Senate committee seeks to improve rural housing stock as needs grow

September 24, 2022

Montana Lending

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Officials are considering how to improve rural housing programs across the United States as more people struggle with the rising cost of living. The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a audience On Tuesday, ask stakeholders and credit professionals how USDA’s Rural Housing Service can better serve rural residents.

In the Mountain West region, more than one-fifth of homeowners with a mortgage spend at least 35% of their monthly income on housing, according to data released last week by the United States Census Bureau. Nearly 40% of tenants across the region spend more than a third of their income on rents, and vacancy rates are falling as supply chains, labor shortages and inflation make it difficult to build additional units.

The Rural Housing Service, or HRH, is one of the only government tools specifically aimed at rural populations. It offers loans, grants and loan guarantees not only for single and multi-family housing, but also for hospitals, fire stations and other critical community infrastructure. However, testimony at the Senate hearing showed that the program has been hampered by staffing shortages, underfunding and technological challenges.

“This disparity negatively impacts rural and Native Americans who rely on them as some of the best and only products designed for rural and Native needs,” said tribal housing expert Tonya Plummer. “We encourage creative solutions.”

Of the total mortgages issued nationwide last year, about 114,000 loans — less than 0.5% of total volume — were USDA-backed, according to David Battany of the Mortgage Lenders Association.

“These programs are worthy of our country’s commitment to them,” he said.

Legislation introduced earlier this week by Sens. Tina Smith, D-Minn., and Jeanne Shaheen, DN.H., aims to further that commitment by making the loan process easier for select rural residents seeking housing assistance.

Most speakers, however, said additional and systematic investments in the USDA are needed to really turn around the HRH. Using South Dakota as an example, Plummer, the tribal housing expert, said program staff in the state are operating at “25% of what they were five years ago.” For starters, she proposed several “nuanced” changes to how the federal government structures its loan, budget, and foreclosure programs during his testimony.

Bettany agreed and added that the current loan payment and application process for lenders and applicants is cumbersome and outdated. RHS response times to approve a loan can take up to 10 days, well beyond the industry standard.

“RHS loans can better serve consumers and industry players,” Bettany said.

“We can advance this goal by addressing three areas: better workflow, better technology, and if both of these areas are achieved, better lending products.”

This comprehensive look at rural housing comes at a time when needs are skyrocketing. In Wyoming, a rental assistance program broke demand records in August, and there was more requests for property tax relief last year than ever.

The Ministry of Housing and Urban Planning is also help to rise for rural homelessness nationwide.

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O’Connor Center for the Rocky Mountain West in Montana, KUNC in the Colorado, KUNM in New Mexico, with support from affiliate stations throughout the region. Funding for the Mountain West News Bureau is provided in part by the public broadcasting company.

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