Senators Smith, Rounds Unveil Major Bipartisan Package to Modernize and Update Rural Housing Programs

Washington [5.2.23] – This week, Senators Tina Smith (D-MN) and Mike Rounds (R-SD) introduced significant bipartisan legislation to improve federal rural housing programs, cut red tape, and strengthen the supply of affordable housing. The legislation would represent the most significant Rural Housing Service reforms years.

“Without a safe, affordable place to live, nothing else in your life works. Not your job, not your education, not your health,” said Senator Smith. “We know that the housing crisis is hurting communities across the country, and the problem is particularly acute in rural places. This legislation is the direct result of bipartisan hearings and conversations with stakeholders who helped identify ways we can make federal rural housing programs work better for people struggling to find a safe, affordable place to live.”  

“Homeownership is part of the American dream and a key to building wealth,” said Senator Rounds. “Over the past year, Senator Smith and I have held hearings, met with stakeholders and visited with constituents in our states about the hurdles within the U.S. Department of Agriculture’s Rural Housing Service. This legislation makes important improvements and updates to the Rural Housing Service that will create and preserve affordable housing opportunities in South Dakota. As we face an affordable housing crisis across the nation, I look forward to working with my colleagues to get these important, bipartisan updates signed into law.”

Lack of affordable housing remains an impediment for many rural towns and communities as they struggle to attract new businesses, residents and talent. As Chair and Ranking Member of the Senate Subcommittee on Housing, Transportation, and Community Development, Senators Smith and Rounds held several hearings looking at ways to improve federal rural housing programs.

The Rural Housing Service Reform Act of 2023 is the direct result of these hearings and public input from stakeholders closest to the issue.  The legislation would improve and build upon a number of U.S. Department of Agriculture (USDA) rural housing programs. Specifically, the bill would:

1. Fix a longstanding problem for properties (known as Sec. 515 properties) that were financed by the USDA decades ago and now have maturing mortgages, by making it easier for non-profits to acquire those properties and by decoupling rental assistance so that assistance doesn’t disappear when those mortgages mature. This is especially important in Minnesota, which has more of these types of properties than almost anywhere else in the country.
2. Make permanent a USDA pilot program to make mortgage loans available in Native communities by partnering with local CDFIs.
3. Bring the USDA’s outdated way of measuring incomes in line with HUD’s practices.
4. Modernize the USDA’s foreclosure process to cut red tape, better protect homeowners, and ensure USDA-owned properties stay affordable.
5. Update the rules for a home repair loan program to make it less burdensome to get smaller loans.
6. And make much-needed investments in IT so that USDA can process loans more quickly and with less staff time wasted on paperwork or manual data entry.