Bush Budget Will Eliminate Important Rural Housing Programs
The Bush Administration's budget for fiscal year 2009, released this week, proposes severe and devastating cuts to eliminate important Rural Housing Service (RHS) programs. The loss of the RHS programs will affect single family loans, which serve borrowers with very low incomes, and will slash or eliminate funding for a number of RHS programs that provide affordable rental housing for low income rural families.
"Once again, the President has ignored the growing housing crisis in Rural America," said Rep. Ruben Hinojosa (D-TX). "If the Administration's misguided budget is approved, it would be the first time in 40 years that the Agriculture Department has not offered direct lending assistance to help low-income rural families improve their housing conditions."
"As we struggle to alleviate a mortgage crisis that is affecting hardworking families across the country, now is not the time to cut funding for housing programs in rural America," said Rep Lincoln Davis (D-TN).
"President Bush's proposed cuts to these rural housing programs are indefensible," said Rep. Paul Hodes. "These cuts come at a time when people are struggling to make their monthly housing payments and stay afloat in this difficult economy. Limiting access to affordable housing options is the wrong thing to do. I will work hard to protect these initiatives so that hardworking folks in rural America can continue to have access to affordable housing and low-interest loans."
"At a time when the country faces a housing crisis, with a growing number of families facing default and foreclosure and housing prices falling in certain markets, it is incomprehensible why the Bush Administration would propose to roll back critical Rural Housing Service loan programs," said Rep. Barney Frank, chairman of the House Committee on Financial Services. "Adoption of this budget would cripple our committee's efforts to preserve and expand the availability of affordable rental housing for low income rural families."
President Bush's Budget Cuts to the Rural Housing Service will:
Diminish Affordable Mortgage Loan Opportunities for Rural Families:
The budget proposes a 50% increase in the loan fee for RHS guaranteed, unsubsidized single family loans - by raising the upfront fee from 2% to 3% for an estimated 43,000 families buying a home in rural areas.
Eliminate Funding for Affordable and Rental Housing Programs
The Bush Administration budget eliminates funding for a number of RHS programs that provide affordable rental housing for low income rural families generally making less than $10,000 a year. The budget eliminates funding for the RHS Section 515 program, which provided $70 million in low interest loans in Fiscal Year 2008 for the construction, rehabilitation, and preservation of affordable federally subsidized rental housing units.
Congress also provided $28 million in funding last year for a demonstration program to facilitate the preservation of federally subsidized affordable rental housing units. The Administration's budget does not provide a penny this year for this purpose, and instead rescinds $20 million in unused funding from previous years. These are funds that could be used to restructure affordable RHS units, in order to avoid having these units converted to less affordable, market rent housing.
Strip Funding for Important Low-Income Rural Housing Programs.
The Bush Administration budget will eliminate funding for Section 523 Mutual and Self-Help Housing Program grants. Last year, Congress provided $39 million for this program, under which families build their own homes through mutual exchange of labor. The budget also eliminates funding for Section 514 Farm Labor Housing Program direct loans, and for Section 516 Farm Labor Housing Grants.
Two weeks ago, the House passed H.R. 3873, a bill sponsored by Rep. Hodes, to expedite RHS approvals of Section 515 rural housing project transfers, in order to rehabilitate and preserve affordable rural rental housing units. Later this year, the Financial Services Committee expects to act on a comprehensive bill to expand the incentives and resources that can be used to preserve the stock of 465,000 RHS rural rental housing units nationwide. These initiatives would be severely undermined by adoption of the program and funding reductions in the Bush Administration budget.