UPDATE, January 23, 2019

More of the many media reports related to the shutdown’s impact on USDA housing and rural residents:

• Ignore full-rent letter, Newport tenants told; 2nd notice says shutdown “not your fault,” Arkansas Democrat-Gazette, January 23, 2019
• How the shutdown is jeopardizing housing for rural Americans, NBC, January 22, 2019
• Some fear federal safety net is unraveling for those in need, AP News, January 22, 2019
• Tenants at Arkansas complex fret after notified rent aid held up; until shutdown ends, full payment up to them, tenants told, Arkansas Democrat-Gazette, January 21, 2019
• Relief comes for low-income tenants threatened with rent hike due to shutdown, Huffington Post, updated January 23, 2019
• ‘We’re left in the dark’: As many industries get shutdown relief, those without political clout feel left behind, Washington Post, January 19, 2019
• Home buyers, low-income families likely feeling sting of shutdown, UPI, January 18, 2019
• Arkansas eviction scare is a preview of shutdown hell, Huffington Post, January 17, 2019
• Tribal members feeling the ripple effects of the shutdown, Center for Rural Affairs, NE, January 16, 2019

* * * * * *

As of January 16, 2019, parts of the federal government including USDA and HUD remain shut down. Limited functions are continuing at USDA’s national office in Washington, DC and the Customer Service Center in St. Louis, but loan closings are not taking place and applications are not being processed. RD staff provided a great service by getting December’s Section 521 Rental Assistance payments made on schedule in early January, and have unofficially assured HAC and others that January’s RA payments will be made in early February. RA payments each month are for the RA contracts that expired during that month, and obligate a full year of RA funding. It is HAC’s understanding that if the shutdown continues into February, RA contracts expiring that month will not be paid. It is not clear whether Section 542 vouchers will be paid for February.

Here are some recent reports related to USDA housing during the shutdown.This list was updated on January 16.

• Some renters are already facing eviction, thanks to the shutdown, Huffington Post, updated January 16, 2019 (updated again on January 23)
• As the government shutdown continues, would-be homeowners are stuck waiting on USDA aid, Desert Sun, Palm Springs, CA, January 15, 2019
• One casualty of the government shutdown: low-income Texans who need housing assistance, Texas Observer, January 15, 2019
• The U.S. government shutdown: Its impact on Indian Country is deep, Center for Indian Country Development, Federal Reserve Bank of Minneapolis, January 14, 2019
• How the government shutdown is disrupting mortgage, real estate transactions, bankrate.com, January 14, 2019
• Government shutdown derails real estate deals in rural communities, Pittsburgh Post-Gazette, January 14, 2019
• Housing market feels blowback of government shutdown, WHAM, Rochester, NY, January 13, 2019
• Government shutdown threatens certain home loans, Houston Chronicle, January 11, 2019
• What the government shutdown means for your mortgage, Chicago Tribune, January 11, 2019
• Bangert: Home buying ‘nightmare’ as family waits out shutdown in mother-in-law’s basement, Lafayette (Indiana) Journal & Courier, January 10, 2019
• U.S. government shutdown impacts USDA offices in Kentucky, Cincinnati Public Radio, January 9, 2019
• Food stamps, rent aid and the safety net for America’s poorest at risk as shutdown drags on, Washington Post, January 9, 2019
• Prospective homebuyers derailed by the government shutdown, CNBC, January 9, 2019
• Shutdown impacts rural housing, National Rural Housing Coalition, January 8, 2019
• Federal USDA home loans on hold during government shutdown, WCMH-TV, Columbus, OH, January 8, 2019
• How is the government shutdown affecting the local housing market?, KOTA TV, Rapid City, SD, January 8, 2019
• Government shutdown halts USDA housing loans and grants, KOMU, Columbia, MO, January 7, 2019
• Government shutdown affects USDA loans, Ozarksfirst.com, January 6, 2019
• Government shutdown 2019: Homebuyers with USDA mortgages can’t close on house sales, USA Today, January 3, 2019
• Shutdown struggles loom for localities in need of infrastructure, affordable housing funding, Route Fifty, January 3, 2019

In a Federal Register notice published August 31, 2018, USDA’s Rural Housing Service proposed changes to its single-family direct and guaranteed loan and grant programs (Section 502 direct, 502 guaranteed, and 504 loans and grants), including making “income banding” a permanent part of the program regulations. Comments are due October 30, 2018.

The proposed changes are:

(1) Revising the definition of very low-, low-, and moderate-income to allow for a two-tier income limit structure (also known as income banding) within the single family housing direct loan and grant programs.
(2) Clarifying that net family assets are not considered when calculating repayment income, and that net family assets exclude amounts in voluntary retirement accounts, tax advantaged college, health, or medical savings or spending accounts, and other amounts deemed by the Agency not to constitute net family assets.
(3) Revising the methodology used to determine the area loan limits to use a percentage(s), as determined by the
Agency, of the applicable local HUD section 203(b) limit.
(4) As a result of income banding, converting borrowers currently receiving payment assistance method 1 to payment assistance method 2 should they receive a subsequent loan.
(5) Revising the definition of low-income to allow for the two-tier income limit structure (income banding) within the single family housing guaranteed loan program.

 

On July 10, 2018, USDA’s Rural Housing Service released guidance on new expanded eligibility for USDA-assisted farmworker housing. The change, adopted by Congress in this year’s USDA funding bill for USDA, makes workers admitted to the U.S. on H-2A visas eligible to live in housing financed by USDA’s Section 514/516 Farm Labor Housing program.

H-2A workers were not previously eligible for these rental apartments and houses. Their employers – who must obtain federal approval to bring them to the U.S. to do farmwork for up to a year – are responsible for providing housing for them. USDA’s press release announcing the change quotes Secretary of Agriculture Sonny Perdue: “I am pleased that USDA programs can now better assist farmers needing to provide housing” for their H-2A workers while they are in the U.S.

The law that expanded the program also slightly increased its funding over last year’s levels, but it is not yet clear whether there will be additional demand for these units immediately, or whether the additional funds will be enough to meet any increase in demand. This year’s application period is currently underway (preapplications are due August 27).

The new USDA guidance states that “under no circumstance may any [current tenants in USDA-financed farmworker housing] be displaced from their homes as a result of this statutory change.”

There are no provisions in the law or the guidance explaining how landlords should prioritize new applicants with H-2A visas and those who are eligible but have some other form of work permission such as a “green card” or U.S. citizenship.

Meanwhile, the H-2A program itself may be changing. In May a press release from the Departments of State, Agriculture, Labor, and Homeland Security announced they are developing new rules for the program: “The Trump Administration is committed to modernizing the H-2A visa program rules in a way that is responsive to stakeholder concerns and that deepens our confidence in the program as a source of legal and verified labor for agriculture – while also reinforcing the program’s strong employment and wage protections for the American workforce. In addition, by improving the H-2A visa program and substantially reducing its complexity, the Administration also plans to incentivize farmers’ use of the E-Verify program to ensure their workforce is authorized to work in the United States.”

In early July the Department of Homeland Security announced that exemptions for some Caribbean farmworkers are being cancelled. Those workers did not previously need H-2A visas to come to the U.S. for jobs but, as of August 6, 2018, they will.

USDA also recently started a pilot program “to evaluate the logistical feasibility of having mixed occupancy” in a Section 514/516 property that also receives funding assistance from another program. In other words, USDA is testing whether landlords could still comply with program rules if they have some tenants who are farmworkers and some who are not.

USDA released the 2017 Rural Development Multi-Family Housing (MFH) Annual Occupancy Report. The report includes both Rural Rental Housing (RRH) Section 515 and Farm Labor Housing (FLH) Section 514 properties. These results are based on September 2017 data from the Multi-Family Information System database.

This report presents data from the past three years, comparing information from years 2015 to 2017.