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CoreLogic U.S. Housing Policy Update

Rural Housing: A Growing Mortgage Market Flying Under the Radar

Faith Schwartz    |    Videos


The rural housing market doesn’t get much respect—or at least much attention. But it should for two reasons: first because it serves as a laboratory for cutting edge affordable housing techniques, and second because it benefits a huge swath of the country: about 80 percent of all land area and about 20 percent of the country’s population.

The U.S. Department of Agriculture and the Department of Housing and Urban Development (HUD) both have products that are packaged into Ginnie Mae’s Rural Housing Service Section 502 direct and guaranteed mortgage, and the HUD Section 184 mortgage program targeted to American Indians.

Together these programs accounted for about four percent of the $436 billion in Ginnie Mae securities issued last year or about $17 billion to fund rural housing. The RHS 502 single family guaranteed and direct mortgage, which is packaged into Ginnies, did a volume of $19.5 billion for fiscal 2015, according to the Housing Assistance Council.

Since starting to guarantee loans in 1995, the HUD 184 has guaranteed some $5 billion through more than 25,000 loans in single family mortgages for Indians, most of them on or adjacent to their rural reservations.

In addition, USDA also runs the Farm Service Agency, a lender of last resort in the mostly rural niche of farm mortgage lending. It does only a small bit of lending in the $300 billion farm mortgage market, which is dominated by commercial banks and lenders in the first government-sponsored enterprise (GSE) the federal government ever started, the Farm Credit System.

The fascinating farm mortgage sector even has its own secondary marketing agency, Farmer Mac, a tiny cousin to Freddie Mac and Fannie Mae.

There is also an effective affordable multifamily program that does a lot of good work in rural areas.

The Low Income Housing Tax Credit program has provided about 100,000 affordable multifamily units a year since it got started back in 1986. Though more associated with urban areas, the program often directs sophisticated investor money into remote rural areas all around the country. If a quarter of that volume goes to rural, that would mean about 25,000 units a year.

So even though you don’t hear about rural housing all that often that doesn’t mean that there isn’t a lot happening…and a lot of good being done.

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