funds to District offices. Funds may be disbursed at loan closing
or deposited in a supervised bank account for purchase of a building
site, and purchase or repair of a dwelling, or in multiple advances
for construction. For guaranteed loans, funds are disbursed after
all work is complete. Applications for direct loans far exceed
available funding. There is generally a waiting list for direct
loan funding.
POST
ASSISTANCE REQUIREMENTS:
Reports:
Borrowers receiving a payment subsidy must submit verification of
household income annually for recalculation of benefits.
Audits:
None.
Records:
Borrowers are not required to, but should retain copies of loan-related
documents.
Obligations:
(Direct Loans) FY 01 $1,106,424,000; FY 02 est $1,076,998,750;
and FY 03 est $1,076,998,750. (Guaranteed loans) FY 01 $2,150,599,000;
FY 02 est $3,136,429,000; and FY 03 est $3,136,429,000.
Range
and Average of Financial Assistance:
From $1,000 to $105,000; an average of $65,000 for 502
direct loans, and $74,000 for guaranteed loans. Loans in
high cost areas may be higher.
In fiscal year 2001, 17,681 new direct loans and 29,123 guaranteed
loans were made.
REGULATIONS,
GUIDELINES, AND LITERATURE:
7 CFR Part 3550 "Direct Single Family Housing Loans and Grants."
For guaranteed loans, 1980-D "Subpart D -Rural Housing Loans."
INFORMATION
CONTACTS:
Regional
or Local Office: Consult your local telephone
directory under United States Department of Agriculture for Rural
Development field office number. If no listing, contact appropriate
Rural Development State Office listed in Appendix IV of the Catalog
or on the internet at http://www.rurdev.usda.gov/recd_map.html.
Headquarters
Office: Director, Single Family Housing Direct
Loan Division or Director Single Family Housing Guaranteed Loan
Division, Rural Housing Service (RHS), Department of Agriculture,
Washington, DC 20250. Telephone: (202) 720-1474 (direct loans);
(202) 720-1452 (guaranteed loans).
