Rural home loan program has almost run out of money

EAGLE MOUNTAIN — A popular federal home loan program that's allowed many Utahns to buy into the American dream in the state's exburbs and its other hinterlands is running out of money by month's end.

The Rural Home Buyers Program, administered by the U.S. Department of Agriculture, appears headed for temporary mothballing — at the peak of Utah's real estate selling season — until additional or new funding can be secured from Congress.

The program offers generous financing terms to buyers meeting certain income requirements and has helped spur home sales up and down the Beehive State, especially in bedroom communities like Eagle Mountain, Saratoga Springs, Stansbury Park and Grantsville.

Janice Kocher, housing program director for USDA housing, said the program provided 1,800 home loans in 2009 and was on target to provide 2,400 in 2010 before funding ran out. There's currently a backlog of an additional 150 loans awaiting review as homebuyers chased the program's final dollars as well as federal and state tax credits due to expire at the end of April.

New funding, to be included in the Obama administration's next budget, will be available at the beginning of the new fiscal year in October, although a bill that would make funds available sooner is pending in Congress.

The National Association of Realtors is lobbying for those additional interim funds, fearing that if the USDA program is shut down that sales in exburbia and other rural communities could struggle mightily given the fragile private mortgage market.

Kocher said losing the program — albeit temporarily — will be a hardship for a small, rural state like Utah.

Tooele County real estate agent Melissa Collings said thinking about losing the USDA program at the peak selling season is "weighing heavily" on the minds of many other local agents, herself included.

Collins said that four of her last five closings in Tooele County were rural home loans and that every sale she's had in Eagle Mountain has been of that variety.

"I'm nervous with the tax credits going away and now this — how it affects the markets," she said. "I don't see how it can't have a negative impact. It could plunge the market in those areas. I hope Congress acts on it quickly."