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The Rural Housing Service Reform Act of 2023 results from year-long effort in the Senate Subcommittee on Housing, Transportation, and Community Development, including hearings & public comment.

On May 1, Senators Tina Smith (D-MN) and Mike Rounds (R-SD) introduced the “Rural Housing Service Reform Act of 2023” (S.1389) in the U.S. Senate. The bill would aim to improve the housing programs administered by the U.S. Department of Agriculture’s Rural Housing Service (RHS) through several reforms, including decoupling rental assistance from maturing mortgages, permanently establishing the Multifamily Housing Preservation and Revitalization Demonstration (MPR), making permanent the Native CDFI Relending pilot program, and improving staff training and capacity within RHS.

“Without a safe, affordable place to live, nothing else in your life works. Not your job, not your education, not your health,” said Senator Smith. “We know that the housing crisis is hurting communities across the country, and the problem is particularly acute in rural places. This legislation is the direct result of bipartisan hearings and conversations with stakeholders who helped identify ways we can make federal rural housing programs work better for people struggling to find a safe, affordable place to live.”

Lack of affordable housing remains an impediment for many rural towns and communities as they struggle to attract new businesses, residents, and talent. As Chair and Ranking Member of the Senate Subcommittee on Housing, Transportation, and Community Development, Senators Smith and Rounds held several hearings looking at ways to improve federal rural housing programs.

The Rural Housing Service Reform Act of 2023 (S.1389) is the direct result of these hearings and public input from stakeholders closest to the issue. The legislation would improve and build upon a number of U.S. Department of Agriculture (USDA) rural housing programs.

 

Specifically, the bill would:

  1. Fix a longstanding problem for properties (known as Sec. 515 properties) that were financed by the USDA decades ago and now have maturing mortgages, by making it easier for non-profits to acquire those properties and by decoupling rental assistance so that assistance doesn’t disappear when those mortgages mature. This is especially important in Minnesota, which has more of these types of properties than almost anywhere else in the country.
  2. Make permanent a USDA pilot program to make mortgage loans available in Native communities by partnering with local CDFIs.
  3. Bring the USDA’s outdated way of measuring incomes in line with HUD’s practices.
  4. Modernize the USDA’s foreclosure process to cut red tape, better protect homeowners, and ensure USDA-owned properties stay affordable.
  5. Update the rules for a home repair loan program to make it less burdensome to get smaller loans.
  6. And make much-needed investments in IT so that USDA can process loans more quickly and with less staff time wasted on paperwork or manual data entry.