Wednesday, August 04 2010
Last week, Congress passed legislation to restore funding to the 502 single-family rural housing program. The legislation will increase the guarantee fee for borrowers (but still allow it to be financed), which will make the program self-sufficient. The legislation also increases the commitment authority so Rural Housing Service can formally guarantee loans (they had been providing conditional commitments).
Also, the House Financial Services Committee approved H.R.4868, the Housing Preservation and Tenant Protection Act of 2010, which aims to stem the loss of affordable rental housing units and prevent the displacement of low-income tenants.
The Rural Housing program had run through its $13.1 billion funding by early this year and many buyers hoping to finance home purchases using Homebuyer Tax Credits were unable to close their loans.Depleted funding has been a nearly annual occurrence for the program that guarantees loans for single-family homes in designated exurban and rural areas.The new legislation will end the annual uncertainty by putting the program on a self-funding basis through enacting a 3.5 percent guarantee fee paid by the borrower. The fee, while substantial, can be included in the total amount financed.
Source: NAR and MortgageNewsDaily.com, Jann Swanson, (07/30/2010) http://www.realtrends.com/go/view_media.php?mp_id=9797&cat_id=1488