USDA Funding May NOT Run Out

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Yesterday, the Kanjorski bill (HR 5017) passed unanimously in the House Financial Services Committee and we anticipate that it will be voted on by the Full House of Representatives early next week.
HR 5017 is a bill aimed at supporting the rural housing market that has struggled to get passed. Also known as the Rural Housing Preservation and Stabilization Act of 2010, it will end the current method of using federal funding to backstop the guarantee and instead will fund the program through mandatory fees.

HR 5017 ensures rural homebuyers access to affordable loans through USDA, but because these loans have tripled since 2006, federal funding will be running out literally in the next few days, making passage critical.

Rep. Barney Frank, who is a big supporter of the program, expressed his concern that the program was going to run out of funding by the end of the month, and said that he was going to do everything possible to expedite the bill so that would not happen.

In order to pay for the program, lenders will pay up to a 4% fee on new home mortgages. There was an amendment removing the provision for the monthly mortgage insurance, and it appears that the authorization ceiling has remained at $30,000,000 for the balance of the year. The new guarantee fee would be 3.5% for these new funds (currently, it is 2%).

Next, the bill moves to a House vote. Let’s keep our fingers crossed!

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