The wait is (almost) over — Rural Development program receives more funding
Mortgage bankers, homeowners and real estate agents have wondered since mid-April when – and if – the United States Department of Agriculture’s Rural Development program would receive the authority to guarantee more loans.
At the end of July, President Barack Obama signed a bill that will allow Rural Development to guarantee those loans. That’s good news for Arkansans as those mortgages are available in most areas of the state and they exist as one of the few “zero down” loans still available. By the first of August, the Mortgage Bankers Association of Arkansas reported its members were still waiting to get the go-ahead from USDA to originate Rural Development loans. However, the fact that Rural Development money will certainly be available again in rural areas was regarded as great news.
Frankly, the definition of “rural” is a strange one. Rural Development loans are tied to location – a person buying a home in a rural area may be eligible for one of those mortgages, whereas someone purchasing a house in an urban area will not.
Believe it or not, rural areas include such growing cities as Bentonville and Bryant. In other words, Rural Development mortgages are available in areas that may surprise you. There are, of course, income limits in the program and those vary by county.
To find which areas are defined as rural under the program and to figure out income limits in your county, visit the USDA on the Internet at eligibility.sc.egov.usda.gov.
Rural Development loans come in two flavors – direct and guaranteed. The guaranteed program, which is run in conjunction with private mortgage lenders, is the one which benefits the most people. In mid-April, Rural Development officials started sending out bulletins confirming that the program had just about hit its limit.
The start of the federal fiscal year is Oct. 1 and Rural Development – every year – is given the authority to guarantee loans totaling a certain amount of money. The popularity of the program caused Rural development to hit its limit early, leaving a lot of people wondering if that guarantee authority would be extended prior to the beginning of the new fiscal year.
The fact that Rural Development officials announced in late July that that authority had been granted came as a bit of a surprise. Courtney Rowe, communications director for the Senate Agriculture Committee, said in early July a bill that would provide more funding for the program wouldn’t be considered until at least mid-August.
Fortunately, Congress acted sooner than that and the bill was passed. That’s critical this year for a couple of reasons. For one thing, a lot of people who got homes under contract prior to May 1 were wondering if they would be able to take out Rural Development mortgages and close on their homes before Oct. 1 – the deadline for first-time buyers wanting to claim credits up to $8,000 and repeat buyers eligible to receive up to $6,500.
Also, there has been some concern about the 2010 Census. While the aforementioned cities of Bentonville and Bryant are considered rural right now, it’s anyone’s guess as to whether those cities will be classified as non-rural when the new population counts come in should the USDA decide to redefine its definitions.
For now, however, the Rural Development program is back and that’s a relief for Arkansas banks that handle a lot of those mortgages and buyers who rely on the program for purchasing homes.
Home Sweet Home is written by Ethan C. Nobles and is distributed weekly by the Mortgage Bankers Association of Arkansas.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.