U.S. Department of Agriculture Programs SECTION 502 USDA LOW- TO MODERATE-INCOME BASIC PROGRAM INFORMATION LEGISLATIVE OBJECTIVE.-To assist rural families to obtain decent safe, and sanitary dwellings and related facilities. TYPE OF ASSISTANCE.-Loans are insured or made to low- and moderate-income families to buy, build, improve, or relocate homes or farm service buildings. Loans may also be made to buy building sites and to refinance debts under certain conditions. Interest credits may be granted to low-income families which reduce the effective interest rates paid to as low as 1 percent. DATE ENACTED. This program was enacted in 1949. It has been periodically amended. ADMINISTERING AGENCY.-The Farmers Home Administration of the U.S. Department of Agriculture through State directors of Farmers Home Administration, county Farmers Home Administration supervisors, and county Farmers Home Administration committees appointed by the Secretary of Agriculture. FINANCING. The program is funded through the revolving rural housing insurance fund, established in 1965 with an initial appropriation of $100 million. Legislation in December 1969 provided that the rural housing direct loan account be transferred to the fund. In the first 6 months of fiscal year 1975, the Department insured 35,446 new loans worth $585,766,940. Interest credit amounting to $174,012,930 on 10,058 loans was granted. In fiscal year 1971, a total of 1,656 direct loans at a cost of $5,800,000 were made. No direct loans have been made since 1971, nor are any anticipated at least through 1975. ELIGIBILITY CRITERIA TYPE OF HOUSING.-Loans may be used for the following: Construction, repair, or purchase of housing including a building site; installation of essential equipment; provision of adequate sewage disposal; or refinancing of housing debts under certain circumstances. The home must be modest in size, design, and cost. Generally a house with about 1,200 square feet of living area is considered adequate with additional sleeping space provided for large families. The design should be varied but should not include features that are not customarily included in other modest houses in the area. For a family with above moderate income, the home may be somewhat larger and include features such as two bathrooms, a family room, or double garage, not usually associated with modest homes; however, the program for loans to above moderate-income families was last funded in 1970, when 1,667 loans valued at $21.6 million were insured. LOCATION OF HOUSING.-The housing must be on a farm or nonfarm tract in a rural area. A rural area is defined as open country or a village or town with a population of no more than 10,000 which is not part of or associated with an urban area and is rural in character. LOAN LIMITS.-In general, the loan may not exceed the applicant's repayment ability or the value of the security for the loan (usually the home but may include other real and personal property) minus any debts against the property. FAMILY ELIGIBILITY.-The applicant must be the owner of a farm or a person who is or after the loan is closed, will become the owner of a home or a nonfarm tract of minimum adequate size for construction of a home in a rural area. At the time of application the applicant must be without decent, safe, and sanitary housing for his own use. INCOME LIMITS.-To participate in the program families must have low-to-moderate income, as determined by the county committee, and must be without sufficient resources to provide on their own account the necessary housing and related facilities, and be unable to secure credit from other sources upon terms which they reasonably could be expected to fulfill (including a HUD section 235 insured mortgage). Families in the low- to moderate-income group are those whose incomes are not significantly greater than the amount needed, considering the size and composition of the family, to enable them to have a reasonable level of living and meet necessary obligations and expenses. In any case the adjusted family income may not exceed the maximum income limits established for each State except that, when funds are available, loans may be approved for families with above moderate income if they are unable to obtain credit from other sources. For families applying for interest credit assistance, family income may not exceed $8,500 (unless exceptions are authorized by the national office). DEFINITION OF INCOME. The adjusted family income is 95 percent of all income of family members (excluding temporary and nonrecurring income and earnings of members under 21 years of age) reduced by $300 for each minor child in the family. ASSETS.-There is no limit on assets for direct and insured loans. Families must have adequate security for the loan. For families applying for interest credit assistance, assets (net worth excluding value of household goods and debts against them) may not exceed $5,000, unless an exception is made by the State director. ACCOUNTING PERIOD AND PROCEDURES.-Information on current annual income and other conditions is submitted to the county Farmers Home Administration supervisor. The loan application must be reviewed and approved by the county committee. Recertification for interest credit assistance is required at 2-year intervals, and the amount of credit assistance is adjusted on the basis of the borrower's circumstances at that time. BENEFITS Loans assist families by providing credit for housing purchase or improvements not otherwise obtainable. Repayments may be scheduled for periods up to 33 years. Families approved for interest credit assistance receive credit for a portion of interest on the loan which would be payable at regular interest rates. The amount of credit, as determined by the county committee, varies by family income, size of family, and the amount of the loan. Interest credits may not exceed an amount which reduces the borrower's obligation to an interest rate of less than 1 percent on the loan principal. Repayments on the loan are scheduled for 33 years. Interest credit assistance is discontinued when the family's income is sufficient to meet the full monthly payment due. Furthermore, the borrower is required to refinance the loan when his financial condition will enable him to obtain credit from other lenders. SECTION 515 RURAL RENTAL HOUSING LOANS BASIC PROGRAM INFORMATION LEGISLATIVE OBJECTIVE.-To provide rural residents with economically designed and constructed rental housing and related facilities suited to their living requirements. TYPE OF ASSISTANCE. This program provides insured loans to individuals or to public or private profit or nonprofit organizations who will provide rental housing for eligible occupants. Loans are also provided to cooperatives which will provide cooperative housing for eligible occupants. No direct subsidy is made to tenants but adequate housing at reasonable rent is provided which would not otherwise be available. DATE ENACTED.—The program was enacted in 1949. It was expanded rapidly in the late 1960's and early 1970's. ADMINISTERING AGENCY.-The Farmers Home Administration of the U.S. Department of Agriculture, through State directors of Farmers Home Administration housing programs, county Farmers Home Administration supervisors and county Farmers Home Administration committees appointed by the Secretary of Agriculture. FINANCING. The program is funded through the revolving rural housing insurance fund. On June 30, 1974, 2,953 loans were still outstanding, amounting to $209,844,000. The cumulative number of loans which had been made as of that date was 3,115, and their cumulative value was $417,351,473. ELIGIBILITY CRITERIA TYPE OF HOUSING.-Loans may be used for construction, purchase, improvement, alteration or repair of residential housing which is economical in construction and not of elaborate or extravagant design or materials. Housing may consist of apartments-efficiency, one-, two-, or three-bedroom units-duplex homes, or detached dwellings. LOCATION OF HOUSING.-Housing must be in rural communities which have a population of not more than 10,000 and which have service facilities and social activities readily available. The need for the proposed housing must be demonstrated through a survey show ing the effective market for the housing and the number of eligible occupants in the area willing and able to pay the required rental rates. ELIGIBLE BORROWERS.-To be eligible for benefits, applicants must be unable to provide the housing from their own resources and unable to obtain credit from private or cooperative sources upon terms which they could reasonably be expected to fulfill. Applicants also must have sufficient operating capital and other assets needed for a sound loan and income sufficient to meet operating expenses and loan repayment. Applicants must have the ability and intention to maintain and operate the housing for the purpose for which the loan is made. For insured loans the applicant must be (1) an individual who is a citizen of the United States and who resides in the community where the housing will be located, or (2) an organization whose members own a majority of the voting interest and reside in the community where the housing will be located. Loans are also made to private nonprofit corporations or housing cooperatives, each of whose members is limited to one vote in the affairs of the organization and a majority of whose members reside in the community where the housing will be located. MORTGAGE LIMITS.-There are no dollar mortgage limits, although the repayment period for insured loans may not exceed 40 years, except for senior citizen projects. TENANT ELIGIBILITY.-For the purposes of a loan to a nonprofit applicant, tenants may be senior citizens with low or moderate income, or any other family resident with a low income. For the purposes of a loan to a profit-motivated applicant, tenants may be senior citizens who have no income limit imposed or any other person with a low or moderate income. A senior citizen is a person age 62 or over, and the wife or husband regardless of age. A senior citizen's household may also include other family members under 62 years of age or a person under 62 if the younger person's occupancy is necessary for the well-being of the senior citizen. INCOME LIMITS.-See section on Section 502 USDA Low-To-ModerateIncome Housing Loans. DEFINITION OF INCOME.-Family income means gross income received by the family, as defined by the Internal Revenue Service for income tax purposes, plus any retirement, social security, pension, or similar payments, and any interest received on State and municipal bonds. ASSETS TEST.-There is none. ACCOUNTING PERIOD.-Income is determined at the time of application for occupancy by the previous year's gross income, plus relevant additions, as reported for income tax purposes. Redetermination of income of tenants is required at least every 2 years. BENEFITS Benefits to tenants consist of modest adequate housing at reasonable rent, which would not otherwise be available to them at comparable costs. |