USDA Rural Development Single-Family Housing Programs Presented by: Elsie Meeks | South Dakota State Director Jenny Rydberg | MN Area Specialist Andrew Gag | MN Area Specialist USDA Rural Development 2014

Discussion Topics Discussion Topics Brief overview of USDA Rural Development Direct home loan (purchase) programs Guaranteed home loan (purchase) program Direct home loan/grant repair program South Dakota Housing Initiatives

OUR MISSION USDA Rural Development’s mission is to improve economic opportunity and enhance the quality of life in rural America.

$2.3 billion benefitting American Indians & Alaska Natives Including: Housing Loans | $594.1 million 4,724 loans Water/Wastewater | $388.6 million Community Facilities | $368.2 million Broadband/Telecom | $294 million Electric | $558.3 million Rural Business and Cooperative Programs $96 million Investments

Fire/Rescue o Fire Halls o Trucks/Ambulance/ Other Equipment Healthcare o Hospitals / Clinics Public Service Buildings o Library / Community Center / Daycare Streets/Sidewalks/Bridges(limited)

MN CF Projects MN CF Projects

Business & Industry Loan Guarantees Rural Business Enterprise Program Intermediary Relending Program Rural Economic Development Loans & Grants Rural Cooperative Development Grants Rural Business Opportunity Program Value-Added Producers Grants Small, Socially Disadvantaged Producer Grants Many Energy Loan and Grant Programs

SectionProgram 588Housing Preservation Grants 515Direct Loans 538Guaranteed Loans

HOME PURCHASE PROGRAMS

Section 502 Home Loan Program Home loans for low and very-low income individuals Income limits apply (based on household size & county) Loan limits apply -- by county Applications are filed with Rural Development area offices

Loans up to 100% of appraised value Closing costs may be financed Fixed interest rate, 33-year term Payment assistance available Subsidy is subject to change annually Subsidy is subject to recapture at the time of sale or refinance Homebuyer education required for first time homebuyers Home inspection and/or technical certification required

502 SFH Loan Activity to AI/AN Fiscal Years Number of Loans 502 Direct 2000 – 2013 Total Loans = 3,145 Trust Land = % 10% on Trust Land 12

ELIGIBILITY Individuals or families who do not own a dwelling or current dwelling is inadequate Unable to obtain credit from other sources Must personally occupy the property financed Have adequate and dependable income Have an acceptable credit history Adjusted household income cannot exceed 80% of median county income Home must be located in a rural area, defined as population of 20,000 or less Legal capacity to incur loan obligation U.S. Citizen, permanent resident or qualified alien

Purchase New (end or permanent loan) o Stick or Modular o Manufactured (must be approved dealer- contractor, owned site, permanent foundation) Purchase Existing o Stick or Modular

Adequate Cash for Closing Costs Meeting Debt to Income Ratio Annual vs. Repayment Income

HOMEBUYER EDUCATION Required for all applicants Acceptable Programs Homestretch Framework E-Home America Pathways

ACCEPTABLE CREDIT No outstanding judgments obtained by the United States in Federal Court. More than one credit score listed on their Residential Mortgage Credit Report that result in a reliable credit score of 640 or higher. UNACCEPTABLE CREDIT Little or no credit history Past foreclosure Collection accounts Judgments Two or more 30-day late payments on revolving debt One 30-day late payment on installment debt

Collection Accounts Must be paid off for 6 months Judgments Must be settled for at least 12 months Bankruptcy Debt must be discharged 36 months prior to an application

Stable and Dependable Reasonably expected to continue for at least two years Would like to see two-year history of receiving the income but not required.

Evidence of tribal action for legally binding and effective foreclosure procedures and will enforce those procures upon notice of default from a lender and or Agency. Evidence of tribal adoption procedures ensuring that the federally guaranteed loan will always have first lien priority. A copy of the tribe’s lease for use on residential land. Signed tribal affirmation stating tribal understanding of the importance of maintaining and enforcing the above procedures. Signed tribal affirmation stating tribe agrees to permit the agency and/or lender and agents to access mortgaged properties for the purpose of evaluating and servicing loan-related items.

Websites for income limits, property eligibility, etc. For income and property eligibility: Rural Development Website: MN Offices and Contacts:

Applications are made with approved local lenders or mortgage companies Any licensed lender can originate loans and reserve funds Interest rate is negotiated between lender and applicant and Rural Development guarantees the loan

Purchase New (end or permanent loan) o Stick or Modular o Manufactured (must be approved dealer- contractor, owned site, permanent foundation) Purchase Existing o Stick or Modular

Designed for moderate income families No maximum purchase price or loan limit Loans made up to 102% of appraised value 30 year term-fixed interest rate No restrictions on size or design of home No mortgage insurance required Non-traditional credit histories accepted Expanded qualifying ratios: 29/41% (waivers possible per eligibility) No asset limitations, closing cost or seller concessions limitations Repairs may be financed up to 100% of appraised or “as improved” value Credit scores – No Minimum –>680 – streamlined=no further review of credit –<680 – review per Rural Development regulations

ELIGIBILITY Live in rural area, defined as community with population of 20,000 or less (unless exception made up to 25,000) Income cannot exceed adjusted annual income established for each county. Income limits available at elcomeAction.do

Fiscal Years Number of Loans FY 2013 Highlights Total Grants =175 Total Loans = % On Trust Lands 504 SFH Activity to AI/AN 27

ELIGIBILITY Individual or family homeowners of single- family dwellings in need of repair. Property value NOT in excess of the applicable area loan limit Adjusted income NOT in excess of the applicable income limit for the county Live in a rural area, defined as community with population of 20,000 or less (exceptions can be made for communities with populations up to 25,000 in certain cases) Must lack personal resources to pay for the needed repairs Asset limits apply -- $20,000 elderly; $15,000 non-elderly Must be U.S. Citizen, permanent resident or qualified alien Posses legal capacity to incur loan obligation

Loan Qualifications Very-low income homeowners with homes in need of repair Must have an acceptable credit history Maximum loan is $20,000 Fixed interest rate of 1% with a term up to 20 years Mortgage required for loans over $7,500 Appraisal required for loans over $15,000 Grant Qualifications Homeowners 62 years of age or older unable to make payments on a 1% loan Limited to removal of identified health and safety hazards or to make accessible to household members with disabilities Maximum life-time grant is $7,500 Maximum loan/grant combination is $27,500 Grant must be repaid if home sold within three years of grant approval

PARTNERSHIP Tribal Housing Authorities Community Action Agencies