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An Update on Maturing Mortgages in USDA’s Section 515 Rural Rental Housing Program

Rural America is Losing Affordable Rental Housing at an Alarming Rate

USDA’s Section 515 Rural Rental Housing properties are an important resource for many rural households and communities. But the availability of these homes is declining. In 2016, USDA presented estimates of the date when properties would leave their portfolio and potentially lose affordability and some renter protections. HAC examined changes in USDA’s Section 515 portfolio during the past five-year period. The analysis identified 921 Section 515 properties that left the portfolio between 2016 and July 2021 – nearly three times the original USDA projection for maturing mortgages during the five-year period. The ramifications of this accelerated loss of affordable rural rental housing are important as the number of properties expected to leave USDA’s portfolio will grow exponentially in the coming decades.

Download Research Brief (PDF)

Appendix 1: List of properties that have left the program.

HAC News: August 10, 2016

August 10, 2016/in HAC News

HAC News Formats. pdf

August 10, 2016
Vol. 45, No. 15

• Additional $5.6 billion needed to preserve USDA rental housing • “Make Room” coalition launches campaign to end U.S. rental housing crisis • USDA launches online data and mapping • HUD issues new single-family property disposition regulations • Audit supplement issued for nonprofits and others • CDFI Fund seeks to shift incentives for Bank Enterprise Awards lenders • Mortgage servicing rules amended • Racial wealth divide is increasing, research finds • Veteran homelessness dropped by almost half since 2010 • Please nominate national or local rural housing leaders for HAC awards

HAC News Formats. pdf

August 10, 2016
Vol. 45, No. 15

Additional $5.6 billion needed to preserve USDA rental housing. The Comprehensive Property Assessment of the USDA Rural Development Multi-Family Housing Portfolio updates a 2004 assessment that covered Section 515 properties only. The new research, funded by USDA and conducted by consultants, also reviewed off-farm Section 514/516 farmworker housing properties, those with loans guaranteed under the Section 538 program, and those that have used the MPR preservation program. Researchers found that over the next 20 years, $5.6 billion will be needed, in addition to existing capital reserves, to cover capital costs. The report suggests USDA consider using available tools to reduce mortgage payments so property owners can put more money into capital reserves.

“Make Room” coalition launches campaign to end U.S. rental housing crisis. The partnership between Enterprise Community Partners, MacArthur Foundation, Ford Foundation, CohnReznick LLP, and others including HAC hopes to elevate rental housing on the national policy agenda. Make Room’s website offers information about rental affordability and suggestions for action by individuals and organizations.

USDA launches online data and mapping. Information about individual properties receiving loans, loan guarantees, and grants through RHS single-family housing, multifamily housing, and community facilities programs is now available online through a partnership with PolicyMap. Demographics, income levels, affordability, and more can be mapped. Data is also posted on USDA’s site. More data related to rental preservation is expected to become available.

HUD issues new single-family property disposition regulations. The rule governs sales of FHA homes to individuals, government entities, and nonprofits. Contact Thomas Kumi, HUD, 202-708-1672.

Audit supplement issued for nonprofits and others. OMB’s 2016 Supplement applies to 2 CFR Part 200, the regulation that replaced OMB Circulars including A-133, and applies to audits of nonprofits and state, local, and tribal governments that receive federal funding. Comments are due October 31. For more information, contact the federal agency that awarded or oversees the funding being audited.

CDFI Fund seeks to shift incentives for Bank Enterprise Awards lenders. When reviewing BEA participants’ activities in distressed communities, the CDFI Fund will look separately at consumer loans (which include loans for affordable housing purchase and home improvement) and at commercial loans and investments (which include loans for affordable housing development). Comments are due October 11. Contact Robert Ibanez, CDFI Fund.

Mortgage servicing rules amended. The Consumer Financial Protection Bureau released a lengthy final rule amending mortgage servicing rules it issued in 2013. A CFPB blog post says the changes are intended to improve communication and availability of loss mitigation for homeowners, add protections for those who obtain property through death or divorce, and require information for those in bankruptcy proceedings. Contact CFPB’s Office of Regulations, 202-435-7700.

Racial wealth divide is increasing, research finds. The Ever-Growing Gap, released by CFED and the Institute for Policy Studies, reports that from 1983 to 2013, the average black family’s wealth grew by a little less than $20,000, Latino families’ increased by about $40,000, and white families’ wealth went up more than $300,000. If current trends persist, by 2043, when people of color are predicted to outnumber white people for the first time in the U.S., the racial wealth gap will double, leaving the average white family with over $1 million more in assets than black and Latino families. Recommendations include identifying government policies that contribute to the discrepancy, changing tax incentives, and addressing the growing concentration of wealth at the top.

Veteran homelessness dropped by almost half since 2010. Data released by HUD, VA, and the U.S. Interagency Council on Homelessness show a 17% decrease between January 2015 and January 2016, and a 47% drop since 2010. Nationwide, fewer than 40,000 veterans were experiencing homelessness on a given night in January 2016. Estimates for each state and Continuum of Care are online. Veterans who are homeless or at imminent risk of becoming homeless can speak to a homeless coordinator at a VA Medical Center or call 1-877-4AID-VET.

Please nominate national or local rural housing leaders for HAC awards! Nominations are due September 30 for the Cochran/Collings Award for national rural housing service and the Skip Jason Community Service Award. The honors will be presented at HAC’s Rural Housing Conference, November 29-December 2. Complete the online nomination form on HAC’s website. Questions? Contact Lilla Sutton, HAC, 202-842-8600.

HAC News: September 2, 2015

September 2, 2015/in HAC News

HAC News Formats. pdf

September 2, 2015
Vol. 44, No. 18

• Administration asks for permission to spend more rural Rental Assistance early in FY16 • Some RA contracts running out of funds early cannot be renewed • House’s FY16 appropriations bills exceed caps set in budget deal • HUD offers ICDBG funds • Grants available for domestic violence HIV/AIDS housing • USDA reports on review of Section 523 self-help TA • Comment period reopened for RD economic and community development setaside • CDFI Program interim rule issued • HUD corrects errors in AFFH and voucher portability rules • Report reviews progress in Texas colonias

HAC News Formats. pdf

September 2, 2015
Vol. 44, No. 18

ADMINISTRATION ASKS FOR PERMISSION TO SPEND MORE RURAL RENTAL ASSISTANCE EARLY IN FY16. The White House has requested a number of “anomalies” – changes from FY15 appropriations – it wants Congress to include in a Continuing Resolution that would fund the government in early FY16. The list includes one rural housing item, asking that Section 521 Rental Assistance funds “may be apportioned up to the rate for operations necessary to pay ongoing debt service for the section 514 and 515 multifamily direct loan programs.” Noting that “the timing of contract renewals has shifted heavily to the first few months of the fiscal year,” the Administration wants to be able to spend a disproportionate amount of RA dollars at the beginning of the fiscal year. It does not ask for additional funding.

SOME RA CONTRACTS RUNNING OUT OF FUNDS EARLY CANNOT BE RENEWED. Under the FY15 appropriations act, Section 521 RA contracts dated December 16, 2014 or later cannot be renewed early if they use up their funding before their full 12-month terms (see HAC News, 12/10/14). USDA RD estimates that in FY15, 50 properties will run out of RA money before their terms end, and that in early FY16, 700-800 projects will be affected. Owners can ask RD for the mitigation measures offered at the end of FY13, such as deferral of RD payments (see HAC News, 10/1/13), but when those changes are not enough to cover operating costs RD staff reportedly are telling property owners they can request permission to raise rents. The National Housing Law Project has informed RD that raising rents in this situation is illegal. HAC is offering to share information among owners and others; please send contact information to Leslie Strauss, HAC, leslie@ruralhome.org, 202-842-8600, and identify any specific properties in this situation.

HOUSE’S FY16 APPROPRIATIONS BILLS EXCEED CAPS SET IN BUDGET DEAL. The Office of Management and Budget calculates that, if the spending limits enacted in the 2011 Budget Control Act are not raised, the House’s funding levels for FY16 would result in sequestration of $1.8 billion in non-defense spending and $3 million in defense. The Senate’s bills would require sequestration of $1 million in defense spending.

HUD OFFERS ICDBG FUNDS. Indian tribes and tribal organizations can apply by October 14 for Indian Community Development Block Grants. Contact Gloria N. Green, HUD.

GRANTS AVAILABLE FOR DOMESTIC VIOLENCE HIV/AIDS HOUSING. October 23 is the deadline for states, units of local government, and nonprofits to request funds to provide housing assistance and supportive services to low-income persons living with HIV/AIDS who need housing assistance as a result of sexual assault, domestic violence, dating violence, or stalking, and for whom emergency shelter services or other crisis intervention services are unavailable or insufficient. Contact Amy Palilonis, HUD, 202-402-5916.

USDA REPORTS ON REVIEW OF SECTION 523 SELF-HELP TA. A recent internal review of the Section 523 Mutual Self-Help Technical Assistance Grant Program, summarized in AN 4789 (August 13, 2015), found that overall the program performed well. Some of the “areas of concern” that “must be addressed” are self-help homes built with limited homeowner sweat equity due to factors other than reduced property values; grant extensions for reasons the agency believes should have been within the grantee’s control; and grantee failure to use construction contracts for subcontracted work that clearly identify the work to be completed, specifications, price, and payments. Contact a Regional Technical and Management Assistance contractor.

COMMENT PERIOD REOPENED FOR RD ECONOMIC AND COMMUNITY DEVELOPMENT SETASIDE. Comments are due September 18 on an interim rule setting aside 10% of funds from some RD non-housing programs for projects that help implement development plans (see HAC News, 5/27/15). Contact Farah Ahmad, RBS, 202-245-1169.

CDFI PROGRAM INTERIM RULE ISSUED. Comments are due October 30 on changes implementing the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published in December 2014 (see HAC News, 12/22/14) and making technical corrections and other updates. Contact Amber Kuchar, CDFI Fund.

HUD CORRECTS ERRORS IN AFFH AND VOUCHER PORTABILITY RULES. There was a typographical error in the final rule on Affirmatively Furthering Fair Housing (see HAC News, 7/8/15) and some text was missing from the Housing Choice Voucher portability process regulation (see HAC News, 8/19/15).

REPORT REVIEWS PROGRESS IN TEXAS COLONIAS. Las Colonias in the 21st Century: Progress along the Texas-Mexico Border, published by the Dallas Federal Reserve Bank, focuses on infrastructure, housing, economic opportunity, education, and health in the six Texas counties with the highest concentrations of colonias. The vast majority of residents (96%) characterize themselves as Hispanic or Latino, almost two-thirds are U.S. citizens, and more than 40% are poor. A shortage of decent, affordable housing remains, but the report highlights housing successes by community-based nonprofits.

HAC News: March 19, 2014

March 19, 2014/in HAC News

HAC News Formats. pdf

March 19, 2014
Vol. 43, No. 6

• Members of Congress question Vilsack about proposed cuts in Sections 502 and 523 • USDA publishes more details about budget requests, HAC responds to rental proposals • Senators propose housing finance reform deal • Deadlines coming up for Assets for Independence • USDA to hold conference calls on multifamily programs •Comments sought on Native Asset Building Initiative • USDA RD explains implementation of rural definition changes • New data on USDA tenants released • Report examines income inequality in states • HAC blogs on rural seniors

March 19, 2014
Vol. 43, No. 6

MEMBERS OF CONGRESS QUESTION VILSACK ABOUT PROPOSED CUTS IN SECTIONS 502 AND 523. USDA Secretary Tom Vilsack was the only witness at a March 13 House Appropriations Subcommittee on Agriculture hearing on the Administration’s FY15 budget request. House Appropriations Committee Chair Hal Rogers (R-KY) criticized the proposed cuts in Section 502 direct loans and Section 523 self-help grants, saying this approach “shows a disrespect for our rural communities.” Subcommittee Chair Robert Aderholt (R-AL) also asserted support for the rural housing programs. When Rep. David Valadao (R-CA) asked the Secretary why the reductions were proposed, Vilsack replied that “difficult choices” had to be made.

USDA PUBLISHES MORE DETAILS ABOUT BUDGET REQUESTS, HAC RESPONDS TO RENTAL PROPOSALS. In its Congressional Justification explaining the FY15 budget, USDA tells how it calculates the amount it would expect to collect if a $50 monthly minimum rent were imposed, and how it might use the discretion it wants with respect to renewals of Section 521 Rental Assistance contracts. HAC board and staff critique the ideas in posts on the Rooflines blog: “No, Minimum Rents Do Not ‘Encourage Financial Responsibility” and “Rural Rental Assistance Needs USDA’s Support to Survive.”

SENATORS PROPOSE HOUSING FINANCE REFORM DEAL. Senators Tim Johnson (D-SD) and Mike Crapo (R-ID), the Chair and Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, have released a discussion draft of a bipartisan housing finance reform bill based on S. 1217, the Corker-Warner bill introduced in June 2013. Like the earlier bill, it would create a new Federal Mortgage Insurance Corporation to replace Fannie Mae and Freddie Mac and would eliminate affordable housing goals. It does include other mechanisms to encourage affordable housing development.

DEADLINES COMING UP FOR ASSETS FOR INDEPENDENCE. The next deadlines are May 7 and July 14, and applica-tions are accepted on a rolling basis. This program makes grants to nonprofits and government agencies that establish individual development accounts for low-income participants. Contact the AFI Resource Center, 1-866-778-6037.

USDA TO HOLD CONFERENCE CALLS ON MULTIFAMILY PROGRAMS. Calls with stakeholders will be scheduled at least quarterly during 2014. To register, contact Timothy James, RD, 919-873-2056. Those who have previously registered do not need to register again.

COMMENTS SOUGHT ON NATIVE ASSET BUILDING INITIATIVE. The Administration for Children and Families at the Department of Health and Human Services proposes policy changes to be used in the FY14 NOFA for NABI, which funds Individual Development Accounts and related services. Comments are due April 7. Contact Carmelia Strickland, HHS, 877-922-9262.

USDA RD EXPLAINS IMPLEMENTATION OF RURAL DEFINITION CHANGES. Administrative Notice 4748 explains that the grandfathering provisions adopted in the Farm Bill and the FY14 appropriations act will be implemented in two stages. The February 5, 2014 HAC News stated erroneously that the new 35,000 population limit for growing areas would not take effect until October 1; instead, RD expects to implement it around May 6. No currently eligible places will become ineligible until October 1, when currently eligible places will become ineligible if their populations exceed 35,000 or they are no longer rural in character.

NEW DATA ON USDA TENANTS RELEASED. The annual occupancy report shows that the total number of properties in USDA’s rental portfolio fell by 2.48% from April 2012 to September 2013, a decrease of 346 Section 515 properties and 34 Section 514 properties, representing about 5,092 apartments (1.14% of total units). This report is the first to include demographic data on Section 521 Rental Assistance households, and they appear generally similar to tenants in Section 515 properties. The average annual income of Section 515 residents has increased slightly to $11,747. For 515 tenants with RA, average income is $9,828.

REPORT EXAMINES INCOME INEQUALITY IN STATES. The Economic Analysis and Research Network calculated changes in income from 1917 to 2011 and found that in every state the incomes of the top 1% have grown faster than those of the other 99%, although the extent of the gap differs among states. The Increasingly Unequal States of America, published by the Economic Policy Institute, is accompanied by an interactive feature that provides figures and graphics for each state.

HAC BLOGS ON RURAL SENIORS. “Keeping Rural Seniors in Their Homes” describes home and community based care as a way to allow rural seniors to age in place.

Tag Archive for: usda rental housing

An Update on Maturing Mortgages in USDA’s Section 515 Rural Rental Housing Program

Rural America is Losing Affordable Rental Housing at an Alarming Rate

HAC News: August 10, 2016

HAC News: September 2, 2015

HAC News: March 19, 2014

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