The Housing Act of 1949 created the USDA rural housing programs. They may have been a medium-sized idea at the time but grew rapidly in the 1960s and 70s into a big idea – a major resource that has allowed over 2.6 million low-income rural families to become homeowners or live in decent and affordable rental units. These programs have undergone major budget cuts in recent years but are worthy of rejuvenation and restoration. Conservatives may like that most of the federal billions invested in these programs over the years are loans and get repaid to the federal government with interest.
Today these programs are at a crossroads. They have been cut very substantially since the early 1980s, and there is some interest in turning the programs into block grants or in moving them to HUD. Instead what if we not only kept these efforts but rejuvenated them to robust funding levels?
The biggest USDA housing effort is the Sec. 502 home mortgage loan program. Since 1950 it has provided over $71.5 billion – all loans – to allow rural families to build or buy 2,152,757 modest homes. All the borrowers are low-income and most of them would never have become homeowners without the Sec. 502 loans. (A subset of this program is a self-help, sweat equity effort in which families receive a Sec. 502 mortgage but also cooperatively build their own homes in a group effort, contributing 65% of the labor needed. Conservatives should love this one.) USDA itself is the bank here, making and servicing the loans (a really big idea that have may have less attraction to conservatives). Sometimes called “a hand up, not a handout,” the program has allowed families to build equity, and it does not make predatory loans to unprepared borrowers. Today about 7,000 new homes are being supported a year, but in the late 1970s this figure was over 100,000 homes a year.
On the rental side, since 1963 the USDA Sec. 515 multifamily program has provided $15.8 billion in loans to sponsors who have built 533,473 low-income apartments in every state. Today many of these units are in danger of being lost from the affordable housing stock. In many rural places these small projects are some of the only rental housing in the community. Today no new units are being built, but in the late 1970s over 30,000 apartments a year were financed.
These are resources worth saving – and worth funding at more robust levels. Another what if (one that is my speculation): What if you cut back by 90 to 100% programs that improve the lives of low- and moderate-income rural people? Their opportunities for homeownership or a decent, affordable apartment become much less. Do many of those people turn sour and vote for a demagogue promising salvation?