Federal Rural Housing Programs Face Funding Cuts

The ""National Rural Housing Coalition"":http://ruralhousingcoalition.org/ recently released a ""report"":http://ruralhousingcoalition.org/wp-content/uploads/Opening%20Doors%20to%20Rural%20Homeownership.pdf detailing two successful rural housing programs that, according to the Coalition, are two of the most cost-effective federal housing programs. However, funding for these programs is being drastically cut.

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""Housing options in rural America are too expensive, are of poor quality, or are inaccessible to low-income families,"" the report reads. One of the unique challenges in rural areas is that renting is not as accessible, leaving homeownership as ""the predominate form of housing in rural America.""

The Coalition's report highlights the impact of the Section 502 Direct Loan program and the Section 523 Mutual Self-Help Housing program.

The Direct Loan program has reached more than 2.1 million low-income families in the last 60 years. The program allows homeowners to obtain interest rates as low as 1 percent and mortgage loans lasting up to 38 years.

The Section 523 Mutual Self-Help Housing program has reached more than 46,000 rural families in the past 50 years, almost 6,500 in the past six years.

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The Mutual Self-Help program is the only federal housing program to require ""sweat equity,"" according to the National Rural Housing Coalition.

Six to 12 families join to invest their time building their own homes, thus minimizing construction costs and earning equity in their homes. Generally, families complete about 65 percent of the home construction themselves.

The Section 523 program also relies on Section 502 to finance the new homes being built.

The Coalition praises the Mutual Self-Help program for helping ""some of our nation's poorest rural families,"" while remaining ""far less costly than other federal programs.""

Additionally, ""Section 502 Direct Loan program is the single, most cost-effective federal housing program,"" the Coalition stated in its report.

While thousands of applicants are wait-listed for the program each year, the program's budget has been ""severely cut"" over the past decade. From 2003 to 2012, the budget for Section 502 was reduced by more than 80 percent.

The proposed federal budget for 2013 would further reduce funding from $42.5 million to $39 million.

""Although many federal programs have seen declines in funding in recent years, the impact on Rural Housing programs has been disproportionately worse,"" the Coalition stated in its report.

""We simply cannot afford to overlook the well-documented benefits of these valuable rural homeownership programs,"" the Coalition stated.