USDA Rural DevelopmentSingle-Family Housing Programs

Presented by:

Elsie Meeks | South Dakota State Director

Jenny Rydberg | MN Area Specialist

Andrew Gag | MN Area Specialist

USDA Rural Development

2014

DiscussionTopics

• Brief overview of USDA Rural Development

• Direct home loan (purchase) programs

• Guaranteed home loan (purchase) program

• Direct home loan/grant repair program

• South Dakota Housing Initiatives

OUR MISSIONUSDA Rural Development’s mission is to improve economic opportunity and enhance the quality of life in rural America.

2009-2013

$2.3 billion benefitting American Indians & Alaska Natives

Including:

• Housing Loans | $594.1 million 4,724 loans

• Water/Wastewater | $388.6 million

• Community Facilities | $368.2 million

• Broadband/Telecom | $294 million

• Electric | $558.3 million

• Rural Business and Cooperative Programs $96 million

Investments

Community Facilities Loan/Grants• Fire/Rescue

o Fire Halls

o Trucks/Ambulance/ Other Equipment

• Healthcare

o Hospitals / Clinics

• Public Service Buildings

o Library / Community Center / Daycare

• Streets/Sidewalks/Bridges(limited)

MN CF Projects

RURAL BUSINESS PROGRAMS• Business & Industry Loan Guarantees

• Rural Business Enterprise Program

• Intermediary Relending Program

• Rural Economic Development Loans & Grants

• Rural Cooperative Development Grants

• Rural Business Opportunity Program

• Value-Added Producers Grants

• Small, Socially Disadvantaged Producer Grants

• Many Energy Loan and Grant Programs

Multi-Family Housing Programs

Section Program

588 Housing Preservation Grants

515 Direct Loans

538 Guaranteed Loans

www.rurdev.usda.gov/HMF_MFH.html

HOME PURCHASE PROGRAMS

Section 502 Home Loan

Program

• Home loans for low and

very-low income individuals

• Income limits apply (based

on household size & county)

• Loan limits apply -- by

county

• Applications are filed with

Rural Development area

offices

PROGRAMHIGHLIGHTS

• Loans up to 100% of appraised value

• Closing costs may be financed

• Fixed interest rate, 33-year term

• Payment assistance available

• Subsidy is subject to change annually

• Subsidy is subject to recapture at the time of sale or

refinance

• Homebuyer education required for first time

homebuyers

• Home inspection and/or technical certification

required

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

32 39 43 40 42 25 16 6 25 6 15 12 6 10

250

222 202268 290 252

225 219 196 192

341

188144

156160

231209

282 291 278236

274

438

619

891884

209

1100

Direct On Trust LandDirect TotalGuaranteed Total

502 SFH Loan Activity to AI/AN

Fiscal Years

Nu

mb

er

of

Loan

s 502 Direct 2000 – 2013

Total Loans = 3,145

Trust Land = 317

10% on Trust Land

12

ELIGIBILITY• Individuals or families who do not own a

dwelling or current dwelling is inadequate

• Unable to obtain credit from other sources

• Must personally occupy the property financed

• Have adequate and dependable income

• Have an acceptable credit history

• Adjusted household income cannot exceed 80% of median county income

• Home must be located in a rural area, defined as population of 20,000 or less

• Legal capacity to incur loan obligation

• U.S. Citizen, permanent resident or qualified alien

Direct Loan Purposes

• Purchase New (end or permanent loan)

o Stick or Modular

o Manufactured (must be approved dealer-

contractor, owned site, permanent

foundation)

• Purchase Existing

o Stick or Modular

APPLICANTCHALLENGES

• Adequate Cash for Closing Costs

• Meeting Debt to Income Ratio

• Annual vs. Repayment Income

HOMEBUYER EDUCATION

• Required for all applicants• Acceptable Programs

• Homestretch• Framework• E-Home America• Pathways

ACCEPTABLE CREDIT• No outstanding judgments obtained

by the United States in Federal Court.

• More than one credit score listed on their Residential Mortgage Credit Report that result in a reliable credit score of 640 or higher.

UNACCEPTABLE CREDIT• Little or no credit history

• Past foreclosure

• Collection accounts

• Judgments

• Two or more 30-day late payments on revolving debt

• One 30-day late payment on installment debt

PATHWAY TO BETTER CREDIT

• Collection Accounts

• Must be paid off for 6 months

• Judgments

• Must be settled for at least 12 months

• Bankruptcy

• Debt must be discharged 36 months

prior to an application

EMPLOYMENTREQUIREMENTS

• Stable and Dependable

• Reasonably expected to continue for at least

two years

• Would like to see two-year history of receiving

the income but not required.

• Evidence of tribal action for legally binding and effective foreclosure procedures and will enforce those procures upon notice of default from a lender and or Agency.

• Evidence of tribal adoption procedures ensuring that the federally guaranteed loan will always have first lien priority.

• A copy of the tribe’s lease for use on residential land.• Signed tribal affirmation stating tribal understanding of the

importance of maintaining and enforcing the above procedures.• Signed tribal affirmation stating tribe agrees to permit the

agency and/or lender and agents to access mortgaged properties for the purpose of evaluating and servicing loan-related items.

Tribal Trust Mortgage Requirements

Websites for income limits, property eligibility, etc.

• For income and property eligibility:

http://eligibility.sc.egov.usda.gov/eligibility

• Rural Development Website: http://www.rurdev.usda.gov

• MN Offices and Contacts:

http://www.rurdev.usda.gov/MN-Contacts.html

GUARANTEED HOMELOANS

• Applications are made with approved

local lenders or mortgage companies

• Any licensed lender can originate loans

and reserve funds

• Interest rate is negotiated between

lender and applicant and Rural

Development guarantees the loan

Guaranteed Loan Purposes

• Purchase New (end or permanent loan)

o Stick or Modular

o Manufactured (must be approved dealer-

contractor, owned site, permanent

foundation)

• Purchase Existing

o Stick or Modular

PROGRAM HIGHLIGHTS

• Designed for moderate income families

• No maximum purchase price or loan limit

• Loans made up to 102% of appraised value

• 30 year term-fixed interest rate

• No restrictions on size or design of home

• No mortgage insurance required

• Non-traditional credit histories accepted• Expanded qualifying ratios: 29/41% (waivers possible per eligibility)• No asset limitations, closing cost or seller concessions limitations• Repairs may be financed up to 100% of appraised or “as improved”

value• Credit scores – No Minimum

– >680 – streamlined=no further review of credit – <680 – review per Rural Development regulations

ELIGIBILITY• Live in rural area, defined as community

with population of 20,000 or less (unless exception made up to 25,000)

• Income cannot exceed adjusted annual income established for each county.

• Income limits available at http://eligibility.sc.egov.usda/eligibility/welcomeAction.do

HOME REPAIRPROGRAM

Fiscal Years

Nu

mb

er

of

Loan

s FY 2013 Highlights

Total Grants =175Total Loans = 4734.2% On Trust

Lands

504 SFH Activity to AI/AN

27

ELIGIBILITY• Individual or family homeowners of single-

family dwellings in need of repair.

• Property value NOT in excess of the applicable area loan limit

• Adjusted income NOT in excess of the applicable income limit for the county

• Live in a rural area, defined as community with population of 20,000 or less (exceptions can be made for communities with populations up to 25,000 in certain cases)

• Must lack personal resources to pay for the needed repairs

• Asset limits apply -- $20,000 elderly; $15,000 non-elderly

• Must be U.S. Citizen, permanent resident or qualified alien

• Posses legal capacity to incur loan obligation

PROGRAM HIGHLIGHTS

Loan Qualifications

• Very-low income homeowners with homes in need of repair

• Must have an acceptable credit history

• Maximum loan is $20,000

• Fixed interest rate of 1% with a term up to 20 years

• Mortgage required for loans over $7,500

• Appraisal required for loans over $15,000

Grant Qualifications

• Homeowners 62 years of age or older unable to make payments on a 1% loan

• Limited to removal of identified health and safety hazards or to make accessible

to household members with disabilities

• Maximum life-time grant is $7,500

• Maximum loan/grant combination is $27,500

• Grant must be repaid if home sold within three years of grant approval

PARTNERSHIP• Tribal Housing Authorities• Community Action Agencies

Rural Development Housing Programs in South Dakota