WHAT’S NEW IN RURAL DEVELOPMENT?
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WHAT’S NEW IN RURAL DEVELOPMENT? NORTH CAROLINA AFFORDABLE HOUSING CONFERENCE RALEIGH, NORTH CAROLINA SEPTEMBER 16, 2010. MEL ELLIS. DIRECTOR, SINGLE FAMILY HOUSING USDA RURAL DEVELOPMENT (NC) (919) 873-2060

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What s new in rural development

WHAT’S NEW IN RURAL DEVELOPMENT?

NORTH CAROLINA AFFORDABLE HOUSING CONFERENCE

RALEIGH, NORTH CAROLINA

SEPTEMBER 16, 2010


What s new in rural development

MEL ELLIS.

DIRECTOR, SINGLE FAMILY HOUSING

USDA RURAL DEVELOPMENT (NC)

(919) 873-2060

[email protected]


What s new in rural development

WHO HAS HEARD OF

USDA RURAL DEVELOPMENT

BEFORE TODAY?


What s new in rural development

MISSION STATEMENT

“To enhance the ability of rural communities and to develop, grow, and improve their quality of life by targeting financial and technical resources in areas of greatest need through activities of greatest potential.”

  • Rural Development consists of three areas:

    • Rural Housing

    • Rural Utilities

    • Rural Business


Single family housing programs

Single Family Housing Programs

Section 502 Guaranteed Loans

OVER $805.0 M

Section 502 Direct Loans

$75.8 M

Section 504 Repair Loans

$1.54 M

Section 504 Repair Grants

$1.52 M

FISCAL YEAR 2010

NORTH CAROLINA


Single family housing programs1

Single Family Housing Programs

Section 502 Direct Loans ($75.8 M)

Assisted 575 Rural Households with Mortgage Loans


Section 502 direct loans

Section 502 Direct Loans

Purpose

Provide people in rural

communities the opportunity to own adequate, modest, decent, safe and sanitary homes


What s new in rural development

BASIC ELIGIBILITY CRITERIA

Do not currently own adequate housing

Must be a U.S. Citizen, or Legal Resident Alien

Have legal capacity to enter into a contractual

relationship

Possess acceptable credit

Have a stable and dependable income


What s new in rural development

BASIC ELIGIBILITY CRITERIA

Down Payment: None Required

Property: No square footage or amenity limitations

Exception: No swimming pools


What s new in rural development

RATES, TERMS, AND LIMITS

Interest Rate: (Changes monthly, depending upon the cost of money to the Government). Payments may be subsidized to as low as 1% financing.

Terms: Typically 33 years, but may be extended to 38 years for very low income applicants if needed in order to achieve adequate repayment capacity.

Loan Ceiling: Varies by County


What s new in rural development

CREDIT HISTORY

  • Indicators of Unacceptable Credit

  • Account payments delinquent > 30 days on two or more occasions

  • within a 12-month period

  • Foreclosure that has been completed within the last 36 months

  • Outstanding Internal Revenue Service (IRS) tax lien or any other outstanding tax liens with no satisfactory arrangement for payment

  • Two or more rent payments paid 30 or more days late within the last

  • 2 years


What s new in rural development

CREDIT HISTORY

  • Indicators of Unacceptable Credit

  • Outstanding collection accounts

  • with no satisfactory arrangements

  • for repayment or paid in full within

  • the last 6 months

  • Non-Agency debts written off within

  • last 36 months unless paid in full at

  • least 12 months ago

  • Delinquency on a federal debt


What s new in rural development

CREDIT HISTORY

  • Indicators of Unacceptable Credit

  • A court-created or court-affirmed obligation or judgment caused by nonpayment that is currently outstanding or has been outstanding within the last 12 months, except:

  • A bankruptcy in which:

  • Debts were discharged >36 months prior to the date of application

  • Debt restructuring plan successfully completed and applicant has met

  • obligations when due for the 12 months prior to the date of application

  • A judgment satisfied more than 12 months before the date of application

An applicant with an outstanding judgment obtained by the United States in

a Federal court, other than the United States Tax Court, is NOT eligible for a

Section 502 loan. This requirement is statutory and cannot be waived.


What s new in rural development

YOU MAY HAVE SOME CREDIT ISSUES

BUT

DON’T GIVE UP YOUR DREAM!!!


Credit history

CREDIT HISTORY

Credit Waivers

  • Rural Development may consider mitigating circumstances to establish the borrower’s intent for good credit when the applicant provides documentation that:

    • The circumstances were of a temporary nature, were beyond the applicant’s control, and have been removed.

    • The adverse action or delinquency was the result of a refusal to make full payment because of defective goods or services or as a result of some other justifiable dispute relating to the goods or services purchased or contracted for.


What s new in rural development

CREDIT HISTORY

  • Credit counseling is also available to help put you on the right track to homeownership

  • Local Non-Profit Community Development Corporations & Community Action Agencies that are active in housing


What s new in rural development

Section 502 Direct Loan Borrower


Single family housing programs2

Single Family Housing Programs

Section 502 Loan Guarantees

(OVER $805.0M)

Assisted over 5,949 Rural Residents


What s new in rural development

Sec. 502 Guaranteed Loan customer


Section 502 rural housing loan guarantees

Section 502 Rural Housing Loan Guarantees

Purpose:

  • To help those at the moderate income level purchase homes in rural areas. Funds can be used to build or purchase a home.


Section 502 rural housing loan guarantees1

Section 502 Rural Housing Loan Guarantees

Role of USDA:

To Guarantee a Lender that we will

repay that lender 90% of the total loan

value if the Loan goes bad &

is not re-paid


Section 502 rural housing loan guarantees2

Section 502 Rural Housing Loan Guarantees

Eligibility:

  • Income of up to 115% of median income for the area.

  • The lender determines repayment feasibility, using repayment ratios.


Section 502 rural housing loan guarantees3

Section 502 Rural Housing Loan Guarantees

Terms:

  • Loans are for 30 years

  • Interest rate is set by the lender

  • No required down payment


What s new in rural development

Home Financed Through Section 502 Guaranteed Home Loan


Sfh 504 loan program 1 54 m

SFH 504 LOAN PROGRAM ($1.54 M)

PURPOSE:

To provide a source of funds for rural homeowners

for the removal of safety hazards and repairs to

existing properties.


Sfh 504 loans

SFH 504 LOANS

Provides a source of funds for very low income owner occupants for removal of safety hazards and repairs to existing properties.

  • Interest Rate: 1%

  • Terms: Maximum of 20 years

  • Maximum Loan Amount: $20,000


Sfh 504 loans1

SFH 504 LOANS

ELIGIBILITY

  • Must own and occupy property that needs repairs

  • Household income must be below the area’s very low income limit

  • Must be a US Citizen or Legal Resident Citizen

  • Possess legal capacity to enter into loan relationship

  • Have satisfactory credit history


Sfh 504 grant program 1 52 m

SFH 504 GRANT PROGRAM ($1.52 M)

  • Funds Purpose: Emergency repairs, energy conservation, and the removal of safety hazards

  • Maximum Grant Amount: $7,500

    (FUNDS HAVE BEEN EXTREMELY LIMITED WITH NORMALLY A LENGTHY WAITING LIST)

  • Who is Eligible: Owner occupants aged 62 years or older) who lack repayment capacity for a loan

    Grant recipients must sign a statement agreeing to repay the grant if the property is sold within 3 years from the date of grant.


Rural housing site loan program

RURAL HOUSING SITE LOAN PROGRAM

  • Rural Housing Site Loans are loans made to provide financing for the purchase and development of affordable housing sites in rural areas for low and moderate-income families. Loans are made to acquire and develop sites for housing to be constructed or for site development to build affordable homes for low or moderate income rural residents.


Rural housing site loan program1

RURAL HOUSING SITE LOAN PROGRAM

  • Eligible organizations include nonprofit organizations, public bodies and Federal recognized Indian Tribes.


What s new in rural development

For more information about these or other USDA housing programs, contact the USDA Rural Development State Office at 919-873-2060 or visit our website at:

www.rurdev.usda.gov


Usda rural development state office

USDA RURAL DEVELOPMENTSTATE OFFICE

4405 Bland Road, Suite 260

Raleigh, NC 27609

Phone:

(919) 873-2060


Rural development new happenings multi family housing

RURAL DEVELOPMENTNEW HAPPENINGSMULTI FAMILY HOUSING


What s new

WHAT’S NEW?

  • New Underwriting Templates

  • Handbook Changes for Appraisals

  • Capital Needs Assessment (CNA)

  • Guaranteed Rural Rental Housing Program (GRRH)


New underwriting templates

New Underwriting Templates

  • RD is releasing three new tools for evaluation by RD staff

  • The three tools are:

    • New construction underwriting template

      • supports the underwriting for new construction 515 projects and new construction farm labor housing projects

    • Preliminary analysis tool for transfers (for use by RD staff, borrowers, and potential purchasers)

      • allows rapid assessment of whether a potential transfer transaction is likely to be approvable by RD.

    • Preliminary analysis tool for MPR (for use by RD staff, borrowers, and potential purchasers, to evaluate whether a potential MPR transaction may be approvable by RD)

      • should allow sellers and purchasers and RD staff to structure their transfer requests in a way that complies with RD requirements, leading to rapid RD approval with minimal changes to the proposed transaction.


Handbook changes for appraisals hb 1 3560 attachment 7 c

Handbook Changes for AppraisalsHB-1-3560 Attachment 7-C

  • SPECIFIC VALUE TYPES TO BE REQUESTED AND REPORTED BASED ON THE INTENDED USE OF THE APPRAISAL

    • Value types that should be requested in an appraisal Statement of Work (SOW) are specific to the loan-making, loan-servicing, preservation, or disposition decision(s) for which the appraisal is ordered. In other words, the intended use of the appraisal determines the value type(s) to be requested and reported.

  • The value types listed are

    • NEW OR SUBSEQUENT LOAN

    • EXISTING LOAN

    • VALUE OF PROPERTY

    • VALUE OF PROPERTY

    • VALUE FOR SALE - NON PROGRAM PROPERTY

    • VALUE FOR SALE - ELIGIBLE AS PROGRAM PROPERTY

  • This guidance does not require an appraisal when it is not otherwise needed and does not restrict Rural Development from requesting additional values if a need for analysis or for any other purpose is determined or requested.


Capital needs assessments information update tips tricks

Capital Needs Assessments Information Update “Tips & Tricks”


What s new in rural development

Existing MFH Portfolio

  • Size of Portfolio:

    • 2003: 17,287 properties

    • 2008: 15,361 properties

    • (predominantly due to consolidations)

  • Average Age of Property: 28 years


Capital needs assessment cna

Capital Needs Assessment (CNA)

  • WHAT ARE THEY ?

    • A snapshot in time useful for projecting reserves and a tool for financial planning.

    • A written report which identifies the repair, replacement, and improvement needs of a property over an extended period of time.


Capital needs assessment cna1

CapitalNeedsAssessment(CNA)

  • WHAT ARE THEY NOT ?

    • An assessment of ALL costs of ownership over the economic life of the material or system. (Life Cycle Cost Analysis)

    • A comprehensive report on work items and their related costs for a proposed/potential rehabilitation project. (Unit by Unit Inspection)

    • Not a rehab/repair list


What s new in rural development

Capital Needs Assessments

When Are CNAs Required?

1. New Construction Loans

2. Rehabilitation Loans

3. Transfer of project ownership

4. Loan Servicing:

a. Loan Reamortization.

b. Loan Write-down.

5. MultiFamily Housing Preservation and

Revitalization program (MPR)


Capital needs assessments

Capital Needs Assessments

WHAT DO THEY INCLUDE ?

1. Description of the property.2. Condition of materials and systems.

3. Accessibility Issues.

4. Environmental Issues.

5. Repair / Replacement / Improvement Costs.

6. Repair / Replacement / Improvement

Schedule. (IMMEDIATE & LONG TERM)


Capital needs assessments1

Capital Needs Assessments

  • OWNER ACCEPTANCE ?

    The CNA final report accepted by the property owner BEFORE accepted by Rural Development.


What s new in rural development

Contact Information

  • MPR Public Website:

  • Contact location for general public

  • Information on MPR Program

    • includes CNA Provider List and application

    • Unnumbered Letter on CNAs

    • Latest RD CNA Template

    • 2008 data / information will be replaced with current as it becomes available

  • http://www.rurdev.usda.gov/rhs/mfh/MPR/MPRHome.htm


Section 538 guaranteed rural rental housing program grrhp

Section 538 Guaranteed Rural Rental Housing Program (GRRHP)

Rural rental housing guarantee loan program

housing very low to moderate income tenants

guided by Title V of the Housing Act of 1949

and RD regulations 7 CFR Part 3565

Types:

New Construction Loan only

Construction & New Construction Loan

Rehabilitation Loan

Specifics:

Up to 90% on principal and accrued interest

Initial tenant income less than 115% of AMI

Up to 40 year amortization of loan

Loan uses include soft costs


Section 538 guaranteed rural rental housing program grrhp1

Section 538 Guaranteed Rural Rental Housing Program (GRRHP)

Where are we now?

In FY 2009 approximately 30% of the GRRHP was used for 515 preservation and rehab

Continuous funding – funding lender requests 12 months a year

Providing seamless construction/permanent guarantees

Vibrant secondary market for guaranteed loans


Section 538 guaranteed rural rental housing program grrhp2

Section 538 Guaranteed Rural Rental Housing Program (GRRHP)

Where are we going?

  • Regulation – seamless const./permanent guarantee

  • Handbook changes

  • More extensive regulation changes

  • Greater secondary market participation

  • Moving towards a costless product

  • Workforce housing component


State office raleigh nc contact information

State Office, Raleigh, NCCONTACT INFORMATION

  • Program Director

    • Beverly Casey 919-873-2055 [email protected]

  • State Office Specialists

    • Rebecca Dillard 919-873-2062 [email protected]

    • Susan Ekalo 828-254-0916 x119 [email protected]

    • Barbara Owens 252-204-0472 [email protected]


What s new in rural development

COMMUNITY PROGRAMS

=

COMMUNITY FACILITIES

(CF)

&

WATER AND ENVIRONMENTAL (WEP)


What s new in rural development

PROGRAM SUPPORT =

ENGINEERS

ARCHITECT

APPRAISER

ENVIRNOMENTAL COORD.


What s new in rural development

SO……………

HOW MANY OF YOU HAVE

USDA/RD/CP EXPERIENCE?


What s new in rural development

LET’S LOOK AT COMMUNITY FACILITIES…..


What s new in rural development

THE DEAL ABOUT CF…..

HEALTH CARE

EDUCATION

PUBLIC SAFETY

PUBLIC SERVICE


What s new in rural development

THE DEAL ABOUT CF…..

WE FINANCE ESSENTIAL COMMUNITY FACILITIES FOR RURAL COMMUNITIES

THE APPLICANTS CAN BE PUBLIC BODIES, NON-PROFITS OR INDIAN TRIBES.

$$$ CAN BE USED TO BUILD FACILITIES AND PURCHASE EQUIPMENT FOR FIRE/RESCUE,

EARLY WARNING SYSTEMS, POLICE STATIONS, HEALTH CLINICS, SCHOOLS,

LIBRARIES, HOSPITALS, FARMERS’ MARKETS, ETC….

FOR POPULATIONS OF LESS THAN 20K

CAN BE A LOAN, LOAN GUARANTEE, GRANT (C HAIR ON HEAD) OR COMBINATION

THEREOF

CAN GO TO 100% APPRAISED VALUE UP TO 40 YRS/LIFE OF THE SECURITY

MAX GRANT IS 75% OF TOTAL PROJECT COST


What s new in rural development

NORTH CAROLINA’S CF PORTFOLIO:

AS OF SEPT 1, 2010, $398.7 MILLION

THRU AUGUST THIS FY, $192.1 MILLION PROCESSED

WITH $274.3 MILLION MORE IN PIPELINE

LARGEST CF PORTFOLIO IN USA


What s new in rural development

COMMUNITY FACILITIES REGS CAN BE FOUND @

1942-A, CF LOANS

1942-C, FIRE/RESCUE

3570-B, CF GRANT PROG

3575-A, CP GUAR LOANS

And at http://www.rurdev.usda.gov/rhs/cf/cp.htm


What s new in rural development

THE DEAL ABOUT WEP…..

TO PROVIDE WATER AND WASTE FINANCING IN RURAL AREAS TO THE MOST

FINANCIALLY NEEDY APPLICANTS RESULTING IN REASONABLE USER FEES.

THE APPLICANTS MUST BE PUBLIC ENTITIES, NON-PROFITS AND INDIAN TRIBES.

$$$ CAN BE USED TO BUILD, REPAIR, AND IMPROVE PUBLIC WATER SYSTEMS, AND

WASTE COLLECTION AND TREATMENT SYSTEMS

FOR RURAL AREAS, CITIES AND TOWNS WITH POPULATIONS OF LESS THAN 10K

CAN BE A LOAN, LOAN GUARANTEE, GRANT OR COMBINATION THEREOF

INTEREST RATES ARE SET QUARTERLY BASED 0N AN INDEX OF CURRENT MARKET

YIELDS FOR MUNICIPAL OBLIGATIONS. REPAYMENT PERIOD IS UP T0 40

YEARS.


What s new in rural development

WATER AND ENVIRON REGS CAN BE FOUND @1780, 1778, 1779, and STAFF INSTRUCTION 1782-1

And at

http://www.usda.gov/rus/water/


What s new in rural development

LET’S LOOK AT WATER AND ENVIRONMENTAL DEALS….


What s new in rural development

NORTH CAROLINA’S WEP PORTFOLIO:

AS OF SEPT 2, 2010 $625 MILLION

THRU AUG 27 THIS FY, $163.79 MILLION WITH

$145 MILLION MORE IN PIPELINE

LARGEST WEP PORTFOLIO IN USA


What s new in rural development

COMMUNITY

PROGRAMS!!


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