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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NORTH CAROLINA AFFORDABLE HOUSING CONFERENCE
RALEIGH, NORTH CAROLINA
SEPTEMBER 16, 2010
USDA RURAL DEVELOPMENT
“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.”
Section 502 Guaranteed Loans
OVER $805.0 M
Section 502 Direct Loans
Section 504 Repair Loans
Section 504 Repair Grants
FISCAL YEAR 2010
Section 502 Direct Loans ($75.8 M)
Assisted 575 Rural Households with Mortgage Loans
Provide people in rural
communities the opportunity to own adequate, modest, decent, safe and sanitary homes
Do not currently own adequate housing
Must be a U.S. Citizen, or Legal Resident Alien
Have legal capacity to enter into a contractual
Possess acceptable credit
Have a stable and dependable income
Down Payment: None Required
Property: No square footage or amenity limitations
Exception: No swimming pools
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
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.
DON’T GIVE UP YOUR DREAM!!!
Section 502 Loan Guarantees
Assisted over 5,949 Rural Residents
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
To provide a source of funds for rural homeowners
for the removal of safety hazards and repairs to
Provides a source of funds for very low income owner occupants for removal of safety hazards and repairs to existing properties.
(FUNDS HAVE BEEN EXTREMELY LIMITED WITH NORMALLY A LENGTHY WAITING LIST)
Grant recipients must sign a statement agreeing to repay the grant if the property is sold within 3 years from the date of grant.
4405 Bland Road, Suite 260
Raleigh, NC 27609
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)
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)
The CNA final report accepted by the property owner BEFORE accepted by Rural Development.
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
New Construction Loan only
Construction & New Construction Loan
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
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
Where are we going?
WATER AND ENVIRONMENTAL (WEP)
HOW MANY OF YOU HAVE
WE FINANCE ESSENTIAL COMMUNITY FACILITIES FOR RURAL COMMUNITIES
THE APPLICANTS CAN BE PUBLIC BODIES, NON-PROFITS OR INDIAN TRIBES.
$$$ CAN BE USED TO BUILD FACILITIES AND PURCHASE EQUIPMENT FOR FIRE/RESCUE,
EARLY WARNING SYSTEMS, POLICE STATIONS, HEALTH CLINICS, SCHOOLS,
LIBRARIES, HOSPITALS, FARMERS’ MARKETS, ETC….
FOR POPULATIONS OF LESS THAN 20K
CAN BE A LOAN, LOAN GUARANTEE, GRANT (C HAIR ON HEAD) OR COMBINATION
CAN GO TO 100% APPRAISED VALUE UP TO 40 YRS/LIFE OF THE SECURITY
MAX GRANT IS 75% OF TOTAL PROJECT COST
AS OF SEPT 1, 2010, $398.7 MILLION
THRU AUGUST THIS FY, $192.1 MILLION PROCESSED
WITH $274.3 MILLION MORE IN PIPELINE
LARGEST CF PORTFOLIO IN USA
1942-A, CF LOANS
3570-B, CF GRANT PROG
3575-A, CP GUAR LOANS
And at http://www.rurdev.usda.gov/rhs/cf/cp.htm
TO PROVIDE WATER AND WASTE FINANCING IN RURAL AREAS TO THE MOST
FINANCIALLY NEEDY APPLICANTS RESULTING IN REASONABLE USER FEES.
THE APPLICANTS MUST BE PUBLIC ENTITIES, NON-PROFITS AND INDIAN TRIBES.
$$$ 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
WATER AND ENVIRON REGS CAN BE FOUND @1780, 1778, 1779, and STAFF INSTRUCTION 1782-1
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