USDA Loans: More Funding On The Way?

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Last week, the House Financial Services Committee voted unanimously to approve HR 5017 – the Rural Housing Preservation and Stabilization Act of 2010 which means that the next step is to get the full US House of Representatives to vote on it and insiders say that there is a strong likelihood of it passing there.

The bill is designed to ensure funding for homeowners who want to get a USDA loan – which have become more and more popular in recent years due to their true 100% financing and no mortgage insurance features (among others).

The bill was sponsored by Congressman Paul E. Kanjorski of Pennsylvania, who is the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

According to Congressman Kanjorski:

“Since its creation in 1987, USDA’s affordable rural home loan guarantee program has helped hundreds of thousands of families to realize the American dream of homeownership, including many in Northeastern Pennsylvania. As a result of the unprecedented demand, the program is now unfortunately running out of money. At no cost to taxpayers, my bill will preserve the access of millions of families living in America’s heartland to needed USDA loan guarantees, so that they can continue to buy homes with affordable mortgages. Without action, too many families in rural America will have no options for getting home loans. We cannot allow that to happen.”

The USDA loan program has become popular with homeowners – volume has more than tripled in recent years – and the program shows no signs of slowing down anytime soon.  The USDA loan program is currently scheduled to run out of money any day now and the passage of this bill will ensure that qualified homeowners can still get a USDA loan.

Under the new bill, lenders will pay up to a 4 percent premium for the guarantee at the time of the funding of the loan which will then enable the financing of the program to be self sustaining over time. For the Fiscal Year in 2010, the bill authorizes up to $30 billion.

Will the bill pass for sure? While nothing is 100% certain (especially in Washington), it appears as if it is likely – which is good news for anyone considering a USDA loan.

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  1. Subrina Bauer on

    I have been in the process of purchasing a home for almost 3 months now and this is the week of my closing and I just got told that there were no more funds available. This is beyond heart breaking at this point. I ask that every one contact their state representatives and ask that they reallocate funds as soon as possible! This program helps so many people become home owners. This program stimulates economic growth, and the lack of funds could effect the housing market as well as the unemployment rate. There are many companies that only deal with the rural housing market and this could cost thousands of people their jobs. PLEASE write, email or call your state representatives, if we flood them with our concerns they may move quicker! I thank everyone in advance!!

  2. Rose Meldrum on

    My daughter’s boyfriend got approval on a USDA loan early last month and has an accepted offer on a house he wants to buy, but now that the USDA is out of funds he has been left hanging. He has a good job and excellent credit but has received no word when the funds might come through. Even worse, the house he’s living in was sold and he needs to be out by June 7th. Where is he supposed to go?

  3. Rose,

    I wish I had a better answer to the question of “where is he supposed to go?” than…

    “your house”?

    There are quite a few people in this same situation — I have no idea how it will play out.

    Keep us posted, and maybe call your congressman?

    Sorry — I wish I had better news.

    If anyone else knows a different answer, please keep us posted.

    .-= Justin McHood´s last blog ..Customer Stealing: Steal Customers From Your Competition =-.

  4. Carolyn Johnson on

    I am a widowed mother of 2 children that was approved for the USDA home loan program.I have finaly gotten to the Appraisal part of my loan and was told that there is no funds to buy my home. I was looking forward to going to Closing by the 17 th of December, but I don’t know what’s going to happen now. This is such a big let down and it’s the main reason why some lenders, sellers and people don’t want to deal with the government programs.I pray that they allocate the funds to help people like me, that have the employment history and income but not a one credit to secure a loan on my own. I truly would love to be a homeowner.

  5. Don’t you think this may cause another housing bubble, or the government could sell out to their Washington finance lobbyists later on down the track and a whole lot of new mortgage derivatives get created floundering the economy even worse than it current is.

    I am against government intervention in any industry and think maybe they should look at fixing the corruption and bad debt produced by their corporate cronies first before looking to introduce new bills.

  6. Heather Walmsley on

    I am a single mother in a similar situation a the widower. I too am in the final stages of the USDA loan process and I am waiting for funding. The seller has even completed the necessary repairs. My closing is scheduled for January 21st. I am anxious to know how you have made out, if you have made any progress. I am also wondering what the chances are there will be some funding by the time I am scheduled to close. Any info would be appreciated.

  7. danielle jackson on

    any news on the funding of usda loans? i am looking to apply for one this week. is it worth the headache? please, any feedback would be greatly appreciated.

  8. I have put an offer on a house last week pending USDA funding here in Georgia..any news yet? Who do I need to call to get a push on funding?? I talk to a lady at USDA almost everyday and she keep saying we haven’t heard anything yet but please keep calling back to check…I really wish I knew something cause I am a first time home buyer that worked hard to get her finances on track and maintaining well on my own as a single mother with no help.

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