Policy Archives

It is past time to end this shutdown

January 22, 2019/in Policy

Housing Assistance Council Statement on Federal Government Shutdown

by David Lipsetz, CEO, Peter Carey, Chair, Peggy Wright, President

It is past time to end the government shutdown. As the budget stalemate continues, the impact on small towns and rural families grows more severe. Every day Americans are losing out on billions of dollars’ worth of affordable housing, clean drinking water, and community facilities, like town halls, fire stations and hospitals. Like it or not, the federal government does important work, and must be reopened now.

The shutdown has thrown countless rural home sales into limbo. U.S. Department of Agriculture offices are closed, so the department’s Rural Housing Service is not making mortgages, guaranteeing mortgages made by banks, or processing requests for new mortgages.

The homebuying industry is central to the entire U.S. economy. Because USDA is closed, rural residents and businesses have lost the annual equivalent of more than $25 billion of business. Some of that activity will go forward when the government reopens, but some will not. Sellers have found other buyers. Buyers are losing out on the stability and wealth-building of home ownership. Businesses are not selling furniture and other goods and services to new home buyers. Realtors and local banks are losing time, money and, potentially even worse for the long-term health of the housing market, their customers’ confidence in publicly-backed privately-managed mortgages. Ripples from these, and all the other shutdown-related missed opportunities, will extend to the national economy, and will get bigger as the shutdown continues.

The Housing Assistance Council has been hearing about these ripple effects from rural community organizations we work with around the country. A group in Utah has to find $1.3 million to reimburse electricians, plumbers and others for work they have already done on USDA-financed houses under construction. A realtor in a small town in Tennessee has lost 90 percent of their business without USDA mortgages. In Alaska and elsewhere, families are hearing from their insurance companies that USDA has not made their homeowners’ insurance payments – the money is there, escrowed from the residents’ monthly mortgage payments to USDA, but there are no staff at USDA to send out the funds.

HAC is also keeping in close contact with rural tenants and landlords who rely on USDA. More than 268,000 tenant families receive USDA rental assistance. Their annual incomes average less than $11,000 and two-thirds of them are elderly or disabled. If the shutdown continues into February, USDA will run out of money to help thousands of those tenants pay their rent. This is putting renters and their landlords into an impossible situation. Renters will have to decide whether to divert their grocery money to cover the gap in rent or to risk eviction. Landlords will have to decide whether to punish renters for non-payment or stop paying for other things like insurance, taxes and property management staff.

At the same time, USDA’s multi-billion dollar loan programs for water systems, rural health clinics, schools and fire halls are shut down; tens of thousands of low-income tenants who rely on the Department of Housing and Urban Development for similar programs are losing their rent support; and countless other Americans are suffering in myriad ways.

This is no way to manage the public’s programs. End this shutdown now!

About the Housing Assistance Council

The Housing Assistance Council helps build homes and communities across rural America. Founded in 1971 and headquartered in Washington, D.C., HAC is a national nonprofit and a certified community development financial institution dedicated to helping local rural organizations build affordable homes by providing below-market financing, technical assistance, training, research, and information services. To learn more, visit www.ruralhome.org.

CLARIFICATION and shutdown update: January Rental Assistance payments will be made

January 15, 2019/in Policy

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

Federal shutdown continues, impact on rural renters still unclear

January 8, 2019/in News, Policy, Rural News Housing Affordability, Rental Housing

As of January 8, 2019, parts of the federal government including USDA and HUD remain shut down. HAC has not been able to learn any additional information about the impact on USDA Section 521 Rental Assistance and Section 542 vouchers since our December post.

The National Rural Housing Coalition has compiled information about the shutdown’s early impacts on rural housing organizations around the country.

– Posted by Leslie Strauss

HAC Shares Comments on OCC's "Reforming the Community Reinvestment Act Regulatory Framework" ANPR

November 16, 2018/in Federal Register Comments Community Reinvestment Act

The Housing Assistance Council (HAC) is presenting its comments to the Office of the Comptroller of Currency (OCC) on its “Reforming the Community Reinvestment Act Regulatory Framework” Advanced Notice of Proposed Rulemaking (ANPR). Through this ANPR, the OCC is seeking stakeholder comments on avenues to modernize CRA and increase lending and investment where it is needed most, reduce reporting burden, and assess performance, all in a manner consistent with the statute’s original purpose. Given its organizational focus on rural housing, HAC has prioritized its remarks related to questions and issues that most impact rural communities and consumers.

Download HAC’s Comments: PDF

HAC Shares DRAFT Comments on USDA Proposed Rule on Income Banding

October 23, 2018/in Federal Register Comments

The Housing Assistance Council is making available its DRAFT comments on USDA’s proposed rule published August 31, 2018, The proposal seeks to amend USDA’s regulations to implement a two-tier income limit structure and revise the methodology to determine area loan limits for its Single Family Housing direct loan and grant programs and make other changes. The proposed change to the income limit structure is intended to minimize the observed disconnect between minimum wages and the low median income in many areas. The proposed change to the Area Loan Limit methodology is intended to streamline the process and improve the reliability of the data set used to establish the area loan limits. HAC agrees that these are desirable goals. However, we are concerned that the proposed solutions will divert limited program resources to applicants with much higher incomes. HAC strongly urges the Agency to take positive steps to assure the program continues to serve those who are most in need. Comments are due to the Agency on or before October 30, 2018.

Download HAC’s Draft Comments: PDF | Word

USDA Proposes to Make "Income Banding" Permanent

August 31, 2018/in Policy

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.

HAC Submits Comments on HUD Fair Housing Regulations

August 21, 2018/in Policy

On August 20, 2018 HAC submitted a response to HUD’s request for comments on the “disparate impact” standard used in its fair housing regulations. HAC’s letter (PDF) strongly supports the regulation in its current form. HUD received a total of almost 2000 comments.

USDA Implements Farmworker Housing Occupancy for H-2A Visa Holders

July 10, 2018/in Policy

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.

Administration Proposes Moving Some Rural Housing Programs to HUD

June 21, 2018/in Policy

The rural loan guarantees and rental assistance programs of the U.S. Department of Agriculture (USDA) would move to the Department of Housing and Urban Development (HUD) under a proposal released by the Trump Administration on June 21, 2018. The Administration’s document acknowledges that USDA’s Section 502 guarantee program for homebuyers, its Section 538 guarantee program for developers of rental housing, its Section 521 Rental Assistance program, and its Section 542 tenant voucher program are not the same as HUD’s Federal Housing Administration mortgage guarantee programs or HUD’s renter aid programs. It contends, however, that rural America no longer needs separate housing resources.

The Administration proposal suggests modeling this reorganization of agencies after a bill drafted in 2011 but never introduced, the FHA-Rural Regulatory Improvement Act of 2011. That bill would have transferred the entire USDA Rural Housing Service (RHS) to HUD. It is unclear how that would have been feasible, since RHS field staff are also responsible for USDA’s community facilities programs and overlap with staff for other USDA rural development programs. HUD would have been responsible for determining how to effectuate the transfer.

The Administration’s suggestion seems to be based on reports from the Government Accountability Office in 2000, 2012, and 2016, although GAO’s analyses stop short of recommending the change. GAO has repeatedly noted the challenges involved in combining programs and has recommended “that RHS and FHA should evaluate and report on opportunities to consolidate their similar housing programs.” Such an evaluation has never been prepared.

The other housing-related section of the Administration’s government reorganization document proposes to end the conservatorship of Fannie Mae and Freddie Mac and transition the two government-sponsored enterprises to fully private entities. An unspecified federal government entity would continue to regulate them. Fannie, Freddie, and any other competitors that entered the secondary mortgage market would pay a fee that would be transferred to HUD to finance affordable housing.

USDA Multi-Family Housing Annual Occupancy Report Released

April 25, 2018/in Policy

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.