Massive Gov Overhaul Impacts USDA Rural Housing

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MORTGAGE EXPERT
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A sweeping consolidation of the federal government proposed by the Donald J. Trump administration would have government-backed rural housing finance changing agencies.

Currently, the Single Family Housing Guaranteed Loan Program is utilized for financing rural properties and is administered by the U.S. Department of Agriculture.

“This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas,” the USDA says on the website.

Through the program, the USDA provides approved lenders with a 90 percent guarantee on the note. The loan-to-value ratio can be as high as 100 percent.

But a comprehensive consolidation of the federal government being proposed by the White House would have administration of the program transferred from the USDA to the Department of Housing and Urban Development, according to a presentation by Director of the Office of Management and Budget Mick Mulvaney.

“Billions and billions of dollars are being wasted on activities that are not delivering results for hardworking American taxpayers. … President Donald J. Trump’s reform and reorganization plan will make the federal government more responsive and accountable to the American people,” a White House statement Thursday said.

The proposal follows a year of development that included input from stakeholders, agencies and the public, according to the statement.

In addition to the rural housing program, consolidation is proposed for food safety functions and economic assistance resources. The proposal also merges the Department of Education and Department of Labor into a single cabinet agency.

“Instead of a ‘one size fits all’ approach to reform, the Trump administration’s plan to reorganize the government proposes solutions tailored to each agency’s mission,” the White House said.

In addition to the consolidation, the administration wants federal agencies to become digitized.

The Mortgage Bankers Association was supportive of proposed housing finance reform in the overhaul.

“MBA applauds the administration for releasing a proposal to reform Fannie Mae and Freddie Mac which closely tracks much of the work that has been done to date by policymakers on Capitol Hill,” MBA President and Chief Executive Officer David H. Stevens said in a written statement. “It includes many core principles that MBA has long advocated for, such as an explicit government guarantee on MBS only as a catastrophic backstop, allowing for multiple guarantors and ensuring small lender access.”

While MBA is heartened that GSE reform is needed before Fannie or Freddie can emerge from conservatorship, it acknowledged “the devil is in the details.”

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