The Department of Agriculture's Rural Development Service has announced a six-state pilot program with Chase Home Finance to increase the availability of financing for new houses in rural areas where many lenders can't or won't go.Under the program, which will be operational in the next 60 days in California, Florida, Georgia, North Carolina, Ohio, and Texas, the government will guarantee 100% construction loans that cover the price of the lot, the cost of materials and labor, closing costs, and interest payments while the house is being built. At completion, the loans will be converted to permanent financing without a requirement that the owner/builder go through a second closing. RDS housing programs are targeted to low-income people who reside in towns of less than 10,000 people, said administrator Russell Davis. "Often, the properties are very remote and beyond the reach of many lenders," Mr. Davis said at a government loan conference sponsored by the Mortgage Bankers Association. The National Association of Home Builders helped design the program, which was announced by Agriculture Secretary Mike Johanns. The most unusual feature, according to Bill Renner of the NAHB, is that the construction portion of the loan is guaranteed. Under the Federal Housing Administration's C2P program, the government does not insure the loan until after it converts to permanent financing.

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