There's a good news -- bad news situation going on in Nebraska that prompted me to introduce a bill in the Senate. The good news is, some of our rural communities are growing. The bad news is, there's not always enough housing to accommodate the growing population.
When the population grows above 20,000 rural communities no longer qualify for USDA Rural Development home financing loans.
There are more than 300 rural communities across the country that because of growing populations may no longer qualify for USDA Rural Development loans, including two in Nebraska; Columbus and Norfolk.
In an effort to make sure these communities can continue to grow and attract new residents who will be able to finance new homes, I've introduced Senate Bill 878,better known as "the Rural Housing Preservation Act of 2011".
This is vital legislation aimed at making sure people in rural Nebraska are able to get USDA home loans. It amends section 520 of the Housing Act of 1949 regarding what areas can be considered rural and thus qualify for the loans.
The bill will extend the current grandfather clause that allows affected communities to have a population over 20,000 and still remain eligible for USDA Rural Development loans. The goal is to help improve the quality of life in towns that are growing but have populations which exceed the federal definition of rural.
This program is really a partnership between the federal government and a couple of hundred growing rural communities in rural states around the country. And, it doesn't cost the taxpayers any money.
Products offered are mostly loan guarantees. Individuals must meet industry established underwriting guidelines and apply for a loan through their bank. The bank will work with eligible individuals to get them into the USDA RD loan product.
There is no cost anticipated with this legislation. In fact, it actually helps stimulate the economy.
According to the National Association of Realtors, home sales generate more than 2.5 million private-sector jobs. On average, for every two homes sold a job is created; that's economic development that helps these communities continue to grow.
Housing Development improves property values and expands the tax base. For example, Bradshaw Place, a housing development in Columbus, had an unimproved land value of $255,000. Following improvements the land value increased to $7,470,000. A number of homeowners in Bradshaw Place were able to finance their homes using a USDA loan product.
The Rural Housing Preservation Act is the right way to go for small towns that have continued to grow and thrive despite a sluggish economy. It helps communities that are known for their strong work ethic and commitment to family, because without this program a lot of people wouldn't have decent affordable housing.