USDA: Building a nation of homeowners

USDA: Building a nation of homeowners by Dallas Tonsager, State Director USDA Rural Development One of the greatest achievements of the Clinton/Gore Administration has been its success in helping a record-high percentage of the American people become homeowners. This success can be attributed in great part to this administration's commitment to balancing the federal budget and establishing the economic climate that enables the economy to grow. Also, the numerous partnerships formed during the past seven years have helped bring additional resources to populations that have traditionally been harder to serve. As a result, we see that some 67.5 percent of all American households now live in homes they own � great news to ponder as our nation celebrated national Homeownership Week June 3-10, 2000.

USDA Rural Development has been a key player in making the dream of owning a home a reality for many rural Americans. While most people associate USDA with farm and food safety programs, many are not aware that USDA has been financing home mortgages in rural parts of the nation since 1949. In reflecting on the past seven years of the Clinton/Gore Administration, USDA Rural Development has invested nearly $20 billion in loans for single-family homes in rural America, resulting in more than 175,000 new homeowners. Owning a home helps foster pride in one's community. Through increased homeownership, many rural communities have become stronger, safer and more nurturing places to live.

USDA's role during the past 50 years as one of the principal financers of homes in rural America represents a true success story. Testimonials from rural residents participating in this program are plentiful. These are the stories of individuals and families whose incomes were low and whose prospects were virtually nonexistent for borrowing funds to become homeowners. But, this administration has prompted innovative approaches for becoming a homeowner. In fact, this administration's innovations have enabled rural residents living in very remote areas as well as minorities to access USDA's programs in greater numbers.

Of these innovations, most notable are the public/private partnerships USDA fostered in the past few years. In particular, the Rural Home Loan Partnership is an initiative that has extended the reach of rural housing programs to minorities and combined Rural Development dollars with outside investments to increase the overall level of funding dedicated to rural homeownership. It also has targeted those hardest-to-reach families in the more remote areas of the country. This partnership involved the efforts of USDA Rural Development, Rural Local Initiatives Support Corporation, Office of Thrift Supervision, Federal Home Loan Bank Board, Federal Deposit Insurance Corporation and the Neighborhood Reinvestment corporation, and the Federal Reserve Bank, as a liaison. Through this partnership, the dollars committed by USDA Rural Development leveraged an additional 30 percent of outside investments. The result has been lower overall cost for homes in rural America.

USDA, in this administration, has also emphasized less traditional approaches to creating homeownership. Through one program, USDA serves as the guarantor of home loans issued by lending institutions. Also, USDA Rural Development operates some unique programs jointly with nonprofit organizations to create homeowners among very low-income people. The Mutual Self-Help Housing program is a good example. Under this program, five to 12 families join forces and provide at least 65 percent of the "sweat equity" labor needed to build their own homes. This program has been particularly successful in helping minority families achieve homeownership, as well as families whose incomes are so low that even renting a home would be a significant burden. It helps reduce home purchase costs by 20 percent and allows families to learn valuable technical and trade skills along the way. The $800 million loaned under this "sweat equity" program has enabled 11,000 families during the past seven years to achieve the American dream.

In South Dakota last year, Rural Development was involved in financing 948 homes for rural families. For these homes, Rural Development made $56.8 million available for Single Family Homeownership. More significantly, South Dakota raised its homeownership percentage from 67.3 percent to 70.7 percent, one of the largest percentage increases in the nation. I believe part of this remarkable increase in homeownership has come from several years of partnering between the private and public sector, and a willingness to look for innovative ways to create increased access to credit and capital in South Dakota.

USDA Rural Development programs have an excellent track record of making homeownership a reality for a vast number of rural Americans. Though USDA has been financing home mortgages in rural areas since 1949, not until the past seven years have we witnessed such a large percentage of rural Americans owning their own homes. Even more remarkable is that homeownership gains have been achieved during a period of declining federal expenditures. The American dream of owning a home is alive and well, thanks in large part to the efforts of USDA Rural Development programs, its staff and partners.

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