Rural Housing Gets The Green Light from Congress
Mortgage update courtesy of The Gardner Team’s preferred lender, Norm Kremer
The House of Representatives late Tuesday passed an emergency supplemental appropriations bill that includes a provision to reform and restart the Rural Housing Service single-family guarantee program.
President Obama is expected to sign the measure (H.R. 4899), which includes funding for the wars in Iraq and Afghanistan as well as other international and domestic government programs.
The RHS provision authorizes the Agriculture Secretary to increase the upfront premium on RHS backed loans to as much as 3.5% to cover the cost of new loan guarantees and make the program self-funding. The current upfront premium is 2%.
The USDA secretary also has the option of charging a 0.5% annual premium. RHA secretary Tammye Trevino could not reached for comment at press time.
Rep. Paul Kanjorski, D-Pa., was the original sponsor of a bill to increase the premium and free the RHS program from the congressional appropriations process.
In fiscal year 2010, congressional appropriators provided RHS with $12 billion in loan commitment authority and a ‘carry over’ of $1.1 billion in unused authority from the prior year. But RHS exhausted the commitment authority in May, forcing many lenders to stop making government-backed rural housing loans. The new fees should provide RHS with the necessary credit subsidy to guarantee $24 billion worth of loans annually.
