[StBernard] KANJORSKI BILL PRESERVING AFFORDABLE MORTGAGES IN AMERICA'S HEARTLAND PASSES IN COMMITTEE

[Westley Annis]

April 22, 2010                                                  

 


 

KANJORSKI BILL PRESERVING AFFORDABLE MORTGAGES IN AMERICA'S HEARTLAND PASSES
IN COMMITTEE

Without Congressional Action, USDA 502 Rural Housing Program Will Run Out of
Funding Within Days

 

Washington, DC - Today, the House Financial Services Committee unanimously
passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of
2010, introduced by Congressman Paul E. Kanjorski (D-PA), Chairman of the
House Financial Services Subcommittee on Capital Markets, Insurance, and
Government Sponsored Enterprises.  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 continued
access of rural homebuyers to affordable mortgages through the U.S.
Department of Agriculture's (USDA) loan guarantee program.  The financial
crisis has spiked consumer interest in the program, tripling the number of
loans annually made since 2006.  Because demand continues to grow, the
program will exhaust its federal funding within days.   H.R. 5017 would, at
no cost to the taxpayers, solve this problem by making the program self
funded, enabling families living in rural communities to continue to access
these much needed loan guarantees. 

 

"Since its creation in 1987, USDA's affordable rural home loan guarantee
program has helped hundreds of thousands of families to realize the American
dream of homeownership, including many in Northeastern Pennsylvania," said
Chairman Kanjorski.  "As a result of the unprecedented demand, the program
is now unfortunately running out of money.  At no cost to taxpayers, my bill
will preserve the access of millions of families living in America's
heartland to needed USDA loan guarantees, so that they can continue to buy
homes with affordable mortgages.  Without action, too many families in rural
America will have no options for getting home loans.  We cannot allow that
to happen."

 

"As a result of this program, I was able to purchase my first home which I
have wanted all my life," said Virgie Spruiell from Bushkill, Pennsylvania.
"I enjoy it every day and it is a blessing.  I greatly appreciate Chairman
Kanjorski's efforts to enable the program to continue so that other people
can access these guaranteed home loans just as I did.  It has had helped me
tremendously."

 

Chairman Kanjorski's legislation will correct the Section 502 Single Family
Housing Guaranteed Loan Program funding shortfall by enabling the program to
pay for itself, rather than relying on federal funding.  In order to pay for
the program, lenders will pay up to a 4 percent fee on new home mortgages.
As a result of these changes, financing of the program will move from a
combination of government funding and industry fees to a self-sustaining
initiative.

 

The USDA's Rural Housing Service manages the Section 502 program, which
provides a vital source of mortgage credit for people living in rural
communities.  Low- and moderate-income individuals and families in rural
communities often have fewer mortgage credit options than those households
in urban areas.  The program aims to fill that void and lower the costs of
homeownership by giving rural areas access to a home loan guarantee program.
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.  To qualify for the program
<http://www.rurdev.usda.gov/rhs/sfh/GSFH_Information/individuals.htm> ,
borrowers must have good credit and reliable incomes to sustain
homeownership.  

 

###