Summary
This document focuses on options for optimizing the federal role in rural housing development. The federal government has scaled back its involvement in rural housing assistance programs, often reducing its financial commitment to direct lending thus shifting responsibilities to state and local governments and the private sector. Rural housing continues to suffer and has been labeled substandard. Possible options for optimizing the federal role in rural housing include changing programs' targeting subsidy levels, and delivery systems, as well as merging the Rural Housing Service's programs with Department of Housing and Urban Development programs.
GAO noted that: (1) nationwide, the physical condition of rural housing has greatly improved since the inception of rural housing programs in the 1930s, but it still lags somewhat behind that of urban housing; (2) particularly in some remote rural areas, the quality of housing is poorer for some groups, especially minorities; (3) affordable housing is also difficult to find in some rural areas, and rural homeowners sometimes pay slightly higher mortgage interest rates than their urban counterparts; (4) RHS is the largest component of a comparatively new USDA mission area, Rural Development, created when the Department was reorganized in 1994; (5) RHS targets a wide array of housing services to rural residents, often offers more favorable terms and conditions than other federal housing programs, and delivers service through an extensive field network; (6) RHS' single family and multifamily programs are available to households that live in rural areas and have incomes ranging from very low to moderate; (7) RHS' multifamily programs provide: (a) direct and guaranteed loans to commercial developers or nonprofit organizations to produce new rental housing; (b) grants and loans to public or nonprofit agencies or individual farmers to build affordable rental housing for farm workers; (c) housing preservation grants to local governments, nonprofit organizations, and Native American tribes; (d) and rental assistance subsidies; (8) as government has scaled back its involvement in rural housing assistance, it has greatly reduced its funding for RHS' direct loan programs, expanded RHS' guaranteed loan programs, and increased reliance on state, local, and private partners to leverage funds for rural communities; (9) rural households have greater access to RHS than to other federal or state agencies; (10) overlap in the products offered and in the households served by RHS and the other organizations offering housing assistance varies by rural housing program and program mission; (11) given the diminished distinctions between rural and urban areas today, improvements in rural housing quality and access to credit, and RHS' increasing reliance on guaranteed lending and public and private partnerships, the federal role in rural housing is at a crossroads; and (12) options for optimizing the federal role include fundamentally changing the programs' targeting, subsidy levels, and delivery systems, as well as merging RHS' programs with HUD's or other agencies' comparable programs.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
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No director on record
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No phone on record
Matters for Congressional Consideration
Recommendation: To optimize the federal role in rural housing, Congress may wish to consider requiring USDA and HUD to examine the benefits and costs of merging those programs that serve similar markets and provide similar products. As a first step, Congress could consider requiring RHS and HUD to explore merging their single-family insured lending programs and multifamily portfolio management programs, taking advantage of the best practices of each and ensuring that targeted populations are not adversely affected.
Status: Implemented
Comments: To date, Congress has not acted on this matter. The subcommittee held an oversight hearing in July 2003. GAO testified and restated the findings and matter for congressional consideration. No action is expected in the immediate future.
