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Housing Assistance Council:
The budget would defund the Section 502 and 515 direct lending programs, which have enabled the U.S. Department of Agriculture to make loans to low-income homebuyers and to producers of rental housing for the lowest-income rural residents.
Funding for counterpart programs that guarantee loans made by private lenders would be increased; it costs the government less to guarantee a loan made by a private lender than to serve as a lender itself.
"The trend away from direct lending and toward loan guarantees has been developing for a number of years, but eliminating both major direct lending programs is a significant jump - not just a step," said Moises Loza, executive director of the Housing Assistance Council.
"I look forward to seeing the proposal for subsidized guaranteed mortgages, since Section 502 guarantees can't substitute for direct Section 502 mortgages.
More than half the tenants in Section 515 buildings are elderly and disabled people, who generally live on fixed incomes.
The Section 515 rental program, which took effect in 1963, has financed more than half a million decent, affordable apartments for rural residents who cannot afford market-rate rents.
Posted on February 5, 2007 11:59 PM
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