Media Contact: Tim McNeilly 202-690-0498

tmcneill@rdmail.rural.usda.gov

WASHINGTON, May 9, 2001– USDA Rural Development announced that USDA has modified the requirements for its Multi-Family Housing Guaranteed Loan program. Loans for acquisitions can now be used to purchase and rehabilitate existing housing units.

Developers are being encouraged to rehabilitate existing units, using the $85 million in loan guarantee authority remaining for the fiscal year, which ends August 31, 2001. Previous regulations only allowed funds to be used for new construction of rental housing units.

Under the Guaranteed Rural Rental Housing Program, USDA provides loan guarantees to lenders, who in turn provide loans for the construction and rehabilitation of multi-family housing complexes in rural areas. USDA will guarantee the lender's loan, up to 90 percent of the total development cost.

Units financed under the program are available to families whose income does not exceed 115 percent of the local average. The program also makes available Interest Credit Assistance for 20 percent of the loans guaranteed. This assistance allows USDA to buy down the loan interest rate to the appropriate federal rate (AFR).

Program applications and procedures were published in the Federal Register December 26, 2000, and amended on February 16, 2001 and May 2, 2001. Interested lenders may apply the third Thursday of every month until funds are exhausted.

Further information is available from Ms. Joyce Allen of the Rural Housing Service, telephone (202) 690-4499, or from USDA Rural Development state offices, which are listed on the USDA Rural Development web site at: http://www.rurdev.usda.gov/rhs/

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