Washington, D.C., May 17, 2010 -- Contact:
Jay Fletcher (202) 690-0498
USDA Announces Demonstration Program To Increase Availability of Affordable, Rural, Multi-Family Housing
WASHINGTON, May 17, 2010 – Agriculture Under Secretary for Rural Development Dallas Tonsager today announced that USDA is accepting applications for a demonstration program to simplify the loan guarantee process for the construction and operation of affordable, rural multi-family dwellings. The purpose is to explore new ways to finance the dwellings to increase the supply of affordable rural housing.
“Streamlining the loan guarantee process will make it easier for lenders and developers to finance and build affordable multi-family housing units in rural areas,” Tonsager said. “President Obama believes in nurturing strong, robust and vibrant rural communities, and I anticipate this program will have a significant impact on rural communities across the nation.”
Under this demonstration, lenders with existing USDA guarantees on construction loans that have not closed can get a single guarantee for construction loan advances as well for the permanent loan after construction is completed. Under current policy, lenders must go to two loan closings: one for construction loan advances and a later one for the permanent loan. This demonstration combines the two closings into one. USDA Rural Development provides a guarantee to lenders to reduce their financial exposure in the event that a borrower defaults on a loan.
USDA Rural Development plans to reserve for this demonstration up to $10 million in construction loans that are approved between Oct. 1, 2008, and Dec. 31, 2010, but have not gone to closing. For additional information, see the May 10 Federal Register, page 25829, or go to http://edocket.access.gpo.gov/2010/pdf/2010-10929.pdf.
USDA, through its Rural Development mission area, administers and manages more than 40 housing, business and community infrastructure and facility programs through a national network of 6,100 employees located in the nation’s capital and 500 state and local offices. These programs are designed to improve the economic stability of rural communities, businesses, residents, farmers and ranchers and improve the quality of life in rural America. Rural Development has an existing portfolio of more than $134 billion in loans and loan guarantees.
USDA is an equal opportunity provider, employer and lender. To file a complaint of discrimination, write: USDA, Director, Office of Civil Rights, 1400 Independence Ave., S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice), or (202) 720-6382 (TDD).