USDA Housing Program Sees Hope But Premium Hike Coming

The House Financial Services Committee Thursday morning approved a bill that could make the Rural Housing Service single-family program self-funding by imposing higher loan guarantees fees and prevent a shutdown of the program in the next few weeks. The House is expected to pass the RHS bill (H.R. 5017) next week, sending it over to the Senate. The committee approved the bill by a voice vote. The measure, sponsored by Rep. Paul Kanjorski, D-Pa., doubles the upfront guarantee fee to 4% from 2% and allows the Agricultural Department to assess a 0.5% annual fee on the loan balance. Rep. Kanjorski said the Agriculture secretary plans to impose a 3.44% upfront fee, which can be rolled into the loan amount. (The program is administered by the U.S. Department of Agriculture.) It is estimated the increase would require borrowers to pay an extra $11 a month on a $120,000 loan. As of April 15, the RHS loan guarantee program had used $11.6 billion of its $13.1 billion in loan commitment authority for fiscal year 2010, which ends Sept. 30. The Kanjorski bill increases RHS' commitment authority to $30 billion.