[Senate Hearing 117-750]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 117-750


               EXAMINING THE U.S. DEPARTMENT OF AGRI-
                 CULTURE'S RURAL HOUSING SERVICE: STAKE-
                 HOLDER PERSPECTIVES

=======================================================================

                                HEARING

                              BEFORE THE

                            SUBCOMMITTEE ON
                    HOUSING, TRANSPORTATION, AND COMMUNITY 
                               DEVELOPMENT

                                OF THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

 EXAMINING THE U.S. DEPARTMENT OF AGRICULTURE'S RURAL HOUSING SERVICE 
   FOCUSING ON HOW TO IMPROVE ACCESS TO HOUSING IN RURAL COMMUNITIES

                               __________

                           SEPTEMBER 20, 2022

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


                Available at: https: //www.govinfo.gov /

                               __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
53-650 PDF                  WASHINGTON : 2023                    
          
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         COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                        Pat Lally, Hearing Clerk

                                 ______

   Subcommittee on Housing, Transportation, and Community Development

                      TINA SMITH, Minnesota, Chair

          MIKE ROUNDS, South Dakota, Ranking Republican Member

JACK REED, Rhode Island              RICHARD C. SHELBY, Alabama
ROBERT MENENDEZ, New Jersey          MIKE CRAPO, Idaho
JON TESTER, Montana                  BILL HAGERTY, Tennessee
CATHERINE CORTEZ MASTO, Nevada       CYNTHIA LUMMIS, Wyoming
CHRIS VAN HOLLEN, Maryland           JERRY MORAN, Kansas
JON OSSOFF, Georgia                  KEVIN CRAMER, North Dakota
RAPHAEL WARNOCK, Georgia             STEVE DAINES, Montana

                Tim Everett, Subcommittee Staff Director

         Kathleen Gayle, Republican Subcommittee Staff Director

                   Adam Schiff, Legislative Assistant

                                  (ii)


                            C O N T E N T S

                              ----------                              

                      TUESDAY, SEPTEMBER 20, 2022

                                                                   Page

Opening statement of Chair Smith.................................     1
    Prepared statement...........................................    24

Opening statements, comments, or prepared statements of:
Senator Rounds...................................................     2
    Prepared statement...........................................    25

                               WITNESSES

Senator Jeanne Shaheen of New Hampshire..........................     4
Elizabeth Glidden, Deputy Executive Director, Minnesota Housing 
  Partnership....................................................     7
    Prepared statement...........................................    25
    Responses to written questions of:
        Senator Cortez Masto.....................................    41
Marcia Erickson, CEO, GROW South Dakota..........................     8
    Prepared statement...........................................    29
    Responses to written questions of:
        Senator Cortez Masto.....................................    42
Tonya Plummer, Director, Native American Housing Programs, 
  Enterprise Community Partners..................................    10
    Prepared statement...........................................    34
    Responses to written questions of:
        Senator Cortez Masto.....................................    47
David Battany, Executive Vice President, Capital Markets, Guild 
  Mortgage Company...............................................    11
    Prepared statement...........................................    37

              Additional Material Supplied for the Record

Letter submitted by National Housing Law Project.................    51
Statement submitted by National Rural Housing Coalition..........    58
Statement submitted by Housing Assistance Council................    65

                                 (iii)

 
 EXAMINING THE U.S. DEPARTMENT OF AGRICULTURE'S RURAL HOUSING SERVICE: 
                        STAKEHOLDER PERSPECTIVES

                              ----------                              


                      TUESDAY, SEPTEMBER 20, 2022

                               U.S. Senate,
  Committee on Banking, Housing, and Urban Affairs,
    Subcommittee on Housing, Transportation, and Community 
                                               Development,
                                                    Washington, DC.
    The Subcommittee met at 2:30 p.m., via Webex and in room 
538, Dirksen Senate Office Building, Hon. Tina Smith, Chair of 
the Subcommittee, presiding.

             OPENING STATEMENT OF CHAIR TINA SMITH

    Chair Smith. Good afternoon. I call this Subcommittee to 
order.
    Good afternoon. Senator Rounds, I want to thank you for 
working together with me on today's hearing focusing on what we 
can do to improve access to housing in rural communities. I 
want to thank Chair Brown for his encouragement and support of 
our Subcommittee work, and I want to thank Senator Shaheen from 
New Hampshire for joining us today as well.
    So small towns and rural places are creative, 
entrepreneurial, diverse, and wonderful places to live and to 
work and to raise a family. They produce our food and our 
energy. They are hubs of manufacturing and small business, 
education, health care, arts, and culture. And when I travel to 
rural communities in Minnesota, I find hardworking, passionate 
people who love their communities and want them to be even 
better.
    Yet, we know that for many rural communities the shortage 
of affordable housing is an enormous impediment to attracting 
new business, new residents, and new talent. The reality is if 
you do not have a safe, affordable place to live, nothing else 
in your life works or in your community, not your job, not your 
education, not your health. Housing challenges can be about 
families trying to find a place to live for disabled family 
members or seniors that are faced with living in overcrowded 
conditions. I mean, it could be workers who want to take a job 
in a grain elevator or a meat processor or a manufacturing 
facility, but the closest home they can find is 40 miles away.
    One hiring manager in Minnesota told me that they spend 
almost half their time just helping new employees find housing, 
and I know that Senator Rounds has heard similar stories in 
South Dakota.
    And I am grateful to you for the work that we have been 
able to do in a bipartisan way on this Subcommittee to look for 
solutions to some of these problems.
    The U.S. Department of Agriculture's Rural Housing Service, 
which Congress created in 1949, plays an important role in 
supporting the development of single and multifamily housing in 
small towns and rural places across the United States. RHS is a 
trusted and well-known partner for rural America, which faces 
unique challenges when it comes to developing and financing 
housing.
    This is our Subcommittee's second hearing focused on rural 
housing. In May, we heard from Xochitl Torres Small, who is the 
Under Secretary for Rural Development. She runs the Rural 
Housing Service, and she shared several ideas for how to 
improve Rural Housing Service's administrative systems to keep 
housing affordable for residents of Section 515 properties as 
those properties--those USDA mortgages for those properties 
mature.
    Following the hearing, Senator Rounds and I made a public 
call for input on RHS programs, and we received nearly two 
dozen responses. I appreciate so much the thoughtful comments, 
and we learned a lot from them. Nearly all the letters we 
received pointed to the importance of fully funding the Rural 
Housing Service, and I certainly agree with that. Commenters 
also noted the importance of making administrative 
improvements, similar to what we heard from Secretary Torres 
Small.
    We also heard about the need to decouple rental assistance 
from Section 515 mortgages. As properties with these mortgages 
age and their mortgages mature, many low-income families are at 
risk of unaffordable rent increases. Senator Shaheen and I 
introduced a bill yesterday to fix this problem, and I 
appreciate your partnership on this issue.
    In addition, we heard about the unique challenges that 
Native communities face in obtaining mortgages, particularly on 
trust land. Senator Rounds and I have been working on a bill to 
expand an innovative USDA pilot program to address this issue, 
and I look forward to hearing more from our witnesses about 
that today as well.
    Finally, we received some very interesting suggestions for 
addressing other issues that exist, including how to update 
home repair programs, options to prevent foreclosures, which 
can both help keep residents in their homes and save the USDA 
money, and opportunities to reduce burdens and bureaucratic red 
tape on homeowners and renters, especially very low income 
families.
    So I look forward to hearing from all of today's witnesses 
about these issues and more, and I hope that we can continue 
the productive conversations that we have had so far about how 
to address the housing challenges facing small towns and rural 
places.
    Senator Rounds, I recognize you for your opening remarks.

            OPENING STATEMENT OF SENATOR MIKE ROUNDS

    Senator Rounds. Thank you, Madam Chair. Once again, I want 
to thank you for the cooperative effort in which this 
Subcommittee has continued to work, and I want to thank our 
witnesses, specifically, Ms. Erickson, for joining us virtually 
from Sisseton, South Dakota, for offering your stakeholder 
feedback on how to improve the Rural Housing Service, or RHS.
    In South Dakota, RHS has played a large role in supporting 
affordable home ownership and rental housing for lower-income 
families. I believe there are a number of ways that we can 
streamline and modernize RHS to more effectively serve rural 
Americans. Over the last several months, our offices have been 
collecting recommendations from stakeholders, like those 
testifying today, on ways to achieve this. Their proposals have 
included commonsense reforms such as increasing the threshold 
for mortgage requirements on 504 loans, requiring USDA to 
provide more data transparency along with an annual report on 
RHS programs, improving staffing, updating old IT systems, and 
more.
    Over the last several decades, the number of loans made 
through the Section 502 Guaranteed Loan Program has increased 
while the number of loans made through the Section 502 Direct 
Loan Program has declined. The Direct Loan Program, a more 
expensive program that exposes taxpayers to greater risk, was 
failing to reach communities, more specifically, members of 
tribal communities, in a meaningful way.
    In order to better serve Native American communities, USDA 
launched a 502 lending pilot program in 2018, where USDA 
partnered with Native community development financial 
institutions to help Native American families realize that 
dream of home ownership. I look forward to hearing Ms. Erickson 
discuss the successes of that pilot program in South Dakota. 
Although the pilot program was successful, it has not yet been 
expanded.
    The results of a 2022 National Rural Housing Coalition 
survey of organizations working with RHS on administering the 
502 direct program demonstrates how broken the program remains. 
The survey found that there was a wide variation of house 
Section 502 loans that were administered, there was 
inconsistent staffing of loan applications, and loan processing 
was often delayed, sometimes stretching to 70 days or longer.
    That is why as we look to make updates to RHS I think it is 
important to include the bill Chairwoman Smith and I have 
partnered to expand the 502 lending pilot program. We should be 
promoting innovative strategies like this that utilize public 
private partnerships to make certain funds reach the 
communities that really do need them.
    We will also be looking at ways to streamline regulatory 
requirements for programs and increase flexibility for the 
smallest communities as cumbersome processes have deterred 
nonprofits from utilizing programs. In that vein, staffing and 
IT upgrades are imperative as we evaluate how to make RHS as 
effective as possible. RHS is using software that, in some 
cases, is nearly 25 years old. The outdated technology can 
delay applications from perspective renters and buyers and 
scare away perspective landlords that are interested in 
utilizing RHS programs for their properties. As a USDA lender, 
I am interested in hearing Mr. Battany's perspective on ways to 
upgrade processes.
    Thank you again to all of our witnesses for being here 
today, and I look forward to the conversation.
    Thank you, Madam Chair.
    Chair Smith. Thank you, Senator Rounds.
    And now I would like to invite Senator Shaheen, who is 
visiting our Committee this afternoon, to make a few comments. 
Thank you.

      STATEMENT OF SENATOR JEANNE SHAHEEN OF NEW HAMPSHIRE

    Senator Shaheen. Well, thank you very much, Chair Smith, 
Ranking Member Rounds, and Senator Tester, for all of the work 
that you have been doing to address rural housing and also for 
giving me the opportunity to be here this afternoon to talk 
about some of the challenges we are facing with respect to 
housing in rural areas in New Hampshire and also the 
legislation that Senator Smith already referenced to address 
some of those issues.
    Right now, New Hampshire, like I am sure many parts of the 
country, is in the midst of an affordable housing crisis. 
According to the 2022 Residential Rental Cost Survey, which was 
conducted in New Hampshire by the New Hampshire Housing Finance 
Authority, the vacancy rate for all rentals in New Hampshire is 
just 0.5 percent. That is not 5 percent; that is 0.5 percent. 
That is compared to a vacancy rate in the Northeast of 4.9 
percent and, nationally, of 5.8 percent.
    And meanwhile, rents across our State continue to increase 
at an alarming rate. The cost for a 2-bedroom unit has 
increased almost 26 percent in the past 5 years. Now this is a 
statewide crisis, but in some of our rural areas the problem is 
even worse. In Grafton County, which is in the western part of 
New Hampshire, along the Connecticut River and borders Vermont, 
the vacancy rate is just 0.3 percent, and rents have increased 
an astonishing 48 percent over the past 5 years.
    Now in many of our rural communities, as you all know, USDA 
Rural Housing Service Programs remain a critical source of 
affordable housing for our lowest-income and most vulnerable 
residents. Many of them are elderly or disabled, but some of 
these programs are showing signs of strain as they mature.
    The Section 515 loan program, which was originally 
established almost 60 years ago, is one of those programs that 
requires attention today to ensure that it can be successful 
into the future. Under current market conditions, in many 
communities, when a Section 515 loan matures, there are very 
strong incentives for the property owner simply to leave the 
program altogether and convert the units to market rate.
    In fact, we have had two properties in the Lakes Region of 
New Hampshire, which is more in the eastern part of our State, 
which were recently saved from this very fate, including one 
complex that sits on Lake Winnipesaukee, our State's largest 
lake, which could easily have been converted to luxury 
apartments which would command very high rents. It was only 
through the timely intervention of Lakes Region Community 
Developers, which is a mission-driven nonprofit, that this 
outcome was avoided and tenants' homes were preserved, but 
unfortunately, the residents of many other properties in New 
Hampshire and across rural America are not so lucky.
    Legislation I introduced last week with Chair Smith, the 
Strategy and Investment in Rural Housing Preservation Act, is 
designed to address some of these incentives, tilting them back 
in favor of preserving vital, affordable rural housing stock 
and protecting low-income residents from displacement. To do 
so, the bill gives USDA and property owners flexibility to 
restructure existing Section 515 loans to ensure that these 
properties remain affordable for years to come.
    Even where restructuring is not possible, the bill helps 
protect residents by allowing rental assistance to be 
decoupled, as Senator Smith alluded to earlier, from the 
underlying loan but to remain in place at the property or by 
allowing the resident to transfer their rental assistance to 
another eligible property.
    Finally, the bill requires USDA to establish a plan for 
preserving affordable rental housing in rural areas, in 
consultation with an advisory committee composed of a variety 
of interested stakeholders that includes tenants and property 
owners.
    The affordable housing crisis in our rural communities is 
an enormous challenge that no single piece of legislation or 
single action is going to be able to solve, but I believe this 
legislation, like so many of the other initiatives that this 
Subcommittee is working on, is an important step that will help 
prevent immediate harm by preserving existing affordable units 
as we all consider additional measures to create more 
affordable housing in communities where it is needed most.
    Thank you again, Chair Smith, Ranking Member Rounds, and 
all Members of the Subcommittee, Senator Tester, for letting me 
join you today and for the work that you doing, and I stand 
ready to be helpful in any way I can as you bring forward 
legislation.
    Chair Smith. Thank you, Senator Shaheen.
    I now want to welcome our witnesses here today, and I will 
turn to Senator Rounds to introduce Marcia Erickson from South 
Dakota.
    Senator Rounds. Thank you, Madam Chair.
    It is my pleasure to introduce Marcia Erickson, the CEO of 
GROW South Dakota. Marcia has been with GROW South Dakota for 
more than 30 years and has served as CEO for 17 years. GROW 
South Dakota is a statewide nonprofit organization located in 
Sisseton, South Dakota, that provides programs and loan 
products to advance housing, community, and economic 
development. She is also the President of the Board of 
Directors for the National NeighborWorks Association.
    Marcia has a broad range of experience in mobilizing and 
administering resources from private, State, and Government 
funding sources. As a loan packager for the USDA Rural Housing 
Development 502 Direct Loan Program, Marcia is well situated to 
give useful feedback to the Subcommittee on ways to improve RHS 
programs.
    Thank you again, Marcia, for joining us virtually and for 
being willing to represent the interests of South Dakotans in 
Washington.
    Chair Smith. Thank you so much, and welcome, Ms. Erickson.
    I would turn now to Senator Tester to introduce Tonya 
Plummer.
    Senator Tester. Yeah, thank you, Chair Smith and Ranking 
Member Rounds, for holding this hearing.
    And, Senator Rounds, you know that you are number 1 in 17 
Select, and if you----
    Senator Rounds. I was going to say that, but I did not know 
if you wanted me to break that news.
    Senator Tester. No. And if you guys wonder what we are 
talking about, you need to go to Nats Park, and I will give you 
a hint it has to do with good beer and good fun.
    I have the distinct pleasure to introduce Tonya Plummer, 
who is the Director of Native American Housing Programs at the 
Enterprise Community Partners, where she works with folks from 
across the country to build capacity and to improve Native 
housing. She also serves on the Montana Board of Housing. Tonya 
is an enrolled member of the Assiniboine and Sioux and Cree 
heritage.
    Tonya has previously led a Native CDFI based on Ft. Belknap 
Indian Reservation, where she has deep ties. During her time 
there, she helped grow the national CDFI network and foster 
Montana Native home ownership opportunities.
    We are glad to have you here today, Tonya, and we look 
forward to this hearing.
    Madam Chair.
    Chair Smith. Thank you, Senator Tester, and welcome, Ms. 
Plummer.
    I would like to introduce Elizabeth Glidden, who is the 
Deputy Executive Director of the Minnesota Housing Partnership. 
As Deputy Executive Director, Elizabeth manages the Minnesota 
Housing Partnership policy and program initiatives with a focus 
on expanding housing and community development opportunities 
for historically underserved communities.
    I have to say as a personal note it is wonderful to welcome 
Ms. Glidden. She and I have known each other since our days 
working together in city government in the city of Minneapolis, 
when I was Chief of Staff for the Mayor and she served and was 
a leader on the City Council, including on housing issues then.
    I would like to welcome David Battany to the Committee, who 
is the Executive Vice President for Capital Markets at Guild 
Mortgage Company. Mr. Battany has more than 30 years of 
leadership experience in single-family lending and is 
responsible for all of Guild Mortgage's Government agency 
lending, including USDA's Rural Housing Service loans. Mr. 
Battany serves as a member of the Mortgage Bankers 
Association's Residential Board of Governors and cochairs the 
Mortgage Bankers Association's Affordable Homeownership 
Advisory Council, and he is cochair of the National Housing 
Conference 2022 Black Homeownership Collaborative and is a 
board member of Habitat for Humanity.
    And I also learned from greeting David that he hails from 
far western Colorado, so issues of rural communities are near 
and dear to his heart.
    With that, I just have a few reminders. This hearing is in 
hybrid format. Our Members may be both in person and remote as 
well as having witnesses testify, as we do today, both in 
person and by video. If there is any technology issues, we will 
move to the next witness until it is resolved.
    For witnesses, you all have 5 minutes for your opening 
statements. Each of you will have a clock in front of you or on 
your screen. Your full written statement will also be part of 
the record.
    For Ms. Erickson, who is joining virtually, you will hear a 
bell ring when you have 30 seconds remaining and then again 
when your time has expired.
    And, Ms. Glidden, I recognize you for your opening 
statement.

  STATEMENT OF ELIZABETH GLIDDEN, DEPUTY EXECUTIVE DIRECTOR, 
                 MINNESOTA HOUSING PARTNERSHIP

    Ms. Glidden. Thank you, Chairwoman Smith and Members of the 
Subcommittee. My name is Elizabeth Glidden, and I am the Deputy 
Executive Director of the Minnesota Housing Partnership, a 
nonprofit organization that advocates for equitable housing 
policy, produces data-informed research, and delivers community 
development services across the United States. We specialize in 
serving rural communities and Native nations, and in the past 
year alone we have provided direct technical assistance to 36 
rural communities, including 14 Native nations.
    So what does the housing affordable crisis look like for 
rural communities? Rural residents have fewer housing options 
and are more likely to live in substandard housing than their 
urban peers due to older housing stock and less compliance and 
enforcement of codes. In Minnesota, 41 percent of rural renters 
are cost burdened, meaning they are paying more than 30 percent 
of their income for housing.
    To serve the housing affordability needs of rural 
residents, Minnesota has been an early and enthusiastic adopter 
of USDA's Section 515 program. In Minnesota, Section 515 homes 
make up almost 20 percent of all subsidized housing units in 
rural areas of Minnesota. That percentage is much higher in 
some areas of the State, where 515 units can make up more than 
45 percent of available affordable homes. This means that a 
Section 515 property may provide the only affordable housing 
option within a community or for many miles around.
    The average income of Minnesota's Section 515 residents 
utilizing rental assistance is less than $12,000. This means 
that these very deeply affordable properties are critical in 
rural communities.
    A long-time concern has been mortgage maturations of 515 
properties as we still do not have a preservation or 
replacement strategy for these rural homes. The peak of 
mortgage maturations for Section 515 properties in the Midwest 
States is 2030, about 10 years before the peak occurs in other 
areas of the United States, and according to the Housing 
Assistance Council Minnesota actually leads the Nation in the 
number of properties that are exiting the 515 program. In the 
past 5 years, about 1,100 units, representing more than a tenth 
of all 515 properties in Minnesota, have exited. In addition to 
mortgage maturations, the reasons for these exits include 
owners prepaying their mortgages, owners selling outside of the 
USDA transfer process to avoid it, and deteriorating property 
conditions.
    As 515 properties often are coupled with Section 521 rental 
assistance, this helps ensure that these homes are affordable 
to our lowest-income rural residents. And as was mentioned in 
other opening comments, under current law, when a USDA mortgage 
is paid off, the 515 or the 514 or 516 property loses its 521 
rental assistance, which can result in displacement, housing 
instability, and loss of community for those residents, but 
also, a property may face negative financial consequences from 
the loss of rental assistance.
    Decoupling the mortgage from rental assistance can support 
continued housing stability for rural residents by allowing the 
rental assistance to continue at a property that no longer as a 
qualifying mortgage. And in States like Minnesota, with 
increasing mortgage maturations and other exits, this is an 
option that needs serious consideration.
    We agree with our colleagues at the National Rural Housing 
Coalition and the Housing Assistance Council that decoupling 
should be paired with increased funding for USDA's Rural 
Housing Service programs, such as the Multifamily Preservation 
and Revitalization Program, and that implementation conditions 
must be included with any program change. We support the 
conditions that are set forth in the Shaheen-Smith bill as 
providing appropriate conditions for decoupling among other 
supports for rural housing.
    In addition, I would like to mention that we have policy 
recommendations that included funding necessary for 
preservation and program operations for USDA's programs, that 
transfers to mission-focused nonprofits must continue to be 
incentivized, including with technical assistance, and that 521 
rental assistance provided in the American Rescue Plan should 
receive serious consideration for extension.
    Thank you so much to the Subcommittee for allowing me time 
to speak. I look forward to any comments and questions.
    Chair Smith. Thank you very much.
    We will now turn to Ms. Erickson, who is joining us 
virtually, for your testimony.

      STATEMENT OF MARCIA ERICKSON, CEO, GROW SOUTH DAKOTA

    Ms. Erickson. Thank you, Chairwoman Smith, Ranking Member 
Rounds, and Members of the Subcommittee. As the CEO of GROW 
South Dakota, the housing programs offered by USDA have been 
extremely important to the work that we do and the communities 
that we serve. The perspectives that I share with the Committee 
today are both some of those benefits and some of the 
challenges of these programs.
    The 502 Direct Loan Program is a great resource and an 
option for affordable housing. This program assists low-income 
applicants to obtain housing by providing payment assistance. 
However, the length of time for approval on the 502 direct home 
loans can be discouraging to homebuyers. A shortened 
application process, staffing levels sufficient to address the 
need, and upgraded technology for loan processing would greatly 
improve the 502 Direct Loan Program.
    The Native American Rural Homeownership Improvement Act, 
introduced by Senator Smith and Senator Rounds, expands an 
existing USDA 502 Direct Loan Relending Program to partner with 
Native Community Development Financial Institutions. These 
Native CDFIs work daily in their communities and have the 
background and the experience that is needed to close those 
first mortgage loans for Native home borrowers. This is a prime 
example of a program that works. It should be replicated, and 
it should be permanently authorized. GROW South Dakota supports 
this bipartisan legislation.
    In many of our rural communities, the Section 515 
multifamily program does provide the only decent and affordable 
rental housing in the community. Over the last few years, with 
the transition to a more regional approach for the USDA 
offices, the response times have become delayed. The servicing 
agents are overloaded and unable to respond in a timely manner. 
We support increased staffing resources to enhance the 
efficiency and the effectiveness of the 515 multifamily 
program.
    The USDA 504 program provides direct loans and grants to 
low-income applicants to repair their homes. GROW South Dakota 
supports increasing the total funds that can be awarded to 
households, expand the eligibility to grant recipients, and 
raise the average median income limits. With broader 
eligibility and higher awards per household, rural residents 
will have better access to funds needed to repair their 
substandard homes.
    The Rural Community Development Initiative helps nonprofits 
to further their community development work. GROW South Dakota 
recommends an amendment to the grant scoring on the median 
household income for the communities where the recipients are 
physically located. Many times, recipients are physically 
located in an area where the median household income levels are 
higher than what is allowed for the maximum scoring, but yet, 
they are serving communities that are less than 70 percent of 
the State and national median income. This regulation change 
would better reach all low-income communities. We also support 
increased funding for the RCDI.
    In another area, mortgage lending on tribal trust land is a 
challenge, in part, caused by the delays in processing of title 
and mortgage-related documents by the Department of Interior 
Bureau of Indian Affairs. The BIA must review and process the 
mortgage before it can be finalized. The consequences of these 
delays have resulted in financial institutions exiting this 
market, loss of capital flowing into tribal communities, and 
tribal populations not being able to access affordable mortgage 
products.
    The Tribal Trust Land Homeownership Act is important for 
Native Americans to have access to home and business loans. 
Thank you, Senators Smith, Rounds, Tester, and Thune for 
introducing this very important legislation.
    In closing, I applaud the efforts being made by Congress to 
increase the resources to USDA RHS and to ensure that programs 
are structured so that recipients can use them flexibly to meet 
our local needs. Thank you for working to create solutions in a 
bipartisan manner and for your time today. I look forward to 
answering any questions you may have.
    Chair Smith. Thank you very much.
    I will now invite Ms. Plummer to provide your opening 
remarks.

 STATEMENT OF TONYA PLUMMER, DIRECTOR, NATIVE AMERICAN HOUSING 
            PROGRAMS, ENTERPRISE COMMUNITY PARTNERS

    Ms. Plummer. Thank you, Chair Smith, Ranking Member Rounds, 
and Members of the Committee. Thank you for the opportunity to 
share perspectives on USDA's Rural Housing Services with you 
today, and thank you, Senator Tester, for the introduction.
    My name is Tonya Plummer. I am the Director of Native 
American Housing Programs for Enterprise Community Partners, 
where we work to make home and community a place of pride, 
power, and belonging for tribes all across the country.
    My career has focused on housing and home ownership because 
I have experienced in a deeply personal way its role in 
providing stability, security, and the ability to rise above 
circumstances. My grandmother was born in a teepee on the banks 
of Enemy Swim in Sisseton, South Dakota. My grandfather was 
born in a tent on the Missouri River just outside the Ft. 
Belknap Reservation of Montana. Neither ever owned a home.
    From them came my father, born on the Ft. Belknap 
Reservation, who built his home on trust lands over several 
years, with cash, going years without running water until he 
could afford that amenity.
    I was 20 years old when NAHASDA was first authorized, and 2 
years later I became the first homeowner in my family. I 
purchased my first home in Montana with a USDA rural housing 
loan. I have spent my career helping others create a home and 
in bringing this experience to elevate opportunities for 
tribes. I am severely disheartened at the lack of products and 
resources for Indian Country.
    In advance of my recommendations, I do want to acknowledge 
the recent positive outreach and efforts of USDA Rural Housing 
staff to tackle the tough issues for mortgage banking, mortgage 
lending in Indian Country and to be present and available 
thought partners.
    I also want to acknowledge the complexities of applying 
broad changes to all rural and tribal areas, where the markets, 
courts, rates of growth, and ecosystems of support are unique 
and varied. It is critically important to be cognizant of this 
in drafting legislation and careful of unintended consequences.
    We are very pleased to see the Committee's interest in 
supporting USDA's Rural Housing Service. Our submitted written 
testimony is much more robust, and in it we offer specific 
solutions and recommendations toward progress. But to summarize 
today's focus, we will touch on three proposed areas of reform 
needed to improve the accessibility and effectiveness of RHS 
programs, including:
    Number one, increased rural housing resources and 
technology. RHS programs are extremely valuable but 
underutilized due to limited staff and technology, and that 
disparity negatively impacts rural and Native Americans who 
rely on them as some of the best and only products designed for 
rural and Native needs. We encourage creative solutions such as 
the national expansion of the Section 502 direct relending 
pilot, so successful in South Dakota--a few of my partners are 
here behind me supporting--that leans into Native CDFIs as 
natural partners in the deployment of USDA funds and also the 
renewal of appropriations to Section 525 Technical and 
Supervisory Assistance, or TSA, grants.
    Number two, the USDA Section 502 subsidy recapture is 
damaging in Native communities and should never be expected on 
tribal trust lands. Tribal members on trust lands already come 
to the closing table with less equity because their land is 
given no value, and the application of a subsidy recapture 
assures that they will never build it at a rate comparable to 
nontribal members on fee-simple lands, where a buy-sell market 
exists. Recently, in one tribal community, a father with a 502 
direct loan passed away, and in order to keep the family housed 
in the home they had to come up with $22,000 of subsidy 
recapture.
    However, broadly removing the recapture in communities 
where value appreciation is seen and a shared equity model 
makes sense, could harm the USDA budget formulas and 
potentially decrease dollars available for Section 502 lending. 
A nuanced approach, we feel, is needed and the subsidy 
recapture should be treated one way on tribal land, one way in 
appreciating markets, and another way in depreciating markets.
    The proposed application, number three, of Federal 
foreclosure proceedings currently available to HUD but not to 
USDA on Section 515 multifamily preservation products is to be 
addressed. While we appreciate the need to streamline recovery 
and especially to ensure long-term affordability, we recognize 
the tribal courts and jurisdictions are sovereign and that 
tribal sovereignty must be recognized. There is a fear and 
frustration around the way these proceedings play out on tribal 
lands, and we encourage further, deeper consultation with 
NAIHC, with the policy committees of the native coalitions in 
Minnesota, South Dakota, and Montana, and others to determine 
viable solutions to expedite the process while respecting 
tribal sovereignty.
    In conclusion, I thank you for inviting me to share my 
experiences and perspectives today. On behalf of Enterprise 
Community Partners, I would like to thank the Committee, 
especially Chair Smith and Ranking Member Rounds, for their 
leadership on rural and tribal housing issues, as well as the 
bipartisan cooperation on issues that affect so many Americans 
in every corner of our country. We look forward to continuing 
in partnership with you.
    Chair Smith. Thank you so much for your testimony.
    I now turn to Mr. Battany.

 STATEMENT OF DAVID BATTANY, EXECUTIVE VICE PRESIDENT, CAPITAL 
                MARKETS, GUILD MORTGAGE COMPANY

    Mr. Battany. Chair Smith, Ranking Member Rounds, Senator 
Tester, thank you for the privilege to testify on behalf of the 
Mortgage Bankers Association.
    Lenders are indispensable partners to USDA's Rural Housing 
Service as we are both the providers and the servicers of these 
loans. These programs are worthy of our Nation's commitment to 
them.
    In 2021, there were 114,000 mortgage loans backed by USDA. 
This represented less than half of 1 percent of all total loan 
volume. The average loan size was $180,000. The total amount of 
Section 502 guaranteed loans obligated for Minnesota was $448 
million and $170 million for South Dakota. It is imperative to 
be mindful of this small market share and smaller loan size 
when discussing proposals that might further restrict lending 
or impose additional costs on service delivery.
    The focus of my testimony is the opportunity to build on 
recent progress that RHS lending can better serve consumers and 
industry participants alike. We can advance this objective by 
addressing three areas: better workflow, better technology, and 
if these two areas are achieved, better loan products.
    I would like to start my discussion on better workflow by 
commending RHS on its recently proposed rule to implement a 
provision of HOTMA enacted in 2016 to enable the Secretary to 
delegate approval authority to preferred lenders. Lack of any 
delegation authority is a major barrier and has kept RHS out of 
alignment with FHA and VA lending. In some cases, response 
times from RHS to approve a loan can take up to 10 days, and 
this may result in some borrowers delaying or losing their 
closing date. For financing multifamily properties, delays can 
be a deal killer. Building for rural workforce housing require 
a combination of debt, tax credits, and equity financing that 
must come together quickly or they will be applied to other 
deals. USDA should proceed with updates that provide full 
delegation to all approved lenders to be responsive to their 
customers' needs for both residential and multifamily lending.
    The technology backbone of RHS operations is widely 
acknowledged as outdated. It is less advanced than those used 
by several other Government housing agencies, Fannie Mae and 
Freddie Mac, and lenders. USDA should have the budget to ensure 
RHS can keep pace with changes in the market, evolving data 
security threats, and changes in the ways which mortgage loans 
are originated and serviced.
    The technology focus for RHS is centered on its Guaranteed 
Underwriting System (GUS). Further work is needed to ensure the 
system fully supports RHS borrowers and lenders. For example, 
RHS imposes limits on the number of runs a lender can make for 
each borrower, making it difficult for a lender to perform pre 
qualifications. RHS offerings need to be more attractive for 
loan officers working on the ground with consumers. When a 
problem occurs with a system, it often requires substantial 
manual intervention.
    RHS should also update its interfaces for the remittance of 
annual fees. Today, servicers must manually review and submit 
payments, which is cumbersome and outdated.
    Once capacity is improved, various RHS loan parameters 
should be reviewed to ensure they do not restrict access to 
credit or responsible use of RHS offerings. The RHS debt to 
income limits, for example, are far more stringent than those 
associated with other types of Government lending. RHS 
requirements related to borrower reserves, borrower deposits, 
existing trade lines, qualifying income, and tax transcript 
history would benefit from sensible updates as well. Congress 
and USDA could examine limits in the program's population size 
and geographic parameters.
    Finally, RHS can expand pilot projects and finance a 
broader variety of housing types to match GSE standards, 
including manufactured housing and accessory dwelling unit. RHS 
financing will increase affordable housing options in rural 
areas. The Subcommittee should review the lien payment required 
under the Direct Loan Program and work to ensure that Federal 
funds are provided in a timely manner to serve borrowers 
throughout the entire year.
    Once again, on behalf of all MBA members, I appreciate the 
opportunity to testify, and I also deeply appreciate the USDA's 
ongoing engagement with lenders and other stakeholders. I look 
forward to your questions.
    Chair Smith. Thank you so much.
    We are now going to turn to Members of the Committee for 
questions. Each Member has 5 minutes, and I am going to defer 
to Senator Tester.
    Senator Tester. Well, thank you, Madam Chair, and I want to 
thank all the folks who have testified today. I appreciate your 
testimony.
    Several of you mentioned that the USDA RHS programs were 
valuable but they are underutilized because of limited staff 
and technology. That disparity negatively impacts rural and 
Native communities who rely on this program's resources as some 
of the best and some of the only products designed for rural 
and Native needs.
    So I will ask you, Tonya, and anybody else can jump in 
after Tonya is done: Are there creative solutions to explore 
here, and other than more staff, more technology, which is 
huge, are there any other changes to the programs that you see 
obvious?
    Ms. Plummer. Thank you for the question, Senator. Two 
creative ways that we saw to expand the staffing shortages that 
are at USDA--I think portions of USDA staff in South Dakota are 
functioning at 25 percent of what they were 5 years ago, but 
that was really fixed by the----
    Senator Tester. Say that again. Did you say that the 
staffing today is 25 percent of what it was 5 years ago?
    Ms. Plummer. Correct.
    Senator Tester. OK. So why is that?
    Ms. Plummer. I believe it is because of an underfunding of 
the USDA Rural Housing programs.
    Senator Tester. OK.
    Ms. Plummer. And that is a much layered issue to----
    Senator Tester. No, no, no. I just wondered if that is a 
choice that Congress made or if it is a choice the Agency made. 
It would be interesting to find that out. Keep going. Thanks 
for pointing that out.
    Ms. Plummer. We have experienced the same issues in 
Montana. I think we have partners at the table in Montana who 
very much want to come alongside and do better and just do not 
have the staff. So as an executive director of a CDFI, to run 
deals and scenarios, all I could get was an e-mail of the 
handbook. Not for lack of desire or want, it is just nobody has 
done those programs, nobody knows how to do them in Indian 
Country, and there is nobody to really figure out how to 
facilitate it.
    So we would really encourage leaning into the national 
expansion of Senate Bill 2092 because the Native CDFIs on the 
ground are networked through the Native CDFI network. They are 
networked through strong and growing coalitions in South 
Dakota, Montana, New Mexico, Minnesota. There is strength in 
those numbers there. They have peer-to-peer learning models 
where they can lean into each other for best practices, 
especially when it comes to using outdated technology like the 
GUS system. That is a beast to work with, and as an underwriter 
I struggled with that system as well.
    Senator Tester. OK. Anybody else like to respond to that 
question? Go ahead.
    Ms. Glidden. Thank you, Senator. Minnesota Housing 
Partnership is one of a small number of organizations that has 
provided technical assistance through the Multifamily 
Preservation Technical Assistance Program, and while I do not 
think that that is a full solution to the depth of issues with 
staffing and technology, it is a very important program not 
only for 515s but for others as well. So permanently 
authorizing the MFTA program and increasing those resources 
could be important.
    A second issue I wanted to mention was simplifying 
processes. In the 515 area, I would recommend simplifying the 
transfer process by instituting a two-step transfer, and I can 
go into that more if desired.
    Senator Tester. OK. I have a question for Mr. Battany. You 
talked about RHS's closing response can take up to 10 days. 
What is the standard?
    Mr. Battany. For most lenders, they are delegated for most 
products like FHA, VA, Fannie Mae, and Freddie Mac products. So 
the USDA's requirement that they review the loan to make the 
conditional commitment is somewhat unique. There are some 
private investors that require that, but it is not common for 
Fannie Mae, Freddie Mac, FHA, and VA loans.
    So the process, depending on weekends and timing and staff 
shortages, can be 1 day, 2 days, and sometimes 10 days. So the 
problem is if there is ever a Government shutdown or anything 
that could delay a human's ability to respond, it does slow the 
process down.
    Senator Tester. OK. Could you--and I will say this to Tonya 
because you brought it up. A thing called a subsidy recapture, 
tell me when that is used or why that is used, either one. Or, 
you can do it, Mr. Battany. I do not care, just as long as I 
get an answer.
    Ms. Plummer. The idea is really centered around the concept 
of shared equity and sort of increasing the affordability of 
the home and the entry point, and so by applying the subsidy 
early on in the loan process the rate is drawn down to 
somewhere around 1, 2 percent in order to increase the 
affordability of the home. But that is not a permanent benefit 
because it has to be repaid back in the event that the 
homeowner sells the home or passes away, you know, or ends 
ownership in their hands.
    Senator Tester. I got you.
    Ms. Plummer. But I know one of the pilot CDFIs that are 
part of the national relending pilot, they do not even use it 
because it is just felt as a bitter sting and a bite. It does 
not work in those communities. It discourages the resale of 
that home.
    Senator Tester. Gotcha. OK. Thank you, Madam Chair.
    Thank you. Thank you all.
    Chair Smith. Thank you, Senator Tester.
    Senator Rounds.
    Senator Rounds. Thank you, Madam Chair.
    First, thank you, all of you, for the information that you 
are providing to us, and this has been very helpful already 
just in your opening testimonies. As a rural stakeholder who 
helps build--or, who helps administer USDA programs, I know 
that you have experienced a burdensome process and the lack of 
flexibility that comes with that; you have expressed that.
    Ms. Erickson, I would like to address this question to you. 
How would you like to see USDA increase flexibility for our 
smallest communities in South Dakota to promote uptake of the 
USDA RHS programs?
    Ms. Erickson. There is a variety of things that can be done 
to increase flexibility. There are so many intricacies in loan 
packaging, for instance, that you mentioned. It is difficult 
for the packagers to get to the end product. Small credit 
issues, self-employment, and everything like that takes extra 
time, but the technology to support that would be one step, as 
we have already discussed, and the staffing resources.
    Another thing that we are up against a lot of times is just 
communication. There has been a lack of responsiveness from the 
USDA Loan Servicing Center, which could be improved. We have 
shared loans with Rural Development that have been foreclosed 
and may sit empty for a length of time before they are made 
available for resale, and part of that is due to being able to 
effectively communicate with them. I think if those 
communication lines were improved, we could be more efficient 
and possibly help some of those homebuyers through our HUD 
counselors, with financial education and budgeting, or maybe 
even provide assistance to help bring their loans current.
    There are other flexibility areas like the 504 loan and 
grant program. We often refer our seniors to the grant program, 
and it can be coupled with a loan. Our seniors that are low 
income are very cautious about taking out a loan, and I can 
understand that.
    When we were doing home improvement on a house, a lady was 
making lunch. And I said, oh, how nice. I am sorry to interrupt 
your lunch. Do you ever go out for senior meals?
    And she said that the senior meals are too expensive.
    So when I went back to look at her income, it just was 
Social Security income, and she was trying to keep up her house 
with Social Security income and pay for her utilities, 
medicine, and food. Very, very hard. And they are afraid to 
take out that loan portion.
    So, increase the grant portion would be one recommendation 
that I have, and greater flexibility. Working with both focus 
groups and our communities would be a great start also.
    Senator Rounds. Thank you.
    Mr. Battany, as a USDA lender, you are instrumental in 
getting money into the hands of rural Americans, and you have 
seen the inefficiencies of RHS firsthand. Could you detail for 
the Subcommittee the single most important update you would 
like to see?
    Mr. Battany. My view is the single most important update 
would be to increase funding which would allow RHS to make more 
investments in technology. And much of USDA staff perform 
functions that are very manual in nature in response to the 
inefficiencies in the current system, so the investments in the 
technology would free up staff to be more available to provide 
better communications and service.
    So I would suggest that the investment, or the increased 
investment, in RHS funding for the technology would also pay 
the dividend of improving communications and helping create 
better awareness of the programs and the functions and 
requirements of each program to reduce confusion and create 
more certainty with mortgage lenders and with consumers.
    Senator Rounds. Thank you.
    Ms. Plummer, the 502 relending pilot program has been 
extremely successful in South Dakota, and you made note of it 
earlier. Currently, our Native CDFIs even have waiting lists 
for individuals wanting to participate in the program. How 
would legislation like the Native American Rural Homeownership 
Improvement Act make an impact in States like Montana?
    Ms. Plummer. I think between the tribal communities there I 
think the pipeline was--I cannot remember how--it is immense, 
and I believe there would be immediate access to home ownership 
in those tribal communities. We have been working hard to build 
a Montana Native Home Ownership Coalition, patterned similarly 
after South Dakota, to increase capacity among all those CDFIs, 
to have the systems in place, the training in place, to 
immediately deploy USDA funds as a part of that pilot if it 
were to be passed. So the impact would be very real and 
immediate.
    Senator Rounds. It is really a matter of the CDFIs actually 
understanding how to work in Indian Country and on reservations 
and with tribal trust land, isn't it, and it is a matter of 
understanding the current regional situation?
    Ms. Plummer. They already know their communities. Native 
CDFIs are so close to the problem. They are good at building 
the social and emotional infrastructure. They are good 
counselors. Many times, they understand the complicated land 
processes that USDA staff just stumble over and are intimidated 
by. And so I think the education is actually the other way 
around with USDA staff having a chance to understand how Native 
communities think, live, breathe, and how to work within those 
land systems.
    Senator Rounds. Thank you.
    Thank you, Madam Chair.
    Chair Smith. Thank you, Senator Rounds.
    So in 1963, over 16,000 rural rental properties, 
translating to well over half a million affordable units, have 
been financed through the Rural Housing Service's 515 program. 
And in Minnesota, there are currently about 450 properties, as 
I understand it, with Section 515 mortgages. Residents in these 
properties are making somewhere in the neighborhood of $17,000 
a year, and these households are more likely to be headed by a 
woman and more likely to be headed by a person of color.
    And we know that even more properties--we are going to see 
properties leaving this portfolio soon, a big impact in 
Minnesota because we have been a strong adopter in this 
program, but all over the country.
    So when properties exit the 515 program, they may lose 
rental assistance funding, some properties are no longer 
required to keep rental assistance affordable, and that means 
those residents are kind of, you know, up a tree.
    Ms. Glidden, let me just ask you, so what happens to a 
tenant if they are living in a property where that mortgage 
expires?
    Ms. Glidden. So when the mortgage expires, if that property 
has 521 rental assistance, then that rental assistance also 
goes away from the property. Knowing what happens to the 
tenants is something that we have been trying to dig into more 
deeply. This is also part of our analysis that looked at what 
are other housing--affordable properties in the areas. And what 
we find is that there, frankly, are very few, if any, 
opportunities in many communities in Minnesota for residents to 
stay within community once those rents increase and once the 
mortgage expires, and so those residents are left without a 
home and without the community.
    Chair Smith. Yeah, yeah, they have to leave. Everything is 
up in the air. And as we know, there is such a shortage of 
affordable housing in rural communities. It is not surprising 
that some of those residents end up living in their cars or 
living with family. I mean, it is very, very, very disruptive.
    So let me just ask all of the panel. As we think about this 
large number of 515 properties leaving the program as their 
mortgages mature, what are your best recommendations for how we 
should be addressing this challenge? I just open that question 
up to everybody.
    Ms. Glidden. I will maybe start off. So I had talked a 
little bit earlier in response to a question about technical 
assistance. The reason I mention this is that right now, while 
there is a declining interest in 515 properties from private 
owners and investors, it is mission-driven owners that are 
maintaining strong interest in 515s, community-based owners. 
And so we think that we need to do all we can to assist those 
mission-based owners, those nonprofits, and housing authorities 
in being able to access those properties and maintain them as 
affordable. So technical assistance is one way to assist those 
very small organizations in being able to understand the 515 
transfer process, being able to apply it, being able to manage 
through that system.
    A second item that I had mentioned was simplifying the 
transfer process. Right now, even if you are completely 
committed to trying your best, you have no profit motivation to 
maintain that property as affordable. The transfer process is a 
tremendous process.
    And I know that USDA is open to a two-step transfer 
process. This would be one idea for streamlining the transfer 
process, where you would be able to have a nonprofit owner 
close on the property and then have a second step where they 
would be able to develop a rehab plan and secure the funding 
that is necessary to ensure that property is in the proper 
condition----
    Chair Smith. Because that is--I am sorry to interrupt, but 
that gets at the issue that many of these properties are in 
dire need of being refurbished and repaired and improved so 
that they are decent places for people to live. Is that 
correct?
    Ms. Glidden. Absolutely. So many, if not almost all, of 
these properties will need rehab, will need that assistance, 
which means a need to be able to secure the funding----
    Chair Smith. Right.
    Ms. Glidden. ----to be able to assist those properties.
    Chair Smith. If it was easier to roll over the mortgage for 
that property, refinance it in some ways, you could use that as 
a source of funding for refurbishing the property?
    Ms. Glidden. Yes. But part of another issue is that some of 
the resources that we need to continue to assist with these 
restructurings, the MPR program, are not funded to a level that 
we are able to assist new properties. Right now, they are still 
running through a backlog assisting those properties. And so 
right in this moment, where we need to be helping and assisting 
mission-driven owners to be able to secure ongoing 
affordability of properties, we do not have the resources, and 
we do not have the policy in place to help that take place.
    Chair Smith. Yeah. Thank you very much.
    Senator Moran.
    Senator Moran. Chairwoman, thank you. Thank you and Senator 
Rounds for hosting this hearing, and I thank the panelists for 
being here.
    I am sure I am stating something that is obvious, but there 
is no conversation in a community that does not occur, about 
housing, for--maybe takes 2 or 3 minutes before that becomes 
the topic of conversation if you are talking to an employer, to 
a plant manager, to a chamber of commerce executive, to a 
mayor, to a city manager. The conversations in Kansas revolve 
around this topic plus childcare.
    Let me ask just a few questions first. In today's high 
inflation times, do our housing programs take into account 
those circumstances, or does it become even more difficult to 
solve housing needs with the ever increasing cost of materials 
and rent and the cost of construction?
    Mr. Battany, I see you were shaking your--nodding your head 
with me, so I assume there was an answer there.
    Mr. Battany. Yes, the cost of labor and cost of materials 
are driving up construction prices. One of the solutions that 
is available in the industry, which is not currently used by 
USDA and would be one of my recommendations, are manufactured 
homes. Fannie Mae and Freddie Mac have rolled out new higher 
standards for homes that the trade institutions call them 
CrossMods. And these are homes that are 2 to 3 bedrooms, 2 
bathrooms, 2,000 square feet, that are built to the same 
standards as stick-built, site-built homes.
    I have personally toured these homes. These homes are 
indistinguishable. If you walk through a home with a building 
engineer, you will have a difficult time to know if it was site 
built versus factory-built.
    The benefit of factory-built is you can build them very 
quickly. The homes are built in 10 days in a factory, in a 
controlled, indoor environment, and the cost of construction is 
anywhere from 20 to 30 percent less due to the efficiencies you 
have building onsite and repeating processes.
    And in many rural areas, where workforce housing is a 
challenge or labor is a challenge, both the cost of labor is a 
challenge but also the availability of labor in rural markets, 
to have a home built in a factory that can then be transported, 
installed in a couple months onsite--typically, the modules are 
installed. Then the pitched roofs, garages, and porches are 
built and attached onsite.
    But these homes, for many workforce and rural residents, 
could be a very key part to solve both the lack of housing 
units and the cost of construction.
    Senator Moran. I thank you for your answer. I was not 
certain. Are you saying that there is an impediment toward 
programs' financing allowing that type of factory construction?
    Mr. Battany. Yes. In today's USDA RHS guidelines, there are 
pilot programs in a few States where this can be done, but as a 
standard program parameter, only new construction that is being 
financed at the time can be built. So existing manufactured 
homes are not eligible for the programs, and so if USDA could 
align with Fannie Mae and Freddie Mac standards, for example, 
that would allow more of this housing to flow to this part of 
the market.
    Senator Moran. Is there any justification for the position 
that Rural Development takes on this topic?
    Mr. Battany. I think this is more of a newer item to hit 
the market. I do not know there is necessarily a strong 
argument against it. Historically, some of the older homes did 
not appreciate as well because they were not built to the same 
standards, but if they follow Fannie Mae and Freddie Mac 
guidelines to the same high standards, then there should not be 
any issue with respect to the quality of the homes or their 
value as an investment.
    Senator Moran. Mr. Battany, you indicated something that 
caught my attention, and I heard this yesterday from my own 
Rural Development Director, our State director. It was not--
well, I do not want to put words in her mouth, but the emphasis 
was on we need money, resources, appropriations for staffing, 
which is different than we need another program or we need to 
fund programs higher. I heard that from some of the witnesses 
today.
    But the ability for USDA to meet the demands is lacking 
because lack of people, lack of personnel. Is that a common 
circumstance, I assume, across the country?
    Mr. Battany. Yes, that is a very widespread feedback from 
lenders who work with USDA. The teams are wonderful, but they 
are just spread thin. And a lot of the things they spend time 
on are manual processes that could be eliminated through 
technology, and they could better spend their time on being 
more responsive on communications, responding to e-mails, being 
more available for phone calls and just helping lenders because 
every lender who does not get helped is a borrower who is 
waiting for an answer. So the improved customer service to 
lenders will flow through to borrowers.
    Senator Moran. Ms. Plummer, would you tell me something I 
probably should already know, but what are the Department of 
Interior BIA programs that are particularly valuable in 
housing, or does the tribal community rely upon USDA?
    Ms. Plummer. Excuse me. I would say the latter. The BIA, I 
believe they have the home improvement program. That is not as 
broadly used as it could be, and it is largely for restoration.
    But in terms of encouraging new development and new 
finance, there are no programs offered by the Bureau of Indian 
Affairs, and so tribal communities lean into either Section 184 
home loans, which historically--it is becoming more and more of 
a conforming product and inaccessible for tribal communities. I 
believe there are 7 percent of HUD 184 loans that actually are 
performed on trust lands, and so there needs to be some work on 
that front.
    For that reason, more have leaned into USDA and the 
programs available there and have been creative about things 
like the relending pilot.
    Senator Moran. Thank you very much.
    Thank you.
    Chair Smith. Thank you, Senator Moran.
    Senator Daines, you are recognized for 5 minutes.
    Senator Daines. Madam Chairman, thank you, as well as to 
Ranking Member Rounds, and thanks to all the witnesses here 
today. It is great to have a Montanan with us as well, a 
special thank you to Ms. Plummer for your willingness to make 
the journey here and to testify as well.
    I hear consistently from our first responders, our 
teachers, other critical workers in Montana that it is almost 
impossible to find homes to rent, let alone buy, that are safe 
and, of course, affordable. In the past 2 years, construction 
times have been protracted by material and worker shortages.
    This is the business I grew up in. My mom and dad were in 
the homebuilding business in the Gallatin Valley since the 
early 1970s. I spent my summers usually working construction 
and building houses. So we have watched this for a long time.
    In our tribal communities, it is especially true. We may 
have as many as 14 people crammed into a single-family home. 
The importance of addressing this shortage cannot be 
overstated. We are going to have to find solutions to help 
Montanans house their families as well as their loved ones.
    As we both know, the cost of construction tends to increase 
exponentially the further a build site is from materials, from 
parts, and from labor sources. I have heard in some tribal 
communities the costs are much, much higher on a per-square-
foot basis than in more urban areas. Home builders have 
estimated recent lumber price increases alone have added nearly 
$20,000 to the price of an average home.
    Ms. Plummer, could you comment on how inflation has 
affected housing projects in Indian country?
    Ms. Plummer. Sure. Thank you for the question, Senator, and 
first of all, thank you for recognizing the dire need that we 
are experiencing in Indian Country. There is no doubt that 
inflation, I think, has a serious impact on the everyday lives 
of urban, rural, and Native Americans all over the country.
    I believe in tribal communities, especially, it is felt 
more broadly on the development side. There are very few homes 
that exist to finance already. So concentration on the building 
of housing stock is as important as the concentration on 
housing finance. That is difficult with the limited--increase 
of cost in goods and materials and also with a limited task 
force.
    So one thing that we have done to help facilitate improving 
that is work on building a strong Montana Native Homeownership 
Coalition with membership from our Native CDFIs, banks, and 
credit unions, our TDHEs, from every tribal nation across the 
State to come together around solutions.
    We have taken some cues from the South Dakota Native 
Homeownership Coalition and their construction internship 
program that builds the skills of Native workers in their own 
home communities, finds somebody who can sign off on their 
journeyman status so that they can retain employment right at 
home, and then also partners with the Native CDFI to provide 
financial education so that those new workers understand how to 
build their business and become self-employed. So we are really 
looking heavily at facilitating that across the State of 
Montana.
    Senator Daines. Ms. Plummer, thanks for your insights.
    I want to note that if you look back at last spring, in the 
midst of soaring lumber prices and shortages nationwide, lumber 
prices rose about 100 percent. They crested in April at 300 
percent. We all saw that dynamic.
    And by the way, if we look back home in Montana, Ms. 
Plummer, during that same period, our lumber production in 
Montana actually decreased by 11 percent while costs were 
soaring by nearly 300 percent, as our national forests failed 
to meet basic timber harvest targets.
    I will tell you, as a kid growing up, we had 30 active 
sawmills in Montana. Today, we are down to six. We could have 
offset some of these market dynamics had we simply been 
managing our forests, surrounded by millions of acres of 
national forest that get tied up in litigation, and we cannot 
get in there and thing them. It helps a lot of great 
environmental wins by doing so but, importantly, keeping lumber 
prices lower and loggers on the job.
    A lot of attention has been given to housing pressure in 
urban communities, but often rural areas and Indian Country are 
overlooked. Smaller communities have fewer workers. They have 
fewer resources to address their housing needs.
    As you know personally, we have some first-rate community 
colleges and vocational schools right there in Montana. And, 
Ms. Plummer, could you share with us how tribal colleges and 2-
year colleges are critical to developing this pipeline of 
skilled workers?
    Ms. Plummer. Sure. When we started to look at building a 
coalition, one thing that we did across the State was some 
asset mapping to determine which communities had a strong 
tribal college or community college that we could lean into to 
access their trades programs, to look at facilitating that 
construction internship program and providing employment for 
those folks that graduate right out of the gate. So they are in 
every single tribal community across the State of Montana. And 
just really we have not figured out a way to make that happen, 
but I think there is a lot of potential to make that happen.
    Senator Daines. Great. Well, the need is not going away, so 
go forth. Thank you, Ms. Plummer.
    Chair Smith. Thank you so much, Senator Daines.
    I believe a Member or two is interested in doing a second 
round of questions, and so we will proceed with that. I have 
just one question, and then I believe Senator Moran has a 
question, maybe Senator Rounds.
    I want to just dive back into this issue that we are 
calling decoupling, but it essentially gets at the challenge 
that we have when these 515 mortgages mature, they go away, and 
there is a tie between the rental assistance that could be 
provided to people in that mortgage. So when the mortgage goes 
away, the rental assistance goes away. It is sort of like a 
double whammy of badness for people that are trying to figure 
out how to stay in an affordable home.
    Now there is work being done on this. The President's 
budget in fiscal '23 suggested that Congress decouple the 
rental assistance from the Section 515 loans. Work is happening 
on the Senate Ag Appropriations Committee and, of course, the 
bill that Senator Shaheen and I are working on as well.
    I would just like to turn maybe to Ms. Glidden, and then I 
would love to hear anyone else's comments, if you could just 
talk about why this decoupling of these two programs would be 
beneficial to helping to address one of the challenges we face 
in terms of affordable housing in rural communities.
    Ms. Glidden. Thank you, Senator Smith. So I might just 
start with saying that, you know, we have talked before about 
the mortgage goes away and so that is the support to the 
property for maintaining the rents as affordable. And then when 
the rental assistance goes away, that is both a loss to the 
resident, which is the priority, but it also affects the 
property's ability to maintain as affordable, which also needs 
to be considered when we have so few affordable properties in 
many of these rural communities.
    So with decoupling, this would allow that rental assistance 
product to remain with the unit, and then it would also help 
create an opportunity to create conditions that would ensure 
that that property remains affordable into the future. And I 
will note that that is something that colleagues at other 
national organizations have pointed out is very critical to 
decoupling, from the National Rural Housing Coalition and 
NAIHC, that ensuring that there are some conditions around 
decoupling so that property owners then have those requirements 
to ensure the property is maintained in safe condition, that 
there is a restrictive use agreement. So we want to ensure 
those protections stay in place, but it can be a good way to 
retain some affordability when otherwise it would be 
completely, possibly gone.
    Chair Smith. Thank you.
    Would anyone else like to comment on that? Yes, Ms. 
Plummer.
    Ms. Plummer. I will just add my experience is more in 
single-family housing development and finance, and so I cannot 
speak eloquently to this product. But I do have a codirector, 
Robin, who has worked quite often with Elizabeth Glidden on 
this, and I have heard her discuss these issues. I believe that 
she would support everything that you have said today, and we 
would welcome the chance to follow up with questions for the 
record and additional commentary after today.
    Chair Smith. Thank you very much. I appreciate that, and I 
will look forward to--as we continue to work on this and to 
fine-tune it, we will be sure to rely on all of your expertise. 
Thank you very much.
    Senator Moran.
    Senator Moran. Chairman, thank you. I just did not want to 
be remiss. We have been working, Senator Shaheen and I, in our 
appropriations subcommittee in regard to the Department of 
Commerce and USTR in regard to trade issues, particularly 
tariffs.
    And, Mr. Battany, you may be the most appropriate to ask 
this question. We have been working--we have been trying to get 
the Administration to negotiate a trade agreement with Canada 
in regard to lumber, and then we have the lingering issue of 
tariffs on steel. Could you comment on the expense or cost 
associated with those tariffs and what it means to homebuilding 
today?
    Mr. Battany. Yes. Unquestionably, those increased costs 
have directly and dramatically increased the cost of home 
ownerships, and this indirectly also increases rental costs 
because with inflation in general materials across the board, 
but the specific increases in lumber cost in particular but 
also in steel and other costs. Those components, combined with 
the higher inflation on the labor costs, have resulted in much 
higher cost to construct homes.
    It also gives incentives for builders to build more higher 
end homes and less entry-level homes. And as costs go up, homes 
become more unaffordable. At the same time, interest rates go 
up, and homes become more unaffordable. A person who was an 
aspiring September 26, 2022, homebuyer now has to become a 
renter, and that creates more demand for rental and pushes rent 
prices higher.
    So the increased cost of lumber trickles down through the 
entire ecosystem and impacts both homebuyers and renters in 
terms of higher cost of housing.
    Senator Moran. Thank you.
    Chair Smith. Thank you so much. I believe we have no 
further questions from the Members, so I want to thank all of 
our witnesses for being here today and for providing testimony.
    Before we close, I would like to ask unanimous consent to 
enter statements for the record from the National Rural Housing 
Coalition, the National Housing Law Project, and the Housing 
Assistance Council, without objection. Without objection, so 
ordered.
    For Senators who wish to submit questions for the record, 
those questions are due 1 week from today, which will be 
Tuesday, September 27th.
    For our witnesses, you will have 45 days to respond to any 
questions for the record. Thank you again for that.
    Senator Rounds, I think we have lots of very practical, 
commonsense ideas for ways that this program can be improved to 
work better for rural communities, and I am excited to work 
with you on this.
    Senator Rounds. Thank you, Madam Chair, and I would just 
say to our panelists today, thank you very much for a very 
informative question and answer.
    Chair Smith. With that, this hearing is adjourned.
    [Whereupon, at 3:48 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
                 PREPARED STATEMENT OF CHAIR TINA SMITH
    Good afternoon. Sen. Rounds, thank you for working together with me 
on today's hearing, focusing on what we can do to improve access to 
housing in rural communities.
    Thank you to Sen. Shaheen for joining us today as well.
    Small towns and rural places are creative, entrepreneurial, 
diverse, and wonderful places to live, work, and raise a family.
    They produce our food and our energy. They're hubs of manufacturing 
and small business, education, health care, and arts and culture. And, 
when I travel to rural communities in Minnesota, I find hardworking, 
passionate people who love their communities and want to make them even 
better.
    Yet, we know that for many rural communities, the shortage of 
affordable housing is an enormous impediment to attracting new 
businesses, new residents and new talent.
    The reality is, if you don't have a safe, affordable place to live, 
nothing else in your life or your community works. Not your job. Not 
your education. Not your health.
    Housing challenges can be about families trying to find a place to 
live for disabled individuals, or seniors living in overcrowded 
conditions. It could be workers who want to take a job at a grain 
elevator, meat processor or a manufacturing facility but the closest 
home they can afford is 40 miles away.
    One hiring manager, in Minnesota, told me that they spend almost 
half their time helping new employees find housing.
    I know Sen. Rounds has heard similar stories in South Dakota. I'm 
grateful to Senator Rounds that we have been able to work in a 
bipartisan way on this Subcommittee to look for solutions to some of 
these challenges.
    The U.S. Department of Agriculture's Rural Housing Service (RHS), 
which Congress created in 1949, plays an important role in supporting 
the development of single- and multi-family housing in small towns and 
rural places across the United States. RHS is a trusted and well-known 
partner for rural America, which faces unique challenges when it comes 
to developing and financing housing.
    This is our Subcommittee's second hearing focused on rural housing. 
In May, we heard from Xochitl Torres Small, the Under Secretary for 
Rural Development. She runs the Rural Housing Service, and she shared 
several ideas to improve the Rural Housing Service's administrative 
systems and to keep housing affordable for residents of Section 515 
properties as those properties' USDA mortgages mature.
    Following the hearing, Sen. Rounds and I made a public call for 
input on RHS programs, and we received nearly two dozen responses. I 
appreciate all of the thoughtful comments, and we learned a lot from 
them.
    Nearly all of the letters pointed to the importance of fully 
funding the Rural Housing Service, and I certainly agree. Commenters 
also noted the importance of making administrative improvements, 
similar to what we heard from Under Secretary Torres Small.
    We also heard about the need to decouple rental assistance from 
Section 515 mortgages. As properties with these mortgages age and their 
mortgages mature, many low-income families are at risk of unaffordable 
rent increases. Sen. Shaheen and I introduced a bill yesterday to fix 
this problem, and I appreciate her partnership on this issue.
    In addition, we heard about the unique challenges that Native 
communities face in obtaining mortgages, particularly on trust land. 
Sen. Rounds and I have worked together on a bill to expand an 
innovative USDA pilot program to address this issue, and I look forward 
to hearing more from out witnesses about that today.
    Finally, we received interesting suggestions for addressing other 
issues, including:

    ways to update the home repair programs,

    options to prevent foreclosures, which can both help keep 
        residents in their homes and may save the USDA money, and

    opportunities to reduce burdens and bureaucratic red tape 
        on homeowners and renters--especially very low-income families.

    I look forward to hearing from all of today's witnesses about these 
issues and more, and I hope we can continue the productive discussions 
we've had so far about addressing the housing challenges facing small 
towns and rural places.
                                 ______
                                 
               PREPARED STATEMENT OF SENATOR MIKE ROUNDS
    Thank you, Madam Chair and thank you to our witnesses, specifically 
Ms. Erickson for joining us virtually from Sisseton, South Dakota, for 
offering your stakeholder feedback on how to improve the Rural Housing 
Service.
    In South Dakota, RHS has played a large role in supporting 
affordable home ownership and rental housing for lower income families. 
I believe there are a number of ways we can streamline and modernize 
RHS to more effectively serve rural Americans. Over the last several 
months, our offices have been collecting recommendations from 
stakeholders like those testifying today on ways to achieve this. Their 
proposals have included commonsense reforms such as increasing the 
threshold for mortgage requirements on 504 loans, requiring USDA to 
provide more data transparency along with an annual report on RHS 
programs, improving staffing, updating old IT systems and more.
    Over the last several decades, the number of loans made through the 
Section 502 Guaranteed Loan Program has increased while the number of 
loans made through the Section 502 Direct Loan program has declined. 
The direct loan program, a more expensive program that exposes 
taxpayers to greater risk, was failing to reach communities, more 
specifically members of tribal communities, in a meaningful way. In 
order to better serve Native American communities, USDA launched a 502-
lending pilot program in 2018 where USDA partnered with Native 
Community Development Financial Institutions to help Native American 
families realize that dream of home ownership. I look forward to 
hearing Ms. Erickson discuss the successes of that pilot program in 
South Dakota.
    Although the pilot program was successful, it has not yet been 
expanded. The results of a 2022 National Rural Housing Coalition survey 
of organizations working with RHS on administering the 502 Direct 
Program demonstrates how broken the program remains. The survey found 
that there was a wide variation of how section 502 loans were 
administered, there was inconsistent staffing of loan applications and 
loan processing was often delayed--sometimes stretching to 70 days or 
longer. That's why, as we look to make updates to RHS, I think it 
important to include the bill Chairwoman Smith and I have partnered on 
to expand the 502-lending pilot program. We should be promoting 
innovative strategies like this that utilize public-private 
partnerships to make certain funds reach the communities that really 
need them. We will also be looking at ways to streamline regulatory 
requirements for programs and increase flexibility for the smallest 
communities, as cumbersome processes have deterred nonprofits from 
utilizing programs.
    In that vein, staffing and IT upgrades are imperative as we 
evaluate how to make RHS as effective as possible. RHS is using 
software that, in some cases, is nearly 25 years old. The outdated 
technology can delay applications from prospective renters and buyers 
and scare away prospective landlords that are interested in utilizing 
RHS programs for their properties. As a USDA lender, I'm interested in 
hearing Mr. Battany's perspective on ways to upgrade processes.
    Thank you again to all of our witnesses for being here today and I 
look forward to the conversation.
                                 ______
                                 
                PREPARED STATEMENT OF ELIZABETH GLIDDEN
        Deputy Executive Director, Minnesota Housing Partnership
                           September 20, 2022
Introduction
    Chairwoman Smith and Members of the Subcommittee. Thank you for the 
opportunity to testify regarding rural housing issues. My name is 
Elizabeth Glidden, and I am the Deputy Executive Director of Minnesota 
Housing Partnership or MHP. MHP is a nonprofit organization that 
advocates for equitable housing policy, produces data informed research 
to inform solutions, and delivers community development services across 
the United States.
    We specialize in serving rural communities and Native Nations with 
programs such as our Housing Institute, Native Community Development 
Institute, Emerging Developer Initiative, and Strengthening Rural 
Communities. In the past year alone, we have provided direct technical 
assistance to 36 rural communities including 14 Native Nations. In 
addition, we prioritize rural issues with original research and public 
policy solutions, including as a board member of the National Rural 
Housing Coalition, an active member of the Rural Preservation Working 
Group convened by the Housing Assistance Council, and by convening 
community-based rural developers to develop administrative and public 
policy recommendations for rural housing programs.
Rural Housing Issues in Minnesota
    Rural communities are experiencing a housing affordability crisis. 
In Greater Minnesota (the geography outside of the seven-county Twin 
Cities metropolitan area), 24 percent of households are cost burdened, 
or paying more than 30 percent of their monthly income on housing 
costs, a number that increases to 41 percent for rural renter 
households. Two-thirds of renter households in Greater Minnesota earn 
less than $50,000 a year, which is under 50 percent of the State's area 
median income.
    In Minnesota, rural residents have fewer housing options and are 
more likely to live in substandard housing than their urban peers, due 
to older housing stock, and less compliance and enforcement of codes. 
More than 40 percent of homes in Greater Minnesota are over 50 years 
old, built prior to 1970. New construction permits remain low in many 
rural areas, with some communities going years without a new 
multifamily housing project.
Importance of 515 properties
    Minnesota was an early and enthusiastic adopter of the USDA's 
Section 515 program, which provides low interest loans for rental homes 
for very low- and low-income households. In return for low-cost 
financing, borrowers of Section 515 loans are restricted in the amount 
of rent they can charge tenants, with 30-year loans amortized over 50 
years. When loans mature, or properties otherwise exit the 515 program, 
the owner is no longer required to keep rents affordable to any 
particular income, which can result in displacement and housing 
insecurity for current residents and a loss of available housing to 
future residents.
    Section 515 properties make up a substantial portion of the 
affordable rental options for Minnesota's rural households, with such 
properties located in 82 of Minnesota's 87 counties. Of the total 
subsidized housing units in Greater Minnesota, Section 515 homes made 
up almost 19 percent of that total in 2020. That percentage is higher 
in some areas of Minnesota, as 515 units make up more than 45 percent 
of the available affordable homes in multiple counties. A Section 515 
property may provide the only affordable housing options within a 
community or for miles around.
    Minnesota's 515 properties are smaller in size than the U.S. 
average, at 21 units compared to 31, indicating that policy solutions 
must be flexible to address variations across the country in the 515 
portfolio. The Section 515 program is unique in rural communities in 
that it provides very deep subsidies, especially when combined with 
rental assistance, which is the case for a super majority of units. The 
average annual income of Minnesota's Section 515 residents utilizing 
rental assistance is less than $12,000. Forty percent of Midwestern 515 
properties are designated for seniors, higher than in other areas of 
the U.S., although the number of units designated for families 
continues to increase. Nationally and in Minnesota, we are not meeting 
the market need for homes affordable to extremely low-income residents, 
especially in rural communities, so preserving the Section 515 homes we 
have is even more critical to the housing stability of lowest income 
rural residents.


Section 515 Maturing Mortgages and Property Exits at a Crisis for Rural 
        Households
    The Midwest, and Minnesota, will see much of its Section 515 
properties mature out of the program earlier than the U.S. overall. The 
peak of mortgage maturation for Section 515 properties in Midwest 
States is 2030, about 10 years before the peak of mortgage maturations 
for the United States. According to the Housing Assistance Council 
(HAC), Minnesota currently leads the Nation in the number of properties 
exiting the program. Between 2016 and 2021, over 80 properties, with 
1,153 units, exited the 515 program, representing more than one-tenth 
of all Section 515 properties in Minnesota. Our loss of affordable 
rural homes will continue to accelerate in the coming years.
    In addition to mortgage maturation, the decrease in Section 515 
housing is impacted by factors such as owners prepaying their 
mortgages, owners selling outside of the USDA transfer process to avoid 
it, and deteriorating property condition such that rehab may cost more 
than property value.
Decouple Rental Assistance From Mortgages, With Conditions
    Section 515 rental housing and 514/516 farmworker housing 
properties are frequently coupled with Section 521 Rental Assistance, 
ensuring these homes are affordable to our lowest income rural 
residents. In Minnesota 96 percent of Section 515 properties have at 
least one unit with rental assistance; and 68 percent of all units have 
rental assistance. Under current law, when a mortgage is paid off a 
Section 515 or 514/516 property loses its Section 521 Rental 
Assistance. When rental assistance is removed from a property, 
residents may face displacement, housing instability, and loss of 
community. Also, a property may also face negative financial 
consequences from the loss of rental assistance.
    Decoupling the mortgage from rental assistance is a policy solution 
that can support continued housing stability for rural residents, as 
USDA preservation resources are limited, by allowing rental assistance 
to continue at a property that no longer has a qualifying mortgage. As 
properties in States like Minnesota are currently facing a high number 
of mortgage maturations and other exits, this is an option that needs 
serious consideration.
    We agree with our colleagues at the National Rural Housing 
Coalition, Housing Assistance Council, and others that decoupling 
should be paired with increased funding for USDA's Rural Housing 
Service programs, such as the Multifamily Preservation and 
Revitalization Program (MPR) and 515 program, and that implementation 
conditions should be included with any program change. We support 
provisions in S. 4762 (A bill to establish a permanent rural housing 
preservation and revitalization program, and for other purposes) and 
H.R. 1728 (Strategy and Investment in Rural Housing Preservation Act), 
which would require properties seeking to decouple to:

    Sign a restrictive use agreement and multiyear rental 
        assistance contract, preferably for 20 years

    Demonstrate that they have tried to access other 
        preservation funding before pursuing decoupling as a last 
        resort

    Agree to maintain the housing as decent, safe, and sanitary 
        and in conformity with provisions established in Title V of the 
        Housing Act
Funding Necessary for Preservation and Program Operations
    Past underinvestment in USDA's Rural Housing programs has increased 
the housing challenges faced by rural residents. Due to lack of 
resources, USDA has not offered loans for new construction of 
multifamily rental housing in over a decade, and there is a backlog of 
approximately 200 applications for rental preservation resources, so 
that projects in need of these scarce resources must continue to delay 
preservation activities if they can't identify alternative sources. 
Recent estimates shared by the USDA identify that $30 billion is needed 
over the next 30 years to preserve 80 percent of the existing section 
515 portfolio.
    We are pleased that the fiscal year 2023 budget includes increases 
to many rural housing programs, including increases for 515's and to 
the Multifamily Preservation and Revitalization Program (MPR). We 
appreciated the Presidents' recommended increase to USDA rural housing 
programs, and hope this is the track we take, but more investments will 
be needed to preserve rental housing and ensure rental assistance 
remains accessible. We need these investments sufficiently to support 
healthy rural communities, and preserve valuable USDA financed assets.
    We were also pleased that the Inflation Reduction Act included $100 
million for USDA Rural Development administrative costs. We urge the 
Committee to encourage USDA to allocate a significant share of those 
funds for the Rural Housing Service to support its field structure and 
upgrade its information technology.
Incentivize Transfers to Mission-Focused Nonprofits
    MHP is one of a small number of organizations that have provided 
technical assistance pursuant to the Multifamily Preservation Technical 
Assistance (MFTA) program. This program provides competitive grants to 
eligible organizations to provide technical assistance and other 
services to support preservation of affordable homes through the 
transfer of Section 515 properties from current owners to nonprofits or 
public housing authorities.
    Through a 2018 grant, MHP assisted four rural housing and community 
development authorities with the RD transfer process, preserving 82 
units as affordable properties in Minnesota and Illinois, and helped 
515 transfer property owners secure 18\1/2\ million dollars in loans, 
low-income housing tax credits, and loan funds from bonds. Through the 
term of the grant, MHP worked on preservation strategies for a total 
330 Section 515 units. MHP, in partnership with Enterprise Community 
Partners, will continue supporting nonprofit transfers with a recent 
award of USDA technical assistance grant funds, with MHP serving 12 
central region States.
    Many of the organizations MHP has supported are very small rural 
nonprofits or housing authorities that are new to owning 515 
properties, new to working with USDA, new to USDA's complex transfer 
process, and some are even new to multifamily development and ownership 
generally. While there is declining interest in 515 ownership from 
private owners and investors, mission driven owners maintain a strong 
interest in the 515 program as one of the few affordable housing 
resources available to rural residents. To continue to incentivize 
nonprofit transfers we recommend:

    Permanently authorize the MFTA program. Today, MFTA is 
        funded through appropriations, but not authorized. 
        Authorization will ensure the program remains stably funded and 
        is permanent part of the preservation tools of Rural Housing 
        Service.

    Simplify the transfer process by instituting a two-step 
        transfer. This would allow a transfer to a nonprofit owner to 
        close, with time then allowed to develop a rehab plan and 
        funding. Today, a buyer must have prior to closing funding for 
        all capital needs as determined by a Capital Needs Assessment 
        and any adjusted reserve requirement. This process change would 
        eliminate a critical administrative barrier to preservation, 
        one that creates sometimes insurmountable burden to small 
        community-based nonprofits.

    Set aside funding for smaller organizations in the Section 
        515 and MPR programs.
Extend Section 521 Rental Assistance
    The American Rescue Plan Act included $100 million for Section 521 
rental assistance for previously unassisted units and households, 
allowing the USDA's Rural Housing Service to extend rental assistance 
coverage to 27,000 units in 3,700 properties. This funding, which is 
set to run out at the end of fiscal year 2022, ensures housing 
stability for tens of thousands of rural residents and has helped to 
stabilize the longterm preservation needs of the fragile USDA 
multifamily portfolio. Removing rental assistance from these units will 
create tremendous hardship for the households they support today, as 
well as hastening the deterioration of USDA properties--both 
circumstances we cannot afford.
    Thank you for the opportunity to address the Committee. I look 
forward to any comments or questions the Committee may have.
References
MHP's State of the State's Housing 2021, https://mhponline.org/state-
    of-the-states-housing-2021/.
515 Properties in Minnesota: Preserving Affordable Rental Properties in 
    Rural Communities, https://mhponline.org/515-properties-in-
    minnesota-preserving-affordable-rental-housing-in-rural-
    communities/.
An Update on Maturing Mortgages in USDA's Section 515 Rural Rental 
    Housing Program (HAC 2022), https://ruralhome.org/update-maturing-
    mortgages-usda-section-515-rural-rental-housing-program/.
                                 ______
                                 
                 PREPARED STATEMENT OF MARCIA ERICKSON
                         CEO, GROW South Dakota
                           September 20, 2022
Introduction
    Thank you, Chairwoman Smith, Ranking Member Rounds, and Members of 
the Subcommittee. I am Marcia Erickson, Chief Executive Officer for 
GROW South Dakota. Thank you for the opportunity to provide testimony 
on Examining the U.S. Department of Agriculture's Rural Housing 
Service: Stakeholder Perspectives.
    I started my career over 30 years ago working at GROW South Dakota 
and have been the Chief Executive Officer for more than half of that 
time. I carry a Master of Science Degree in Community Economic 
Development from Southern New Hampshire University. I am also a 
graduate of Achieving Excellence in Community Development from 
Harvard's Kennedy School of Government. Some of my current affiliations 
are National NeighborWorks Association (NNA) Board President, Rural 
Local Initiative Support Corporation (Rural LISC) Rural Advisory 
Committee, Small Business Development Center Advisory Board (South 
Dakota), South Dakota Community Action Partnership President, and 
NeighborWorks America Rural Advisory Committee. Past affiliations 
include the Chair of the Federal Home Loan Bank of Des Moines Advisory 
Council, Langford Community Foundation Advisory Board Member and 
Founder, and Marshall County Healthcare Board Chair.
    My testimony draws on these experiences and a diverse set of 
programs delivered by GROW South Dakota. GROW South Dakota is a 
statewide organization that administers several Federal, State, and 
local programs through three separate private nonprofit organizations 
under our GROW South Dakota branding umbrella. Our organization assists 
South Dakota residents and communities in community, housing, and 
economic development. GROW South Dakota has two certified Community 
Development Financial Institutions (CDFIs) within our purview. We also 
are a designated Community Action Agency, a partner of Rural LISC, and 
an exemplary rated member of NeighborWorks America. Together with our 
fellow South Dakota NeighborWorks organizations, in 2021 we leveraged 
an additional $66 in public and private investment for every $1 of 
NeighborWorks America grant funding awarded to organizations in our 
State. I share the Subcommittee's perspective that the current state of 
the housing programs offered by USDA Rural Housing Services (RHS) is 
crucial to rural communities across the country, yet challenges to the 
successful implementation of these programs remain.
    I have worked with both the National NeighborWorks Association, the 
trade association representing NeighborWorks affiliate organizations, 
and Rural LISC to survey organizations across the Nation to gather 
recommendations on improving USDA RHS programs and operations. These 
surveys found that community-based organizations consider RHS resources 
vital for their affordable housing and community development work. 
Respondents also reported that USDA RHS needs additional staffing and 
resources to oversee and administer their programs.
Section 502 Direct Loan Program
    The 502 Direct Loan Program is a great option and asset for rural 
families to secure an affordable mortgage. This program allows USDA to 
provide single-family direct housing loans in rural areas to eligible 
low- and very-low-income applicants who are unable to obtain credit 
elsewhere. The 502 Direct Loan Program provides decent, safe and 
sanitary single-family housing in eligible rural areas by providing 
payment assistance to increase an applicant's repayment ability. 
Payment assistance is a type of subsidy that reduces mortgage payments, 
easing the financial burden on the household. The amount of assistance 
is determined by the adjusted family income. Borrowers are required to 
repay all or a portion of the payment subsidy received over the life of 
the loan when the title to the property transfers or the borrower is no 
longer living in the dwelling. \1\
---------------------------------------------------------------------------
     \1\ U.S. Department of Agriculture Rural Development. Single 
Family Housing Direct Home Loans. n.d. 11 September 2022. https://
www.rd.usda.gov/programs-services/single-family-housing-programs/
single-family-housing-direct-home-loans
---------------------------------------------------------------------------
    GROW South Dakota recommends relaxing or eliminating the repayment 
of subsidies under the 502 Direct Loan Program. The subsidy payback at 
the end of the amortization can negatively impact the ability of low-
income families to gain generational wealth. According to CNBC, in 
2019, homeowners in the U.S. had a median net worth of $255,000, while 
renters had a net worth of just $6,300. \2\
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     \2\ CNBC. Here's the average net worth of homeowners and renters. 
24 August 2021. 11 September 2022. https://www.cnbc.com/select/average-
net-worth-homeowners-renters
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    The interest rate of the 502 Direct Loan Program can also increase 
each year based on household income increases. This can be problematic. 
If a low-income homeowner receives a pay increase, their loan payment 
becomes higher, making it less advantageous to seek career development 
or other job advancement opportunities. We recommend examining both the 
subsidy payback and considering adjusting the increments on increases 
of income to a higher level.
    In addition, the length of time for the direct home loan approval 
process can be discouraging to potential low-income homebuyers. A 
shortened application process, staffing levels sufficient to address 
the need, and improved technology would greatly improve the Section 502 
Direct Loan Program and ultimately serve more rural families.
Native American Rural Homeownership Improvement Act
    GROW South Dakota appreciates and applauds the leadership of 
Senator Rounds and Senator Smith in introducing the Native American 
Rural Homeownership Improvement Act (S. 2092). This legislation will 
expand an existing USDA 502 Direct Native Relending Program which 
allows the USDA to partner with Native CDFIs, informed by a successful 
demonstration implemented by two Native CDFIs in South Dakota--Four 
Bands Community Fund on the Cheyenne River Indian Reservation and 
Mazaska Owecaso Otipi Financial on the Pine Ridge Reservation.
    This pilot made Native CDFIs eligible borrowers under the Section 
502 Direct Loan Program, allowing these entities to relend to families 
for the rehabilitation, construction, and acquisition of affordable 
housing on trust land. Native CDFIs throughout the country work daily 
in their communities and have the background and experience needed to 
close first mortgage loans with Native borrowers. Their administration 
of these funds will improve the deployment of the 502 loan funds to 
assist a greater number of Native families and households. This is a 
prime example of a Federal program that works, should be expanded, and 
be permanently authorized. GROW South Dakota supports the passage of 
this bipartisan legislation, as well as the inclusion of annual funding 
for these purposes beginning in the Fiscal Year 2023 appropriations 
bill.
    Providing this authority for Native CDFIs to lend Section 502 loan 
funds is a similar model to USDA Rural Development's Intermediary 
Relending Program (IRP), which has been a successful business lending 
program for many years. The IRP program provides loans to local 
intermediaries to re-lend to businesses. This is an efficient and 
effective method to deliver essential USDA resources to local economies 
to create and retain jobs. We believe that delegating more 
responsibilities to mission-based lenders such as CDFIs is an important 
way for USDA to meet its mission of serving low-income families in 
often hard-to-serve small communities.
    Finally, the responsiveness of USDA's loan servicing center could 
be improved and enhanced. Foreclosed homes by USDA Rural Development 
may sit empty for significant lengths of time before they are made 
available for resale due to the inability of partners to effectively 
communicate with the loan servicing center. If communication lines were 
improved, GROW South Dakota could also be more efficient and successful 
in helping homeowners with financial education and possibly providing 
assistance to bring their loans current.
Section 515 Rural Rental Housing Program
    For many rural communities, the Section 515 Rural Rental Housing 
Program provides the only decent and affordable rental housing in the 
community. This program provides necessary rental housing options for 
low-income households. Tenants in Section 515 properties have an annual 
average income of only $14,6653, with many units occupied by seniors 
and people with disabilities. \3\
---------------------------------------------------------------------------
     \3\ United States Department of Agriculture Rural Development. 
Results of the 2021 Multi-Family Housing Annual Fair Housing Occupancy 
Report. 12 May 2022. 18 September 2022. https://www.rd.usda.gov/sites/
default/files/RDUL-MFHreport-0.pdf
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    According to Mills Property Management--a property management 
contractor with GROW South Dakota--reduced USDA staffing and a 
reorganization to more regional offices have lengthened response times 
and led to processing delays over the last few years. USDA servicing 
agents have become overloaded and unable to respond to questions, 
reserve for replacement requests, conduct budget approvals, and 
complete other programmatic tasks in a timely manner. \4\ These 
communication delays have also contributed to the transfer of unused 
Section 521 rental assistance out of the State, hurting small-town 
rural properties in our communities as these resources are vital for 
preserving property affordability and ensuring tenants are not cost-
burdened. We support increased staffing resources for USDA, additional 
Section 521 Rental Assistance funding, and the full renewal of existing 
resources, including those provided in the American Rescue Plan.
---------------------------------------------------------------------------
     \4\ Lamfers, Jessica. Mills Property Management Finance Director 
Maureen Nelson. 13 September 2022. Email.
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    Many Section 515 multifamily projects are in need of additional 
repairs and major renovations due to deferred maintenance. We support 
increased resources for the Multifamily Preservation and Revitalization 
Program (MPR) since it provides USDA the ability to defer existing 
loans and provide ``soft second'' loans and grants.
    Projects in rural communities are not only in need of structural 
capital needs. Projects that are over 30-40 years old are in 
competition with newly constructed units that have amenities such as 
dishwashers, in-unit washers/dryers, garages, and updated security 
systems. Some of these quality-of-life items require a full renovation 
of the USDA Rural Development 515 projects in order to be considered.
    When an owner considers additional financing for 515 properties for 
substantial renovation in the form of a loan, it is difficult to 
finance as the amount of rent allowed is limited. If a loan is approved 
with an increase in rent, the USDA Rural Development subsidy typically 
will be increased to offset the difference between the tenant's ability 
to pay only 30 percent of their income and the higher rent. In essence, 
the subsidy may be assisting with making the loan payment. If USDA 
provides a loan to the project and also provides an increase in subsidy 
due to increased rent, it may be more effective and efficient to 
provide the project grant funding.
    Appraisals that are necessary when considering USDA Rural 
Development or third-party loans are an added expense to the project. 
While USDA Rural Development may consider the tax-assessed value of a 
property, it can be difficult to approve if the valuation is low. In 
rural areas, it is challenging for the property to meet the appraised 
value after renovation when taking into consideration the additional 
and existing debt of the property. GROW South Dakota would support 
creating a capital pool for experienced nonprofits in the lending field 
to finance Section 515 projects requiring renovations and to support 
the preservation of these properties. Nonprofits have greater 
regulatory flexibility with lending requirements and can serve as a 
conduit to fill this void. Congress should consider providing 
appropriations for the USDA Multifamily Housing Preservation Loan Fund 
program, which previously provided support through a delegated lending 
structure.
    Finally, for 515 projects, USDA Rural Development properties are 
difficult to transfer to new ownership due to prepayment debt covenants 
on the project. Potential buyers interested in affordable multifamily 
housing solutions may be forced to assume USDA Rural Development debt 
in order to maintain access to subsidies. GROW South Dakota welcomes 
any legislative intervention available to ease the burden from 
nonprofits during these difficult transfers. Access to subsidies 
continues to be critical for nonprofits like GROW South Dakota to serve 
our communities by providing and preserving affordable multifamily 
units. Nonprofits that own 515 projects also have limited funding and 
revenue to complete the necessary updates for deferred maintenance. 
Because of this, these organizations are being forced to sell projects 
to private parties who remove the units from the USDA Rural Development 
program and increase rents.
504 Single Family Repair Loans and Grants
    The staff of GROW South Dakota work daily in our rural communities 
and see firsthand the need for home repairs. When driving through a 
rural community, it is easy to see the need for shingles and siding 
from property to property, but there is also a need for health and 
safety issues that may be causing risks inside the home. Further, when 
GROW South Dakota has peer-to-peer meetings with groups and 
organizations deteriorating housing is always at the forefront of the 
discussions. This is clearly displayed in our organization, as GROW 
South Dakota has 151 families on our waitlist pending home 
improvements, and unfortunately, our funding is limited to address 
these needs.
    The USDA 504 program provides direct loans and/or grant funds to 
very low-income applicants to repair their homes. GROW South Dakota 
often refers homeowners to the USDA 504 program. However, many of our 
low-income clients looking for home improvement assistance are not 
comfortable taking out a loan, even with the very favorable interest 
rate. This program would benefit from greater regulatory flexibility 
and an increase in the grant funds per household. This grant currently 
allows a maximum grant award of $10,000 \5\ for those over 62 and with 
very-low income. GROW South Dakota's home improvement project costs 
have increased beyond this award ceiling, even for one major 
improvement, such as shingling, while many homes need more than one 
home repair item completed. GROW South Dakota supports increasing the 
total grant funds awarded to households, expanding the eligibility of 
grant recipients and the use of funds, and raising Average Median 
Income eligibility limits. With rising repair costs, broader 
eligibility flexibilities, and higher awards per household, rural 
residents will have better access to funds for needed home repairs.
---------------------------------------------------------------------------
     \5\ USDA Rural Dvelopment. ``Together, America Prospers''. n.d. 
Single Family Housing Repair Loans and Grants. 19 September 2022. 
https://www.rd.usda.gov/sites/default/files/508-rd-fs-rhs-
sfh504homerepair.pdf
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Housing Preservation Grant (HPG)
    The HPG program helps to repair or provide rehabilitation of 
housing owned by low-income rural households. The USDA Housing 
Preservation Grant (HPG) is both complex and difficult to administer. 
Reducing regulatory barriers from the grant application stage to the 
assistance provided to low-income families will increase the program's 
impact.
    During the application stage, GROW South Dakota asks for the public 
comment process to be removed from the HPG process. The 15-day comment 
period window is often shortened by the notice of available funding 
listings being close to the submission date. Although we have not 
administered this program for some time, we never received a public 
comment as a result of this requirement, and it has only added to our 
administrative burden in issuing this program.
    The HPG program also requires the State Housing Preservation 
Offices (SHPOs) to review and approve preservation activities, such as 
replacing windows, while other Federal programs such as the Department 
of Energy's Weatherization Assistance Program have negotiated 
streamlined processes with little or no consultation with the SHPO to 
comply with the National Historic Preservation Act. \6\ USDA Rural 
Development would further its impact under HPG by modeling the 
Department of Energy's streamlined process for review and approval. 
Therefore, we recommend Congress expand resources for HPG since these 
activities are needed in our communities while also incorporating 
administrative reforms to increase the program's impact.
---------------------------------------------------------------------------
     \6\ Office of Energy Efficiency & Renewable Energy. Historic 
Preservation--Executed Programmatic Agreements. n.d. 18 September 2022. 
https://www.energy.gov/eere/wipo/historic-preservation-executed-
programmatic-agreements
---------------------------------------------------------------------------
Rural Community Development Initiative
    The Rural Community Development Initiative (RCDI) is the only 
specific capacity-building program offered through USDA's RD Programs. 
This program helps scale the ability of nonprofits to further their 
affordable housing and community development work in rural areas. GROW 
South Dakota recommends changing the RCDI grant scoring on the median 
household income for the communities where the recipients are 
physically located. \7\ Many times, local partnering development groups 
or recipients are physically located in an area where the median 
household income levels are higher than allowed for scoring the maximum 
points in the grant application, but they are serving communities that 
are less than or equal to 70 percent of the State or national median 
household income. This change would allow RCDI resources to better 
reach all low-income communities. We also support increased funding for 
RCDI.
---------------------------------------------------------------------------
     \7\ Department of Agriculture. FR Vol. 87. 8 February 2022. 18 
September 2022. https://www.govinfo.gov/content/pkg/FR-2022-02-08/pdf/
2022-02624.pdf
---------------------------------------------------------------------------
Tribal Trust Land Homeownership Act
    The South Dakota Native Homeownership Coalition is a collaborative 
group of key agencies dedicated to increasing home ownership 
opportunities for Native Americans in the State of South Dakota. GROW 
South Dakota has worked closely with the South Dakota Native 
Homeownership Coalition since its inception, initially securing and 
administering a USDA RCDI grant to help set roots for this successful 
coalition. However, home ownership continues to be a major challenge on 
trust land.
    Mortgage lending on Tribal Trust and Restricted Land is a challenge 
to home ownership in part caused by delays in the processing of title 
and mortgage-related documents by the Department of Interior Bureau of 
Indian Affairs (BIA). The loans involving property on trust land must 
be reviewed and processed by the BIA before the mortgage can be 
finalized and guaranteed by the relevant Federal agency.
    The unintended consequences of these delays have resulted in large 
financial institutions exiting this market, loss of capital flowing 
into Tribal Communities, Tribal members with homesite leases opting for 
higher-cost chattel loans, frustration by lenders needing to refresh 
documents due to time delays, and tribal populations not able to access 
affordable mortgage products.
    To the BIA's credit over the past three years, they have made 
mortgages a priority in their title work and have created an Indian 
Affairs Mortgage Handbook to standardize mortgage package processing 
across their 12 Regions. The Handbook is a step in the right direction 
as it provides guidance related to timelines, but more work must be 
done to ensure the BIA adheres to its timelines. Given the disparities 
in obtaining access to home loans on trust land compared to fee simple, 
we support the Tribal Trust Land Homeownership Act (S. 3381). This bill 
would codify the mortgage document processing times included in the 
Mortgage Handbook, promote better communication between the BIA and the 
lending industry, and require the GAO to report on the BIAs efforts at 
digitizing documents for the purpose of streamlining and expediting the 
completion of mortgage packages for residential mortgages on trust 
land.
    This legislation is of critical importance as we collectively 
strive to provide Native Americans wishing to live on their land the 
same access to home loans available to any American citizen purchasing 
or renovating their home on fee simple lands. GROW South Dakota 
appreciates Senators Thune, Smith, Rounds, and Tester for their 
leadership in introducing this legislation to address this need.
Other
    As a nonprofit CDFI partnering with USDA Rural Development through 
several programs, flexible program design and capital to address a 
variety of rural affordable housing and community development remain a 
core need. When local leaders have the resources, along with effective 
regulations informed by community practitioners, we can make 
substantial progress in serving rural households. GROW South Dakota 
recognizes that Federal funding needs parameters and grantees require 
accountability, yet burdensome regulations often hinder our progress in 
delivering critical assistance. I have seen that type of funding, I 
have worked with that type of funding, and the cost to administer such 
programs sometimes exceeds the value. I applaud the efforts being made 
in Congress to increase resources for USDA RHS and to ensure that 
programs are structured so that CDFIs and other recipients can use them 
flexibly to meet local needs.
Summary
    GROW South Dakota's aim is to help find solutions together with our 
community members to address the housing problems we face and put 
forward comprehensive, implementable solutions using a unified voice. 
However, we recognize each community has different needs and 
strengths--effective policy does not always mean one-size-fits-all, but 
we do know that housing impacts every single community. This is where 
we start.
    Thank you for working on creating solutions in a bipartisan manner 
and for looking to stakeholders like myself and my fellow witnesses to 
inform those solutions. I look forward to working with each of you to 
promote legislation that will change the future of housing and our 
families across the State and the Nation. Thank you for your time and I 
look forward to answering any questions you may have.
                                 ______
                                 
                  PREPARED STATEMENT OF TONYA PLUMMER
   Director, Native American Housing Programs, Enterprise Community 
                                Partners
                           September 20, 2022
    Chair Smith, Ranking Member Rounds, and Members of the Committee, 
thank you for the opportunity to share perspectives on the USDA's Rural 
Housing Service (RHS) with you today.
    My name is Tonya Plummer. I am an enrolled tribal member of 
Assiniboine, Sioux and Cree heritage with roots in the Sisseton 
Wahpeton Sioux Tribe of South Dakota and the Fort Belknap Indian 
Community in Montana. Early in my career I gained several years of 
experience in mortgage banking, working all sides of the lending 
process, ending as an underwriter, and working deals with USDA loans in 
17 Western States with over 70 branch offices. It has been a challenge 
and a joy to apply that experience to help create home ownership 
opportunities for tribal members living within the bounds of the 
reservation on trust lands. I stepped away from mortgage banking to 
start and direct a Native CDFI focused on home ownership before coming 
to Enterprise Community Partners, where I'm focused on expanding their 
work on affordable housing and community development in tribal 
communities across the country.
    Enterprise is a national nonprofit working to make home and 
community places of pride, power and belonging for all. In order to 
create that change, we draw on our strength as an end-to-end housing 
platform, providing programmatic and advisory services, capital and 
community development under one roof. We advocate on a nonpartisan 
basis for sound public policy at every level of Government. We develop 
and deploy programs and support community organizations on the ground 
nationwide, in urban, suburban and rural areas. We invest capital to 
build and preserve rental homes, and we own and operate 13,000 
apartments and provide resident services for 22,000 people. In short, 
our work contributes to thriving, supportive and equitable communities 
that prioritize safe, stable, and affordable housing options.
    Over the past 40 years, Enterprise has collaborated with thousands 
of local partners to build and preserve 873,000 affordable homes, 
invested $54 billion across all 50 States and improved millions of 
lives. Our strategic priorities are advancing racial equity, building 
climate resilience and upward mobility and creating and preserving 
housing people can afford.
    Enterprise's Tribal Nations and Rural Communities Team has sought 
to support safe, decent, and culturally appropriate housing on tribal 
lands and rural communities since 1997. Enterprise's commitment to 
rural and tribal communities is deep: over the last 20 years Enterprise 
has invested more than $990 million in grants, loans and equity, and 
developed more than 16,000 affordable homes in rural communities 
nationwide. Our team offers technical assistance, trainings, peer 
learning sessions, and other capacity building services to expand 
access to home ownership opportunities and develop or preserve 
affordable rural rental homes.
    Much of this work is supported by Federal contracts through HUD's 
Rural Housing and Economic Development program, USDA's Rural Community 
Development Program and the USDA 515 TA Program, for which we have just 
been awarded $1.4 million in contracts.
    In advance of my recommendations, I want to acknowledge the recent 
positive outreach and efforts of USDA Rural Housing Staff to tackle the 
tough issues for mortgage lending in Indian Country and be present and 
available thought partners, collaborating with a broader array of 
stakeholders towards the goals of removing barriers, making USDA 
housing products more attainable, and realizing a greater impact of 
these programs on the lives of rural Americans and Native Americans.
    I also want to acknowledge the complexities of applying broad 
changes to all areas including rural markets as well as the vastly 
underdeveloped and underserved tribal trust land areas. Though they 
fall under the rural umbrella, the markets, courts and ecosystems of 
support are varied, making it difficult to analyze and assess intended 
outcomes across the board. It is of critical importance to be cognizant 
of this in drafting legislation and careful of unintended consequences.
    Enterprise applauds the Committee's interest in and support of the 
USDA's RHS. The needs of rural residents are profound across the 
country, and these programs are too often overlooked. Seventy percent 
of the United States' 473 persistent poverty counties are in rural 
areas, predominantly in Indian Country, the Mississippi Delta, the 
Colonias, and Appalachia. A 2021 study by Redfin found that single 
family homes for sale in rural areas were down 44 percent year over 
year--the largest drop in rural inventory since Redfin began tracking. 
Because of the unequal distribution of traditional financing for homes, 
USDA RHS funding represents one of the only opportunities for home 
ownership for many rural Americans. There is also a serious shortage of 
affordable rental housing in rural communities, where incomes are often 
lower, making it difficult to finance the construction and development 
of rental housing, often even more so than in urban and suburban 
communities. The Low-Income Housing Tax Credit (Housing Credit), which 
is our Nation's most effective tool for the development of affordable 
rental housing, is greatly over-subscribed, with developers requested 
nearly 2.5 times as many Housing Credits as there was available 
authority in 2020. As a result, the vast majority of subsidized rental 
housing in rural America relies on USDA RHS Section 515 funding to 
bring those small-scale rural rental housing projects to fruition. 
Because of the unique and vital role that USDA's Rural Housing Service 
plays, it is of utmost importance that it is a fully funded, modern 
organization with adequate staffing and streamlined regulations that 
respect the unique needs of rural and tribal communities.
Technology and Staffing
    For RHS to function at the highest possible level, appropriate 
staff coverage and cross training is important. One person cannot be 
the only expert in an issue, or the only person able to complete a 
process. When staff leave for other jobs, retirement, or temporary 
leave, it can create gaps that are open until a new person is hired, or 
the person returns from work. For work in tribal communities 
specifically, it can be difficult to find a staff person who 
understands the specific requirements of working on tribal lands, for 
example. It's been said there have been only five Section 502 loans 
closed on trust lands in the last year and even fewer USDA Guaranty 
loans. Despite a clear desire to do more, the existing State and 
program directors simply do not have the experience with the product 
nor the staff to provide meaningful assistance beyond a reference to a 
chapter of the handbook. The existing barrier to accessing meaning help 
deepens the divide, leaving some of the best products designed for 
rural America on the shelf and Native lands and homes red-lined because 
they are complicated and yet, the staffing weakness did not have to 
impact the deployment of loans. In 2018, due to the smart partnerships 
in the initial Section 502 Direct relending Pilot, which turned USDA's 
two loans to Mazaska and Four Bands into an additional 19 solid 
performing mortgage loans that otherwise would not have been achieved. 
More broadly, to facilitate meaningful progression toward loan 
closings, it would be helpful if multiple staff members were cross 
trained and able to help 502 program partners walk though loan 
scenarios and interpret the regulations. Overall, staff capacity for 
USDA RHS has been a serious challenge. In some areas of South Dakota, 
USDA offices are currently functioning with 25 percent of the staff 
they had 5 years ago.
    This USDA 502 Direct relending pilot is an example of a smart 
approach to overcoming staffing shortages, demonstrating that expanding 
partnerships with Native CDFI's can alleviate the pressure on highly 
limited USDA staff by tapping into the wealth of local expertise and 
community knowledge. Enterprise supports efforts to scale up this pilot 
program nationally.
    Enterprise also recommends reviving appropriations funding for the 
Technical Supervisory Assistance Program (TSA grant) as an additional 
means of extending USDA RHS outreach and resources to create bridges to 
rural and tribal communities and organizations with limited capacity. 
We encourage this TSA Program remain broadly and easily accessible in 
order to expand outreach and limit bureaucracy for programs that are 
already hard to understand and apply for.
    In combination, expanding partnerships like the 502 pilot, reviving 
the TSA Program, and increasing funding for USDA staff and technology 
will go a long way towards adequately meeting the demand of the rural 
and tribal markets and achieving the objectives of the Rural Housing 
Service.
Subsidy Recapture
    The USDA's Section 502 Direct Rural Housing Loan (Section 502), 
despite being a very cost-effective way for low-income earners to 
achieve home ownership, has its shortcomings. It can be difficult for 
loans to be made due to lack of USDA staffing, technology and 
consistent funding. Utilizing these loans on tribal land can also be 
difficult, a problem that would be remedied by S. 2092, the Native 
American Rural Homeownership Improvement Act. Enterprise Community 
Partners is grateful to the Members of this Committee who have 
supported that bill.
    Section 502 can be further complicated by the recapture or balloon 
payment that comes at the end of the mortgage term or at time of sale, 
and this needs to be addressed. In certain cases, eliminating subsidy 
recapture is good and will allow people to better build wealth from 
home ownership. However, this is a nuanced issue and not all markets 
with 502 housing stock are the same. In addition, eliminating subsidy 
recapture altogether will have an impact on the USDA Scorecard and 
subsequent budget authority, potentially resulting in the unintended 
consequence of significantly decreasing the allocation of Section 502 
dollars available.
    As a result, Enterprise proposes that subsidy recapture from the 
USDA's Section 502 be treated differently in different situations to 
allow the program to more appropriately ensure that increasing equity 
in homes enables future home ownership. Subsidy recapture should be 
treated one way on tribal land, one way in appreciating markets, and 
one way in depreciating markets.
    Section 502 loans on tribal trust land should never require 
repayment, because the land is not given any value in the assessments 
and there remains an unproven rate of appreciation but a recognition 
that equity built over time is the simply the result of paying down the 
loan and not of a paired appreciation in land or market value. Tribal 
members in tribal communities, especially those with a large, rural 
trust land base, already come to the closing table with less equity and 
the application of a subsidy recapture assures they will not build it 
at a rate comparable to nontribal members on fee simple lands where a 
buy/sell market exists. Recently, in one tribal community, a father 
with a 502 Direct loan passed away, and in order to keep the family 
housed in the home, they had to come up with $22,000 of subsidy 
recapture. The subsidy is not seen as a benefit, and there are South 
Dakota Native CDFI re-lenders who do not utilize Section 502 because 
the recapture is seen as a burden to carry rather than a means of 
affordability and security.
    Outside of tribal land, subsidy recapture should more closely 
replicate a shared equity model. In some rural places, homes with 
Section 502 loans may substantially increase in value between when the 
home is purchased and when the owner wishes to sell. In these cases, 
the full subsidy recapture represents only a relatively small 
percentage of gained equity. The recapture is thus justified and 
fulfills the goal of providing money to further subsidize new 
homeowners.
    However, in no circumstances should repaying a Section 502 subsidy 
leave a borrower underwater, or discourage or prevent them from selling 
a house that they would otherwise wish to sell. In rural areas with 
stagnant or even depreciating housing values, this is too often the 
case. Capping subsidy recapture at a certain percentage of gained 
equity will prevent this problem. Government support for home 
ownership, at its heart, is a question of wealth building. If the home 
has not appreciated enough to pay back the subsidy, it would be waived 
under this proposal.
Foreclosures of Properties With USDA Loans
    Enterprise understands the desire and need to streamline 
foreclosure but have concerns as previously expressed about the 
foreclosure issue on tribal lands. This is particularly an area where a 
nuanced approach is critical. We look forward to continuing to work 
with Congress to develop legislation that ensures tribal sovereignty is 
respected.
    The Multifamily Foreclosure Act of 1981 allows the Secretary of 
Housing and Urban Development to conduct nonjudicial foreclosures of 
multifamily mortgages held by HUD by designating a foreclosure 
commissioner in a State. The foreclosure commissioner may bypass the 
court process generally required for a foreclosure, allowing the 
property to be sold quickly. Importantly, the Act also requires that 
any subsidized rental properties subject to foreclosure retain their 
income restrictions, even after they are sold again.
    Outside of tribal lands, a similar foreclosure process for RHS 
mortgages would be appropriate. Foreclosures on properties with 
mortgages held by the USDA currently can take years to complete, and 
there is no requirement that affordable properties stay affordable 
after foreclosure or subsequent sale. The result is that properties 
with delinquent mortgages become vacant, which presents both a public 
safety hazard and a lost opportunity for affordable housing in rural 
communities. A nonjudicial foreclosure process that is faster to 
navigate and requires the preservation of affordability requirements 
would allow affordable housing groups to buy these properties, make 
necessary renovations and bring them back into use as affordable 
housing.
    It's extremely difficult to buy a USDA property out of 
receivership. There is no inventory of foreclosed buildings with USDA 
mortgages, the way there is for HUD. Enterprise is currently receiving 
USDA funding through four separate Section 515 Technical Assistance 
contracts to work with communities across the country to provide 
assistance on transfers, and this work would be greatly benefitted by a 
list of properties that are available for purchase and can be retained 
as affordable housing in rural communities.
    On tribal land, any foreclosure process must respect tribal 
sovereignty. When a tribe has foreclosure laws, tribal courts, rather 
than State courts, have jurisdiction over foreclosures. These tribal 
laws must not be disregarded in changes to foreclosure laws. While we 
recognize the need for a streamlined process and affordability measures 
on fee simple lands, we move with caution around the unintended 
consequence of damaging tribal relationships, setting a wrong precedent 
on tribal lands and hindering the furtherance of any USDA financing at 
all on tribal lands. We recommend further consultation with National 
American Indian Housing Council (NAIHC), NCN and the policy committees 
of several State coalitions on this issue.
    Ensuring respect for tribal sovereignty and bringing affordable 
multifamily housing with delinquent USDA mortgages back into service as 
affordable housing quickly do not need to be opposing goals. Enterprise 
Community Partners would welcome the opportunity to work with our 
partners at NAIHC and the Native Homeownership Coalitions in South 
Dakota and Montana to engage further on discussions of foreclosures on 
tribal land and reach a solution.
Conclusion
    Thank you for inviting me to share my experiences and perspectives 
today. On behalf of Enterprise Community Partners, I would like to 
thank the Subcommittee, and especially Chair Smith and Ranking Member 
Rounds for their leadership on rural and tribal housing issues, as well 
as their bipartisan cooperation on issues that affect so many Americans 
in every corner of the country. The issues addressed in this testimony 
are just the beginning, as rural and tribal affordable housing faces 
profound and urgent challenges in alleviating inequality, preserving 
scarce units, and ensuring that more can be built. Enterprise looks 
forward to continuing our partnership with Congress to provide safe, 
stable housing for Native Americans and in rural communities.
                                 ______
                                 
                  PREPARED STATEMENT OF DAVID BATTANY
   Executive Vice President, Capital Markets, Guild Mortgage Company
                           September 20, 2022
    Chair Smith, Ranking Member Rounds, and Members of the 
Subcommittee, thank you for the opportunity to testify on behalf of the 
Mortgage Bankers Association (MBA). \1\ My name is David Battany, and I 
am the Executive Vice President for Capital Markets at Guild Mortgage. 
Incorporated in 1960, Guild Mortgage was one of the first lenders to 
participate in the Rural Housing Service's (RHS) programs and is now 
the fourth-largest rural mortgage lender nationwide. At Guild, I lead 
the company's efforts in the capital markets and am responsible for 
overseeing our work in pricing, hedging, credit policy, and investor 
relationships. Guild is a top five rural lender in Nevada, Montana, 
North Dakota, and South Carolina and we perform both lending and 
servicing throughout the country.
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     \1\ The Mortgage Bankers Association (MBA) is the national 
association representing the real estate finance industry, an industry 
that employs more than 390,000 people in virtually every community in 
the country. Headquartered in Washington, DC, the association works to 
ensure the continued strength of the Nation's residential and 
commercial real estate markets, to expand home ownership, and to extend 
access to affordable housing to all Americans. MBA promotes fair and 
ethical lending practices and fosters professional excellence among 
real estate finance employees through a wide range of educational 
programs and a variety of publications. Its membership of more than 
2,200 companies includes all elements of real estate finance: 
independent mortgage banks, mortgage brokers, commercial banks, 
thrifts, REITs, Wall Street conduits, life insurance companies, credit 
unions, and others in the mortgage lending field. For additional 
information, visit MBA's website: www.mba.org.
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    I currently serve as a member of MBA's Residential Board of 
Governors and cochair of MBA's Affordable Homeownership Advisory 
Council. MBA's policy and advocacy efforts on rural housing matters 
have focused on providing education to members and other stakeholders 
regarding RHS offerings, promoting system upgrades at RHS, and ensuring 
RHS programs operate efficiently for the benefit of borrowers as well 
as industry participants. MBA supports ensuring RHS programs are 
appropriately targeted, accessible to borrowers, and deliverable for 
lenders.
    I am also cochair of the Credit and Lending Committee of the 
National Housing Conference 2022 Black Homeownership Collaborative and 
a board member of Habitat for Humanity. On a personal note, I grew up 
in rural Colorado and the values instilled in me there have stayed with 
me throughout my career in the mortgage industry.
The Lender's Perspective
    I applaud the Subcommittee's oversight of the U.S. Department of 
Agriculture's (USDA) Rural Housing Service and your consideration of 
the lender perspective of rural home ownership programs. Lenders are 
indispensable partners to RHS, as they are both the providers and 
servicers of RHS loans. These programs are worthy of our Nation's 
commitment to them. RHS loan programs play a vital role in increasing 
the availability of mortgage credit for rural Americans.
    This hearing comes at a time when there are new challenges to 
serving rural homeowners--from helping our employees and customers 
recover from the economic impact of COVID-19 to originating a home loan 
when the average contract interest rate for 30-year fixed-rate 
mortgages with conforming loan balances just rose to 6.01 percent. The 
focus of my testimony, however, is the opportunity to build on recent 
progress to make RHS lending better serve consumers and industry 
participants alike. The Subcommittee can advance this objective by 
addressing three areas: better workflow, better technology, and, if 
these two areas are achieved, better loan products.
The Rural Mortgage Market
    The rural market is constrained by its very nature with limited 
housing supply, much of which is aging single-family housing. Rural 
residents do, however, have available to them to varying degrees the 
same housing finance options available to other borrowers in addition 
to RHS programs. These include options offered by Fannie Mae, Freddie 
Mac, the Federal Housing Administration (FHA), and the Department of 
Veterans Affairs (VA), as well as loans offered without Government 
backing. RHS home loans are offered by a wide variety of mortgage 
lenders--from independent mortgage banks (who issued 73 percent of such 
loans in 2021), to depository institutions, including community banks 
and credit unions--throughout the country. Although small relative to 
the scale of the multitrillion-dollar mortgage market, RHS loans are 
meaningful lifelines to economic security for the individuals they help 
and the communities they bolster.
    In 2021, the mortgage industry originated $1.8 trillion in new 
loans and refinanced $2.5 trillion. In that same year, the total volume 
of USDA/Farm Service Agency loans was 114,524 loans. This represented 
just 0.49 percent of all loan volume. The total amount of Section 502 
Guaranteed Single-Family Housing Loans obligated, for example, was $448 
million in Minnesota and $170 million in South Dakota. The average loan 
size was approximately $180,000, less than half the national average 
for a conventional loan. It is imperative to be mindful of this small 
market share and smaller loan size when discussing any potential 
reforms and proposals that might further restrict lending or impose 
additional costs on service delivery.
Better Workflow
    I would like to start by commending RHS on its new proposed rule to 
implement a provision of the Housing Opportunity Through Modernization 
Act (HOTMA), enacted in 2016, to enable the Secretary of Agriculture to 
delegate approval authority to ``Preferred Lenders.'' USDA currently 
does not delegate approval authority to lenders in this manner. This is 
a major barrier to more robust lender participation and puts RHS out of 
alignment with the processes available in FHA and VA lending. The 
existing processes require a conditional commitment from USDA staff, 
and while such commitments are rarely denied, there are instances in 
which delays in receiving such commitments can cause problems for 
borrowers and lenders. Market participants have noted that, in some 
cases, these delays can extend as long as ten days. In such cases, 
borrowers often have missed their closing dates, causing significant 
problems with their transactions. USDA should move forward with a more 
comprehensive set of process updates that provide full delegation to 
approved lenders. This overdue change would accelerate approval 
processing timeframes to the benefit of applicants and bring USDA into 
closer alignment with FHA and VA practices.
    Delays in closing can be a ``deal-killer'' for financing 
multifamily properties, as well. Apartments and buildings for workforce 
housing require a combination of debt, tax credits, and equity 
financing that must come together quickly or they will be applied to 
other deals. One MBA member, for example, relayed to me that he was 
unable to close apartment projects in Tennessee and Texas because of 
months' long delays waiting for a response from RHS.
    The RHS staff has shown a commitment to fostering strong 
relationships with lenders and servicers throughout the industry. 
Improvements could be made, however, in the ability of lenders and 
servicers to get timely clarification on program guidelines when 
contacting RHS representatives, as well as making policy changes and 
guideline updates more readily accessible.
Better Technology
    The aging technological infrastructure supporting the backbone of 
RHS operations is widely acknowledged as outdated and in need of 
substantial upgrades. The systems in place at RHS are less advanced 
than those used by several other Government housing agencies, Fannie 
Mae and Freddie Mac, or most lenders. Dedicated resources are needed to 
ensure RHS can keep pace with changes in the market, evolving data 
security threats, and changes in the ways in which mortgage loans are 
originated and serviced.
    Much of the technology focus for RHS is centered on its Guaranteed 
Underwriting System (GUS). The use of an automated underwriting system 
decreases time-consuming and expensive manual file reviews, improves 
performance monitoring, and reduces program risk, but further work is 
needed to ensure this system fully supports RHS borrowers and lenders. 
Additional investments in the GUS interfacing with industry loan 
origination systems, for example, would make RHS offerings more 
attractive for loan officers working ``on the ground'' with consumers. 
When problems occur, they often require substantial manual intervention 
and data re-entry to support the program's mission. Under the current 
design, RHS imposes limits on the number of ``runs'' a lender can make 
for each borrower, making it difficult for a lender to perform 
prequalifications without exceeding the maximum limit. More broadly, 
updated technological infrastructure is needed to ensure the secure 
operations of RHS programs.
    RHS has begun to assess and collect a $25 per-loan technology fee 
from lenders in the Section 502 program. While this funding has already 
delivered results, it has increased the cost of each loan and created a 
nonappropriated fund that should be reviewed closely. MBA believes that 
USDA and Congress should provide sufficient funding for RHS technology 
upgrades through the annual appropriations process and ensure adequate 
oversight of information technology modernization efforts. RHS should 
also update its interfaces for the remittance of annual fees from 
lenders for RHS products to create an efficient, automated, and secure 
integration between the USDA and servicers' systems. Today, servicers 
must manually review and submit payments of annual fees--a process 
which is cumbersome and outdated.
    I would also encourage USDA to engage in and leverage the Mortgage 
Industry Standards Maintenance Organization's (MISMO) industry 
standards setting process in support of its modernization initiatives. 
Using MISMO standards helps eliminate friction and bifurcation across 
the industry by creating consistency in loan data and loan processes.
Better Loan Products
    Once the capacity to serve rural borrowers is improved, various RHS 
loan parameters could be reviewed to ensure they are not unduly 
restricting access to credit or responsible use of RHS offerings. The 
RHS debt-to-income limits, for example, are far more stringent than 
those associated with other types of Government-backed lending. RHS 
requirements related to borrower reserves, borrower deposits, existing 
tradelines, qualifying income, and tax transcript history would benefit 
from sensible updates, as well. Congress and USDA also should 
collaborate to examine existing population limits on RHS loan 
eligibility to ensure the program's geographic parameters remain 
appropriate.
    RHS also could explore options for increasing the availability of 
financing for a variety of different types of housing types to match 
GSE standards. These options include loans secured by both new and 
existing manufactured housing throughout the country, as well as for 
accessory dwelling units (ADUs). These housing types have benefited 
from advances in technology and design that make them promising 
approaches to increase the supply of high-quality, affordable housing 
in rural communities.
    Although most lending is completed through the guaranteed loan 
program, I also would like to bring to your attention concerns 
regarding Single-Family Housing Section 502 Direct Loans. Congress 
should ensure funds are provided in a timely manner to enable the 
program to serve borrowers throughout the entire year. In some 
instances, lenders have needed to hold a loan until additional funds 
are made available. Further, rural housing loan volume may be impacted 
by the ``subsidy recapture'' imposed through the Direct Loan program. 
The Government subsidy provided for these loans is subject to repayment 
when the property is sold. This creates a disincentive for those 
homeowners who are aware of it to sell a home, and for many others, a 
very unwelcome surprise if they do sell. An unresolved lien on a 
property can delay the loan closing and even stop a sale when a 
homeowner cannot repay the subsidy. I would encourage the Subcommittee 
to evaluate the utility of this lien repayment requirement, which if 
properly addressed could (in a small way) bolster the supply of 
affordable rural housing.
Other Rural Lending Issues
    MBA commends Chair Smith and Ranking Member Rounds for taking 
action to improve and encourage access to quality affordable housing on 
trust land through your sponsorship of S. 3381, the Tribal Trust Land 
Homeownership Act of 2021. For Department of Housing and Urban 
Development (HUD)/Section 184 Native American Loan Guarantees, the 
Bureau of Indian Affairs must locate and produce a Title Status Report 
that is used in lieu of title insurance in those transactions. These 
are all paper files and often are subject to lengthy processing delays. 
Your legislation will reduce processing delays, thereby encouraging 
more lenders to participate in trust land mortgage lending.
    Rural communities face a well-documented shortage of suitable 
housing stock and underproduction of homes that meet the needs of the 
rural workforce. I would encourage the Subcommittee to advance a 
combination of legislation that together opens the aperture for new 
housing, such as the bipartisan S. 902, the Housing Supply and 
Affordability Act (HSAA), which creates a new Local Housing Policy 
Grant (LHPG) program administered by HUD to support local efforts to 
expand housing supply. Zoning reforms, combined with diversification of 
Federal and State financing for rural housing, such as robust Low- and 
Middle-Income Housing Tax Credits and the financing made available in 
S. 4445, the Affordable Housing Bond Enhancement Act, will strengthen 
the rural housing supply.
    Finally, borrowers in rural areas would be well served by greater 
access to remote online notarization (RON). As the Federal investment 
in broadband access reaches rural communities, they will be able to use 
a remote online notary in the loan closing process. Authority to 
perform RON, however, currently is limited to 41 States. I would 
encourage the Subcommittee Members to support S. 1625, the SECURE 
Notarization Act, introduced by Senators Warner (D-VA) and Cramer (R-
ND), to help rural borrowers access a more reliable and timely mortgage 
closing process.
Conclusion
    Once again, on behalf of all MBA members, I appreciate the 
opportunity to comment on the Rural Housing Service's loan programs. I 
also deeply appreciate USDA's ongoing engagement with lenders and other 
stakeholders to address the three specific topics that I have outlined 
today. I look forward to your questions and to working with the 
Subcommittee to develop practical solutions to the issues addressed at 
this hearing.
               RESPONSES TO WRITTEN QUESTIONS OF
          SENATOR CORTEZ MASTO FROM ELIZABETH GLIDDEN

Q.1. Please describe any community land trusts your 
organization has participated in, if any. Are there any lessons 
you have learned from community land trusts?

A.1. Through MHP's role as a provider of technical assistance, 
we have helped communities explore and implement community land 
trusts in rural areas. Currently, MHP is helping West Central 
Minnesota Community Action (WCMCA), located in Elbow Lake, 
Minnesota, to create a community land trust. WCMCA, which 
serves five rural counties next to Minnesota's border with 
North and South Dakota, explored a land trust as a solution to 
the affordability crisis residents in the region have been 
experiencing. With a community land trust, they will be able to 
develop homes at a significant cost reduction, thanks to 
funding available through the Minnesota Housing Finance 
Authority and FHLB. To date, they have closed on two community 
land trust homes, confirming that the land trust model works in 
very rural areas.
    The community land trust model has been popular throughout 
Minnesota in helping provide affordable home ownership 
opportunities, particularly for underserved and Black, 
Indigenous, and households of color. In some cases, such as 
Northeast Minnesota which has a strong community land trust 
producer (the nonprofit One Roof), there has been significant 
interest in community land trusts regionally because of their 
ability to increase affordable housing ownership stock and 
production. Community land trust have leveraged community 
development block grant funds (CDBG) well and have provided 
tremendous community benefit with long term affordability, a 
benefit that balances the challenge of needing a high upfront 
investment.

Q.2. Please describe interactions your organization may have 
had with your regional Federal Home Loan Bank. What investments 
have FHLBanks made in your organization?

A.2. MHP does not build, own or manage housing. Rather, we 
provide technical assistance to rural communities and Native 
nations to achieve their community development and housing 
objectives; thus, we have not received investments from FHLB in 
our organization but have helped other organizations secure 
FHLB resources for their housing goals and projects.
    MHP has extensive experience assisting many local 
governments, housing organizations, and Tribal Nations to 
secure and utilize grant funds through the competitive FHLB 
Affordable Housing and Community Investment program. These 
funds have been instrumental in providing gap funding to 
projects that otherwise would not have been able to move 
forward due to a lack of non-debt-related upfront construction 
and rehab funding.
    Projects MHP has helped secure funds for have included 
everything from rehabbing a Section 515 project in rural South 
Dakota, to leveraging a competitive Indian Housing Block Grant 
in the creation of eight units of elder housing on a Minnesota 
reservation, to supporting several local governments in 
providing additional owner-occupied rehab and downpayment 
assistance dollars to low-income households. FHLB funds are 
frequently utilized to leverage existing programs or funding 
streams, often extending the number of households being served 
in a community.
    Another valuable program we want to highlight that we have 
utilized from FHLB is the Native American Homeownership 
Initiative, where eligible enrolled Tribal households may 
receive up to $15,000 for downpayment, closing cost, 
counseling, and/or rehabilitation assistance through an FHLB 
member bank.

Q.3. Will your organization participate with the Federal 
Housing Finance Agency review of the Federal Home Loan Banks if 
you have suggestions?

A.3. We have not yet participated in this review but will seek 
future opportunities to participate in roundtable discussions 
and submit comments.
    Thank you for this opportunity to provide responses.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM MARCIA ERICKSON

Q.1. Please describe any community land trusts your 
organization has participated in, if any. Are there any lessons 
you have learned from community land trusts?

A.1. While GROW South Dakota does not personally participate in 
community land trusts (CLTs), 21 NeighborWorks America 
Organizations have experience operating as a CLT. There are an 
estimated 225 CLTs in the United States, overseeing 
approximately 12,000 owner-occupied units. \1\ The successes of 
these organizations inform the entire NeighborWorks network of 
the opportunities that exist to implement and expand 
cooperative housing models, in turn creating lasting affordable 
housing, promoting neighborhood stabilization, and generating 
wealth-building opportunities for low- and moderate-income 
families. CLTs provide a unique method of serving the market, 
oftentimes operating as an effective and generative community 
development anchor. Particularly as inflationary pressures 
constrain affordable housing and community development 
activities, more municipal, State, and Federal leaders are 
recognizing the reliability of CLTs to retain that 
affordability and support communities.
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     \1\ Thaden, ``The State of Shared-Equity Homeownership''.
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    CLTs are effective community development entities that 
increase housing affordability to a portion of the housing 
market. Traditional CLT models require the buyer to be below 80 
percent average median income while having sufficient income to 
qualify for a first mortgage and maintain the home. CLTs are a 
good alternative to renting for many low- and middle-income 
households, especially as this population is feeling the 
pressures of rising housing costs. Shared equity housing is the 
model implemented by CLTs, empowering residents to own and 
build equity on otherwise unaffordable homes while ensuring 
that the unit can be sold at an affordable price to the next 
owner through resale restrictions tailored to their markets. 
This way should the unit appreciate before the time of resale, 
the homeowner and the CLT share any increase in the value of 
the property. This resale process is managed by the CLT. As the 
value of the home grows, so does the built-in subsidy to the 
next buyer to keep the unit affordable and keep the CLT 
operational. CLTs expand access to home ownership through this 
permanent affordability, which can be beneficial particularly 
when resources funding a downpayment assistance program may be 
limited and competitive. CLTs create permanently affordable 
units that build wealth for a legacy of homeowners, which a 
mission-driven nonprofit might want to consider in lieu of or 
in addition to providing downpayment assistance for only a 
single household.
    There are numerous shining examples of CLTs in the 
NeighborWorks network, including the country's largest CLT--
Champlain Housing Trust in Burlington, VT, with over 3,100 
homes (rental, co-op and home ownership) in its portfolio--
which is known as one of the initial leaders in developing and 
perfecting the shared equity home model. Another NeighborWorks 
CLT, NeighborWorks Dakota Home Resources, is a fellow South 
Dakota NeighborWorks organization and National NeighborWorks 
Association member located in Deadwood, SD. NeighborWorks 
Dakota Home Resources has 30 properties in Western South Dakota 
plus shared ownership on an affordable apartment.
    DLT charges a $25 monthly lease payment for use of the lot. 
The homeowner receives a 99-year lease with a 99-year extension 
option. The homeowner also pays property taxes on both the land 
and the home. The CLT pays for the cost of the land and the 
homebuyer owns the home and pays the $25 monthly lease payment. 
If the lot cost is $55,000, then the homeowner could save $340 
per month by using the land trust ($55,000 loan, 30-year term, 
7 percent rate = $365.92 - $25 lease = $340.91). These savings 
can be the difference between an opportunity to own a home and 
build wealth versus renting indefinitely. Particularly when the 
Nation is seeing a widening home ownership gap between White 
households and non-White households, expanding affordable 
options for families to transition away from renting presents 
an innovative intervention to address these racial disparities.
    Unsurprisingly, a $25 lease payment does not cover total 
operating expenses for a CLT, therefore additional financing is 
required to handle servicing the land trust. CLTs must layer 
other affordable housing and community development subsidies 
for successful operations, including Federal programs. Such 
resources must be flexibly implementable, allowing CLTs to pull 
from various sources to secure sufficient servicing and 
operating resources, and close financing gaps to continue to 
serve low- and moderate-income households and retain the 
affordability of these units. As Congress considers housing and 
community development legislation, be that new authorizations 
or reforms to key programs such as HOME or CDBG, CLTs must be 
included as eligible recipients to continue the success of 
these innovative home ownership models. Policymakers must 
understand how beneficial CLTs can be to bring a household into 
home ownership.
    Many lessons can be learned from CLTs and applied to 
different markets, geographies, populations, and to address a 
variety of community needs. As housing costs rise and the gap 
between affordable and market-rate housing widens, a CLT can 
preserve a stock of accessible and affordable homes. CLTs can 
also be used to issue homeowner education, legal assistance, 
and financial literacy. Some are also known to help homeowners 
with renovations and repairs, as well as intervene to prevent 
foreclosure.
    CLTs also revitalize neighborhoods that experience 
disinvestment--remote rural areas and urban areas alike. The 
service lines of CLTs continue to diversify, meeting the 
different needs of different markets. Many CLTs have begun to 
acquire land for non-housing purposes to incentivize commercial 
investment or ensure community control within a development. 
One example of this innovative approach is Beyond Housing in 
St. Louis, MO, where their CLT strengthens their local 
community not only by providing permanently affordable homes, 
but also by issuing economic development and employment 
opportunities through constructing and operating a local movie 
theater, grocery store, and bank for the St. Louis community. 
CLTs can revitalize commercial areas by offering affordable 
leases to community services and businesses, all conducted by a 
Board of Directors that is made up of members of the community. 
These successes fortify the importance of community 
participation in neighborhood development, and such engagement 
allows for the successful implementation and operation of these 
initiatives.

Q.2. Please describe interactions your organization may have 
had with your regional Federal Home Loan Bank? What investments 
have FHLBanks made in your organization?

A.2. GROW South Dakota has successfully partnered with the 
Federal Home Loan Bank Des Moines, IA, for 25 years using the 
competitive Affordable Housing Program (AHP). This funding has 
helped our organization successfully provide home improvement 
measures totaling over $7.37 million and assisting over 1,100 
homeowners. We have partnered with two separate financial 
institutions that sponsored our projects.
    The home improvement grants are directed to low-income 
households at 50 percent or below the Area Medium Income and to 
special needs households such as seniors and persons with 
disabilities. Home improvement grants are provided to 
homeowners needing repairs to their homes. Eligible activities 
include roofing, siding, plumbing, electrical, weatherization, 
HVAC, energy efficiency measures, or health and safety 
measures. More than two-thirds of the homes in our service 
area--totaling 51 counties of eastern South Dakota--are over 35 
years old, and nearly one-third are more than 70 years old.
    Home improvements were the highest-rated needs in a recent 
community needs assessment conducted by GROW South Dakota. In 
the survey, 74 percent of respondents rated home improvement as 
a high or moderate need. AHP funds from the Federal Home Loan 
Bank allow GROW South Dakota to assist low-income households in 
making necessary improvements to their homes to make them 
safer, healthier, and more energy efficient.
    Our average home improvement costs have increased over our 
25-year history with our current average cost per home at 
$16,500 for one major home improvement. The demand for housing 
improvements is robust based on our current pipeline of 
requests for these types of projects. GROW South Dakota 
currently has more than 160 requests for home rehabilitation 
opportunities.
    One example of the increasing need for home repairs is an 
individual in northeast South Dakota that recently retired. 
Shortly after retiring, she divorced and was living only on 
social security. The house she owned needed serious repairs 
that were not affordable on her fixed income. Drafty windows 
and floors made the home hard to heat, and her bathroom was in 
dire need of significant repairs. Her neighbor referred her to 
GROW South Dakota for assistance.
    Through the FHLB program, her home improved in a short 
time. Her bathroom now has a new tub and toilet along with an 
exhaust fan. Carbon monoxide detectors were also installed. On 
the outside, her house has new siding and eaves. ``My house 
looks like a new home. It is so nice and easy to clean, and 
there is not cold air leaking anymore,'' she stated. She has 
received many compliments about the work that was done, and can 
now enjoy retirement without having to worry about repairs.
    The AHP is a critical source of funding for low-income 
individuals to address unique housing needs. FHLB is a crucial 
partner and conduit to positively improve housing conditions 
for low-income families in our community.

Q.3. Will your organization participate with the Federal 
Housing Finance Agency review of the Federal Home Loan Banks if 
you have suggestions?

A.3. GROW South Dakota participated in the Federal Housing 
Finance Agency (FHFA) comment period regarding the Federal Home 
Loan Bank's (FHLB) role in promoting affordable housing and 
community investment through the Affordable Housing Program 
(AHP). Our comments were focused on the importance of the AHP 
program.
    The FHLB AHP has been key to addressing the unique home 
improvement needs of rural and financially vulnerable 
homeowners through GROW South Dakota's work in eastern South 
Dakota. As a result of our partnership with the FHLB Des 
Moines, IA, over $7.37 million has been invested in local South 
Dakota communities assisting over 1,100 homeowners. Currently, 
GROW South Dakota has more than 160 requests on a waiting list 
pending home rehabilitation.
    By law, each FHLB must establish an AHP and contribute 10 
percent of its earnings to its AHP. However, with the dire need 
for home preservation due to aging housing stock, more funding 
should be allocated to this program beyond the 10 percent 
threshold. Continued access to AHP is critical as it is an 
invaluable resource to the homeowners that need it most. Home 
is the foundation for vulnerable households. The AHP helps low-
income individuals stay in their homes as is demonstrated in 
the following life-changing event from a homeowner who did not 
have an adequate heating system or plumbing.
    GROW South Dakota received a call from a senior resident in 
need of assistance with heating her house. When the 
weatherization team went to her home, they discovered energy 
inefficiencies as well as safety concerns. The heating unit was 
not adequately ventilated, which could cause carbon monoxide 
poisoning. The windows were leaking, creating drafting in the 
house, and there was no insulation in the attic, walls, or 
under the floor making the house very cold. Most significantly, 
there was no indoor bathroom. The homeowner had been using an 
outhouse as a restroom and would go to friends and neighbors 
when she needed to shower.
    GROW South Dakota insulated the house and provided new 
storm windows. Our organization also replaced the old unvented 
space heater with a vented space heater and installed an 
exhaust fan above the stove. Besides the lifesaving installment 
of a new heating unit, the most significant improvement, with 
assistance from the FHLB AHP funding, was an addition to the 
house. This senior citizen now has an indoor bathroom with a 
shower, sink, toilet, and water hookups for a washing machine.
    She stated, ``Because of this program, I no longer have to 
worry about CO2 poisoning. I have adequate heat and no wind 
blowing through the windows and doors. For the first time, I 
don't have to walk to the outhouse and worry about falling. I'm 
able to take a shower without going to someone else's house. To 
say what I have received from the program has been life-
changing would be a complete understatement.''
    The FHLB has made a significant difference in GROW South 
Dakota's work with home repairs, but there are many more needs 
in our communities. We recommend the 10 percent AHP 
contribution earnings be increased. This funding helps secure 
needed affordable and safe housing while creating and 
supporting healthy communities.
    GROW South Dakota also participated in a robust listening 
session on November 7, 2022, in Pierre, South Dakota, with 
Joshua Stallings, Deputy Director, FHFA Division of Bank 
Regulation, and Michela Barba, Principal Advisor, FHFA, 
present. Our session primarily focused on the unique challenges 
of serving Native American and rural communities in South 
Dakota.
    Key points addressed included the importance of regional 
banks with smaller geographies working directly with community 
advocates to promote affordable, sustainable, equitable, and 
resilient housing and community investment. Smaller geographic 
areas for regional banks encourage partner communication and 
help address the local housing and community needs that have 
the most significant impact in rural and financially vulnerable 
areas. This holds true with access to capital for low-cost 
mortgages with FHLB being a supplier of funds.
    The FHLB is a supplier of lendable funds to financial 
institutions of all sizes and many types, including community 
banks, credit unions, commercial and savings banks, insurance 
companies and community development financial institutions 
(CDFI). The steady supply of lendable funds from the FHLB helps 
U.S. lenders invest in local needs including housing, jobs and 
economic growth. \2\ CDFIs should be reviewed for FHLB 
membership and provided with unique collateral opportunities to 
inclusively meet the local investment needs. CDFIs with lengthy 
histories and solid backgrounds do not increase risk for the 
FHLB or weaken the system. GROW South Dakota has two certified 
CDFIs under our organizational umbrella with a historic 
repayment rate of 98-99 percent between housing and business 
loans with a 50-year history in the revolving loan fund 
industry.
---------------------------------------------------------------------------
     \2\ FHLBanks. (2022). Retrieved 2022, from https://fhlbanks.com/.
---------------------------------------------------------------------------
    Further, CDFIs should be permitted to submit AHP projects 
without a bank sponsor. While sponsoring banks can support and 
bolster partnerships, this requirement has also halted AHP 
projects with Native organizations. Native groups stressed that 
it is difficult if not impossible to find a sponsor.
    Finally, the AHP application is onerous and cumbersome, and 
organizations have had to hire consultants to write the grant 
application. It was noted that one group would not apply for 
AHP funds due to regulations and difficulty in administering. 
This prevents Native communities from benefitting from the 
Banks' affordable housing and community development programs. 
Our recommendation was to engage an active group of CDFI 
organizations and housing advocates to review and analyze the 
regulations in a thorough process to determine which items 
specifically hinder progress.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR CORTEZ MASTO FROM TONYA PLUMMER

Q.1. Is Enterprise tracking American Rescue Plan and CARES 
funds supported tribal housing investments? Can you share your 
research?

A.1. HUD's Office of Native American Programs (ONAP) has 
matched Indian Community Development Block Grant (ICDBG) 
recipients with technical assistance providers, who will work 
with tribes to complete needs assessment workplans to identify 
strategies to spend down their American Rescue Plan Act funds. 
Enterprise's Advisors team, which provides technical assistance 
and capacity building, is currently working with 27 tribes 
across the country. However, Enterprise has not conducted any 
comprehensive research on tribal housing investments supported 
by funds from the American Rescue Plan Act or the CARES Act, 
nor are we aware of any groups conducting such research.

Q.2. Please describe any community land trusts your 
organization has participated in, if any. Are there any lessons 
you have learned from community land trusts?

A.2. While Enterprise Community Partners has not directly 
purchased land from a community land trust for housing 
construction, our CDFI, Enterprise Community Loan Fund (ECLF) 
has provided loans to land trusts, and Enterprise Community 
Partners is actively engaged in policy conversations about 
making HOME funds easily usable for community land trusts.
    In early 2022, ECLF provided a $3.2 million loan to the Bay 
Area Community Land Trust for their purchase of a 13-unit 
apartment building on Solano Avenue in North Berkeley. The 
funding, combined with $3.9 million from the City of Berkeley, 
allowed the purchase of a privately owned building of rental 
units that had attempted to evict all its residents in 2019 and 
sell the building. The Bay Area Community Land Trust's purchase 
will allow the organization to acquire and complete renovations 
at the building. The building will have restricted rents and a 
portion of units restricted for tenants with incomes under 50 
percent and 80 percent area median income.
    In New York, since 2017, Enterprise has invested more than 
$12 million in grant funds to support 11 Community Land Trusts 
across New York State to strengthen their capacity and help 
expand their development pipeline. In the last round of grant 
support, which ended early this year, the participating 
Community Land Trusts acquired nearly 132 properties, 
rehabilitated 88, completed 57 new instructions, and demolished 
8 structures that will pave the way for new construction. In 
Denver, Enterprise Community Partners helped launch the Denver 
Regional Transit-Oriented Development (TOD) Fund in 2010. The 
TOD Fund supports land banking by providing capital needed to 
purchase key properties along current and future transit 
corridors for current or future development or preservation of 
housing. In 2022, ECLF invested $8.8 million in loans for the 
TOD Fund to acquire three properties and finance 462 new units 
of housing.
    Experience lending to and partnering with community land 
trusts has given Enterprise Community Partners a useful 
perspective on changes needed to Federal funding to ensure 
their usefulness to community land trusts. In coordination with 
national and State groups including the Council of State 
Community Development Agencies, Grounded Solutions Network, the 
National Council of State Housing Agencies and National 
NeighborWorks Association, Enterprise Community Partners has 
developed a series of recommendations in advance of proposed 
HOME rulemaking. The recommendations include several suggested 
changes to enable easier use by community land trusts.
    First, HUD should treat CLTs like all other entities that 
have nonprofit tax status under IRS rules. All CLTs should be 
able to access general HOME funding the same way other 
nonprofit entities are able to do so. Should the CLT also meet 
CHDO requirements, it should be able to access CHDO set-aside 
funds. Should the CLT meet the definition of CLT under Part B-
Community Housing Partnership, it should be able to access CHDO 
set-aside funds, technical assistance, and capacity building 
funds.
    Second, HUD should clarify that CLT board composition 
requirements meet the CHDO requirements for low-income 
representation even if individual members who were low-income 
when they joined the board experience economic mobility during 
their tenure on the board. In addition, HUD should clarify that 
demonstrated capacity and a history of serving the local 
community are not required for CLTs per the statute.

Q.3. Please describe interactions your organization may have 
had with your regional Federal Home Loan Bank? What investments 
have FHLBanks made in your organization?

A.3. Enterprise Community Partners' CDFI, Enterprise Community 
Loan Fund (ECLF) has been a member of the Federal Home Loan 
Bank of Atlanta since 2015 and has found their membership to be 
positive and useful. The FHLBank of Atlanta is willing to lend 
expertise, answer questions about their product offerings, and 
brainstorm about how they might be of use to ECLF, as well as 
provide support on paperwork and applications. This high level 
of service is notable because ECLF is one of the smaller 
members. ECLF often utilizes advances from the FHLBank Atlanta 
because the advances are one of the only sources of 20-year 
debt capital available to CDFIs. Prior to ECLF's membership, 
the longest-term debt capital they could access was 10 years, 
until last year, when 15-year capital became available. These 
advances from the CIP also have guaranteed lower interest 
rates.
    ECLF started applying for funding from FHLBank Atlanta a 
few years after becoming a member and has participated in both 
the Affordable Housing Program (AHP) and the Community 
Investment Program (CIP). On behalf of development partners, 
ECLF has applied for AHP grants for 13 projects, for which a 
total of $6,167,520 has been awarded. This funding has 
supported the development of 13 projects with a total of 924 
units with a total development cost of $203,633,549. When ECLF 
partners to help a developer access AHP money, they will also 
often make a loan to the developer themselves, and the FHLB 
Atlanta will frequently subsidize the interest rate on that 
loan as well.
    The Federal Home Loan Bank of New York has also been a 
philanthropic partner for Enterprise, giving a total of $1 
million in grants to Enterprise Community Partners over the 
past 2 years. In June 2021, FHLBank New York awarded $500,000 
to Enterprise's Equitable Path Forward project to allow 
Enterprise to provide consulting and advisory services to up to 
eight affordable housing developers led by Black, Indigenous, 
and People of Color (BIPOC) housing providers. In September 
2022, FHLBank New York granted another $150,000 to that 
project, along with $350,000 to support Enterprise's Asset 
Management University, a statewide initiative that offers 
training and learning resources for affordable housing 
operators in New York, with the aim of better equipping them to 
oversee the financial, physical, and operational health of 
their housing portfolios.
    Enterprise Community Partners' Mountain, Tribal Nations and 
Rural (MTNR) team has recently entered into an agreement with 
the Federal Home Loan Bank of Dallas to conduct a basic needs 
assessment for tribal communities in New Mexico. This needs 
assessment will fulfill FHLBank Dallas' FHFA requirements to 
identify opportunities to invest in Native and tribal 
communities through the Affordable Housing Program. The team 
will draw on existing relationships with tribal housing 
providers and advocates in New Mexico to help inform this work. 
The MTNR team also frequently encourages technical assistance 
recipients to work with their FHLBank and views the FHLBanks as 
an important source of gap funding. The MTNR team provides 
technical assistance in a variety of forums, including through 
the Rural Rental Preservation Academy, Multi-Family Housing 
Non-Profit Transfer Technical Assistance Grants through the 
USDA Rural Housing Service, and the ElevateNV Affordable 
Housing Development Training Series. In each case, the MTNR 
team refers recipients to work with their FHLBank to access gap 
funding. The Federal Home Loan Bank of San Francisco is also a 
sponsor of the ElevateNV series through a grant to the Nevada 
Housing Coalition.

Q.4. Will your organization participate with the Federal 
Housing Finance Agency review of the Federal Home Loan Banks if 
you have suggestions?

A.4. Enterprise Community Partners is monitoring the Federal 
Housing Finance Agency's ``FHLBank System at 100'' process but 
has not yet participated. Given the success of the programs for 
ECLF's loans to affordable housing development, we support the 
FHLBanks putting a larger percentage of profits towards their 
Affordable Housing Programs, as outlined in your Federal Home 
Loan Banks' Mission Implementation Act. If future listening 
sessions are announced regarding topics on which Enterprise can 
offer unique expertise, we may seek to participate.
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