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Senate committee looks to improve rural housing stock as need increases

 A rural property near Laramie, Wyoming.
(Courtesy of realtor.com / Creative Commons)
A rural property near Laramie, Wyoming.

Officials are considering how to improve America’s rural housing programs as more people struggle with increasing costs of living. The U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing Tuesday asking stakeholders and loan professionals about how the USDA’s Rural Housing Service can better serve rural residents.

In the Mountain West, more than a fifth of homeowners with a mortgage spend at least 35 percent of their monthly income on housing, according to data released last week by the U.S. Census Bureau. Nearly 40 percent of renters region-wide spend more than a third of their income on rent, and vacancy rates are declining as supply chains, labor shortages and inflation make it challenging to build more units.

The Rural Housing Service, or RHS, is one of the only government tools specifically geared towards rural populations. It offers loans, grants and loan guarantees not only for single and multi-family housing, but also for hospitals, fire stations and other critical community infrastructure. However, testimony during the Senate hearing showed that the program has been hampered by staffing shortages, underfunding and technological challenges.

“That disparity negatively impacts rural and Native Americans who rely on them as some of the best and only products designed for rural and native needs,” said tribal housing expert Tonya Plummer. “We encourage creative solutions.”

Of the total mortgages given out nationwide last year, about 114,000 loans – less than 0.5 percent of the total volume – were backed by the USDA, according to David Battany with the Mortgage Lenders Association.

“These programs are worthy of our nation's commitment to them,” he said.

Legislation introduced earlier this week by Sens. Tina Smith, D-Minn., and Jeanne Shaheen, D-N.H., aims to enhance that commitment by making the loan process easier on some rural residents seeking rental assistance.

Most speakers, however, said there needs to be further, systematic investments in the USDA to really turn the RHS around. Using South Dakota as an example, Plummer, the tribal housing expert, said the program’s staff in the state is functioning at “25 percent of what they were five years ago.” As a start, she proposed several “nuanced” shifts in how the federal government structures its loan, budget and foreclosure programs during her testimony.

Bettany agreed and added that the current loan payment and application process for both lenders and applicants is cumbersome and outdated. Response times from the RHS to approve a loan can take up to 10 days, well beyond the industry standard.

“RHS lending can better serve consumers and industry participants alike," Bettany said.

"We can advance this objective by addressing three areas: better workflow, better technology, and if these two areas are achieved, better loan products.”

This comprehensive look at rural housing comes at a time when need is skyrocketing. In Wyoming, a rental assistance program broke demand records in August, and there were more property tax relief applications last year than ever before.

The Department of Housing and Urban Development is also upping assistance for rural homelessness nationwide.

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Copyright 2022 Wyoming Public Radio. To see more, visit Wyoming Public Radio.

Will Walkey