Senators Unveil Bipartisan Bill to Address Housing Affordability in Rural America

Mortgage Point

Senators Unveil Bipartisan Bill to Address Housing Affordability in Rural America

By Lance Murray

Midterm elections are just around the corner, and lawmakers are working on solutions an issue top of mind for many Americans: affording a home.

The proposal by Sens. Peter Welch D-Vt., and Jim Justice, R-W.Va., seeks to address affordability in the nation's rural areas by introducing a two-page bill that would help more Americans qualify for housing assistance. Their move comes after a broader bipartisan housing package that the Senate passed in March has stalled in the House of Representatives, NBC News reported.

The senators' new legislation, first obtained by NBC News, would modernize housing assistance eligibility requirements that could aid roughly 30 million homebuyers in rural areas access loans. NBC said that the last time Congress addressed those requirements was almost six decades ago.

Under current law, homebuyers living in areas with a population greater than 2,500 do not qualify for the loans.

"Making farm credit loans more accessible is vital to addressing this crisis and will help millions of rural families experience the joy of homeownership for the first time," Welch said in a statement.

Changes Eligibility Threshold

NBC noted that farm credit lenders and banks provide assistance for Americans in rural areas, including farmers and ranchers, to build or purchase a home. The bipartisan bill, co-sponsored by Sens. Adam Schiff, D-Calif., and Cindy Hyde-Smith, R-Miss., would change the eligibility threshold to communities with a population of less than 10,000, potentially opening the door to nearly 40% of the U.S. population.

The median age of first-time homebuyers in the U.S. reached a record-high of 40 years old last year, and first-time buyers made up just 21% of all purchases. Home prices have grown at five to seven times the pace of homeowner incomes.

"All over rural America, folks just want to own a home, raise their families, and build something that lasts," Justice said in a statement. "This bill helps increase competition for credit and opens the door for over 230,000 West Virginians to do just that."

USDA Taking Action

Other steps to improve rural home affordability are occurring.

Last month, the United States Department of Agriculture announced a new initiative to strengthen its two major rural housing programs, the Single Family Housing Guaranteed Loan Program and the Single Family Housing Direct Loan Program,

The agency announced the Rural Housing Modernization Initiative as part of President Trump's March 13 Executive Order "Removing Regulatory Barriers to Affordable Home Construction." It is an effort to upgrade how USDA delivers affordable single-family housing through its Rural Development Mission Area.

"These upgrades answer President Trump's call to have government provide a higher level of customer service and ultimately make home ownership more affordable for rural Americans," said Rural Development Acting Under Secretary Todd Lindsey. "By improving efficiency and reducing friction, we are helping rural families access affordable credit in today's housing market while maintaining strong oversight and accountability."

Also, in early March, USDA Rural Development implemented handbook revisions to its Section 502 direct loan program that affect how loans are processed and who qualifies.

According to the National Association of Realtors, the Section 502 program helps low- to very-low-income borrowers buy homes in rural areas. The changes took effect Feb. 10.

NAR said the most significant change for homebuyers is a reduction in the program's loan limit.

The cap was previously set at 80% of local HUD limits, but it has been lowered to 60%. That means borrowers will have access to less financing than before. USDA also removed the ability to grant exceptions to this limit, NAR reported.