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.
“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.