WASHINGTON, D.C.- After learning that a U.S. Department of Agriculture (USDA) program that helps low-income individuals and households purchase homes in rural areas has run out of money, U.S. Senator Bob Casey today sent a letter to Ed Schafer, Secretary of Agriculture, urging him to use any discretionary authority to continuing operating the program. Due to historic demands, the funding for the Single Family Housing Guaranteed Loan Program (SFHGLP) will run out this week.
“In a time of fiscal crisis when many families are struggling to make ends meet, it is essential that borrowers are able to obtain good quality loans to purchase homes, or to invest in repairs and renovations to maintain the value and improve the structural soundness of the homes in which they already reside,” Casey wrote.
He went on to write, “In order to avoid any negative impact on rural Pennsylvania families, I respectfully request that you take necessary and appropriate action to keep the SFHGLP operating.”
The SFHGLP helps low-income individuals and households purchase homes in rural areas. USDA Rural Development secures the loans that are made by approved mortgage lenders who pay Rural Development a one time guarantee fee, rather than monthly mortgage insurance premiums. Applicant borrowers, though unable to qualify for a conventional loan because of substantial down payment requirements, must have a satisfactory credit history and adequate and dependable income. Loan repayment terms may not exceed 30 years. Funds secured under the program may be used to purchase new or existing homes that must provide decent, safe and sanitary housing.
Senator Casey today also sent a letter to the Senate Appropriations Committee asking the committee to increase the funding for the program this year.
Full text of the letter below:
Dear Mr. Secretary,
It has come to my attention that the United States Department of Agriculture (USDA) alerted its 3,500 lending partners that funding is no longer available to administer the Single Family Housing Guaranteed Loan Program (SFHGLP). I am writing to request that you use all discretionary authority to continue operating the SFHGLP in the face of this apparent funding shortfall.
As you know, the SFHGLP is funded under a Continuing Resolution (CR) at a guarantee level of $2.6 billion. The unprecedented demand for the program’s assistance over the past several months threatens to drain the program of funding well before the CR’s expiration date of March 6, 2009.
The SFHGLP’s role in helping low-income individuals or households purchase homes in rural areas is critical. In a time of fiscal crisis when many families are struggling to make ends meet, it is essential that borrowers are able to obtain good quality loans to purchase homes, or to invest in repairs and renovations to maintain the value and improve the structural soundness of the homes in which they already reside. Homeownership is particularly important to the stability of families in rural areas where rental housing is often not widely available.
I understand that USDA Rural Development will continue to accept and process applications and issue commitments, subject to receiving Congressionally appropriated funds and that no interruption of service is currently expected. However, it is also possible that Rural Development’s partner lenders in rural areas will not be able to close mortgage loans using the SFHGLP. Given the current economic climate, we should strive to ensure that rural households have access to affordable mortgage loans. In order to avoid any negative impacts on rural Pennsylvania families, I respectfully request that you take necessary and appropriate action to keep the SFHGLP operating.
Thank you for your consideration.
Sincerely,
Senator Robert P. Casey Jr.
###
