June is National Homeownership Month, and this year’s theme is “Rural Housing, Rural Jobs” to recognize the housing sector’s significant role in creating jobs, maintaining viable rural communities and contributing to the economy.
While most Americans are familiar with the historic mission of USDA, many may not know the department plays a major role in providing affordable home loans and home repair assistance to thousands of citizens in rural areas each year. This is one of a number of ways USDA is working to promote vibrant rural economies and communities.
For more than 60 years, USDA has offered homeownership opportunities, and we continue to do so through the single-family housing programs administered by USDA Rural Development. During the first eight months of the current fiscal year, which started on Oct. 1, Rural Development financed approximately 80,000 home loans across the nation. This was accomplished through two key loan programs: the Single Family Housing Direct Loan program and the Single Family Housing Guaranteed Loan program.
Through the Direct program, the agency can provide 100-percent financing for qualified, low-income households to purchase or repair their owner-occupied single-family residences. So far this fiscal year, we have made 59 direct loans to rural Oregonians. These include a number of mortgages through the Mutual Self Help Program. The program allows lower-income families to cover the down payment and up to 65 percent of a new home’s cost by helping with its construction on nights and weekends. Participants work through a local sponsor, which develops building sites and provides coordination, construction training and contractor assistance.
Groundworks, a Southern Oregon nonprofit, is one such entity. By planning the Rice Park community in Ashland, Groundworks this year is helping 15 families achieve the dream of homeownership using their own sweat equity and a secure USDA loan.
With the Guaranteed program, USDA Rural Development encourages lending by private banks. Through the program, USDA can guarantee a percentage of the mortgage provided to an eligible low- or moderate-income household. The program stimulates the housing market and frees up capital. So far this fiscal year, USDA Rural Development has guaranteed 1,312 home loans in Oregon, driving nearly $199 million into the marketplace.
These programs, in turn, encourage people to invest in their local economy. According to the National Association of Realtors (NAR), the sale of an existing median-priced home ($173,000 in 2010) generates $58,529 in economic activity. This includes $15,570 in direct real estate industry support (fees for real estate agents, title companies, mortgage brokers); $5,235 in furniture, home furnishings, landscaping, etc.; and $9,987 in stimulated economic activity.
New home sales generate even more economic activity, including the costs of construction materials and construction jobs, according to NAR. In addition to the benefits related to home construction and sales, homeownership has a positive impact on an entire community — where the new residents live, work, shop and generally invest in the area’s overall economy.
In all of our lending programs, USDA provides a reasonable fixed interest rate and uses sound underwriting criteria to ensure borrowers are able to repay their loans. By investing in Oregonians, we’re not only increasing homeownership and immediate investments in local communities, but also helping keep people in their homes for the long term. I believe our work will reap profound and lasting benefits for families and communities across the state. Through Rural Development housing programs, USDA and the Obama administration are committed to the livability, sustainability and economic prosperity of rural Oregon for the years to come.
Vicki Walker serves as the State Director for USDA Rural Development. Walker, a long-time resident of Eugene, served 10 years in the Oregon State Legislature in both the House and Senate before being appointed to USDA. This blog originally appeared In the Salem Statesman Journal and is reprinted with permission.