In fiscal 2014, for the first time recent memory, the Agriculture Department did not spend all the rural housing loan money it was allocated. Despite pressure from Congress, some $100 million was left on the table at the end of the fiscal year. In addition, a mutual self-help housing grant program -- which works in conjunction with the direct loans -- left almost $10 million unspent after requiring grantees to take a 10 percent reduction. This year, the new undersecretary for rural development, Lisa Mensah, put pressure on the USDA field structure to get the job done.
Agriculture’s Rural Housing Service administers a range of loans, grants and related assistance aimed at improving housing conditions in rural America. In recent years, USDA has shifted its focus from homeownership loans for low-income families to guarantees for moderate-income families. While this may make sense from a budget perspective -- loans cost more than loan guarantees -- the change in emphasis does not necessarily work for rural communities. USDA’s Economic Research Service contends that guarantees are not well-used in smaller, remote rural communities.
The low-income families that receive these housing loans make on average about $25,000 annually. The law requires that 40 percent of families receiving loans have incomes no greater than 50 percent of the area median. There is no other federal program that provides homeownership for families with such limited means. When these loans are combined with the mutual self-help housing program, there are even greater returns. Families work nights and weekends to build their own homes and, coupled with sweat equity, save on average $25,000.
There is strong bipartisan support for the home loan program in Congress. In fact, leaders of the House and Senate appropriations subcommittees on agriculture and rural development sent a letter to USDA Secretary Vilsack last year on obligating the fiscal 2014 funds that their committees had appropriated. Now it looks like pressure from Mensah has paid off. USDA announced just days before the close of fiscal 2015 on Sept. 30 that it had used all the mortgage money appropriated.
This program is too important to low-income rural families to leave money on the table, and we are pleased to see USDA’s Rural Housing Service succeed in meeting its obligations.
Bob Rapoza is founder and president of Rapoza Associates, a public interest lobbying and government relations firm in Washington.