USDA Rural Housing Loans, originally introduced in 1987, provide alternative financing for people living in rural communities who have low to moderate income. Due to the elimination of most zero down loan programs because of the credit crisis, demand has greatly increased for USDA Rural Housing loans and the program is running out of money.

On April 22nd, the House Financial Services Committee voted unanimously to approve H.R. 5017.  H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010, now goes to the full House of Representatives. We could see a vote as early as next week by the house on this very important bill.

If passed, the bill will correct the current Single Family Housing Guaranteed Loan Program, designed to assist homebuyers living in rural areas to obtain affordable mortgages guaranteed by the Department of Agriculture (USDA), to make it self-funding. The new legislation increases the Guaranty Fee from 2% to an amount up to a 4% of the loan amount. The increased Guaranty Fee is designed to allow the program to be more self-sustaining. The bill authorizes the department to guarantee up to $30 billion in loans in FY 2010.

UPDATE 04/28/10:
The House of Representatives passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010, on April 27th by a vote of 352 to 62. No legislation has been introduced in the Senate yet.