On April 22, the House Financial Services Committee unanimously passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010, introduced by Congressman Paul E. Kanjorski (D-PA). The bill ensures the continued access of rural homebuyers to affordable mortgages through the U.S. Department of Agriculture’s (USDA) Section 502 loan guarantee program. The financial crisis has spiked consumer interest in the program, tripling the number of loans annually made since 2006. Because demand continues to grow, the program will exhaust its federal funds within days.

H.R. 5017 would solve this problem by making the program self-funded, enabling families living in rural communities to continue to access these much needed loan guarantees. In order to pay for the program, lenders will pay up to a four percent fee on new home mortgages. As a result of these changes, financing of the program will move from a combination of government funding and industry fees to a self-sustaining initiative. The bill is expected to be considered by the U.S. House of Representatives as early as next week. Last month, MHI with other national housing groups, sent letters to Congressional leaders requesting that Congress approve an additional $10 billion in commitment authority for the program in order to meet the backlog of loan requests for this popular rural loan program.

MHI members can contact Lois Starkey at lstarkey@mfghome.org with any questions.