Homebuyers in over 900 communities would lose their eligibility to take out Rural Housing Service loans if Congress fails to take legislative action by Oct. 1.
And it appears Congress is not going to pass a farm bill with an RHS fix until September, after the lawmakers return from their summer recess.
Currently, borrowers in communities outside of metropolitan statistical areas with populations below 10,000 are eligible for RHS-guaranteed loans. The U.S. Department of Agriculture maintains a list of eligible communities.
Within MSAs, communities with populations up to 25,000 are eligible for RHS single-family loans. But that would drop down to 10,000 people at the end of the September. Most of the communities in danger of losing their RHS eligibility are in metropolitan areas.
The Senate has passed a farm bill with an amendment by Sen. Nelson, D-Neb., that would raise the 25,000 population limit in MSAs to 35,000.
The National Association of Realtors supports the Nelson amendment. But the trade group also wants to ensure that all current RHS-eligible communities are grandfathered.
The House Financial Services Committee has jurisdiction over the Rural Housing Service loan program. And the Realtors are urging the chairmen of the Agriculture and Financial Services committees to work together to find a bipartisan solution.
“We are not looking to expand any program or authorize any additional funding,” NAR president Maurice Veissi says in a letter to the chairmen. “We simply wish to retain the pool of eligible communities,” he writes in the July 10 letter.
Lenders originated $16.8 billion in RHS loans in fiscal year 2011. During the first eight months of this fiscal year, lenders have originated $11.4 billion in RHS loans as of May 31.
