Funding Provided: $967,113,096 (Nationally)
Overview: The Recovery Act investments in the 502 direct loan program will provide assistance to those impacted by the recession, preserve jobs and promote economic recovery. Banks and other financial institutions are reluctant to lend money in the current economic environment. The lack of available credit to purchase a home combined with the number of foreclosures in the market is negatively impacting the housing industry as well as other sectors of the economy. 502 direct Recovery Act funds will provide additional credit for affordable home loans. Loan funds will also provide economically distressed low and very-income homeowners located in eligible rural areas with the opportunity to refinance a qualified existing mortgage to an affordable loan.
Section 502 direct loans are authorized by title V of the Housing Act of 1949. 7 CFR Part 3550 provides the policies for the direct single family housing loan programs. Section 502 direct loan program helps low and very-low income applicants who cannot qualify for other credit, including a 502 guaranteed loan, purchase a modest dwelling located in a rural area. Very low income is defined as below 50 percent of the area median income (AMI) and low income is between 50 and 80 percent of AMI. Applicants may obtain 100% financing and must be able to afford the mortgage payments, including taxes and insurance, which are typically within 24 percent of an applicant's income through a payment subsidy to enhance repayment ability. Housing must be modest in size and design, and must not exceed the applicable area loan limit.
Refinancing is also available in limited circumstances for eligible homeowners at risk of losing their homes. Reducing the number of foreclosures as well as preserving jobs in the real estate industry will stimulate the depressed housing sector.
For More Information: For additional information about the 502 direct single family housing loan program click here. More >>