The U.S. Department of Agriculture (USDA) is upgrading key Rural Housing Service (RHS) loan programs, drawing praise from a mortgage trade group representing small and midsized independent mortgage banks.
Dubbed the “Rural Housing Modernization Initiative,” the USDA action aims to strengthen two RHS programs: the Single Family Housing Guaranteed Loan Program and Single Family Housing Direct Home Loans, also known as the Section 502 Direct Loan Program.
The moves, announced Friday, follow President Donald Trump’s executive order from March 13 titled “Removing Regulatory Barriers to Affordable Home Construction.”
“These upgrades answer President Trump’s call to have government provide a higher level of customer service and ultimately make homeownership more affordable for rural Americans,” said Rural Development Acting Under Secretary Todd Lindsey in a press release. “By improving efficiency and reducing friction, we are helping rural families access affordable credit in today’s housing market while maintaining strong oversight and accountability.”
Specifically, the deregulatory initiatives provide for delegated underwriting authority in the RHS’s Guaranteed Loan Program, which allows qualified lenders to approve and close those loans. The press release noted that the change “allows lenders to close loans more efficiently and aligns USDA’s requirements with other federal home lending programs at the Departments of Housing and Urban Development and Veterans Affairs.”
Additionally, the department is launching a loan portal for direct loan borrowers, which provides secure access to loan information, payments and account management tools.
“These are practical, program-focused upgrades,” stated RHS Administrator George Kelly.
The USDA announcement received immediate endorsement from the Community Home Lenders of America (CHLA), which noted in a press release that it had previously supported a delegated underwriting pilot program.
“CHLA enthusiastically commends the RHS for its actions today to create delegated underwriting authority for its guaranteed mortgage loans,” CHLA Executive Director Scott Olson stated. “This will create efficiencies, making it easier and less costly for lenders to originate loans for homebuyers in rural areas.”
