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RCED-84-145 1 (1984-03-26)

handle is hein.gao/gaobabnhs0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 RESOURCES. COMMUNITY. March 26, 1984 AND ECONOMIC DEVELOPMENT Of- DIVISION . 'the. B-214747 RELEASED The Honorable Jake Gain Chairman, Committee on Banking, Housing and Urban Affairs United States Senate 123778 Dear. Mr. Chairman: Subject: Income Analysis of Farmers Home Administration Subsidized Rural Homebuyers--1983 (GAO/RCED-84-145) In accordance with your March 16, 1984, request, we have analyzed the incomes of those rural households who purchased homes under the Farmers Home Administration (FmHA) section 502 homeown- ership program in fiscal year 1983. As agreed with your staff, we focused our work on the question of what effect new tarqeting pro- visions and income limits enacted by Congress in 1983 would have had on the eligibility of those assisted in 1983. We therefore determined the number of 1983 section 502 households who would have qualified for loans under the new reauirements and the extent to which loans were targeted to very low-income borrowers. BACKGROUND The FmHA section 502 homeownership program provides low interest rate subsidized loans to eligible low-income households, defined as those who earn less than 80 percent of area median income with certain adjustments for family size. Purchasers pay a fixed portion of their income as a housing payment, and FmHA absorbs the difference between that payment and a mortgage payment based on an interest rate related to federal borrowing costs. On November 17, 1983, the Congress amended section 502 of the Housing Act of 1949 by directing FmHA to target a larger propor- tion of its loans to very low-income households. Specifically, the Rural Housing Amendments of 1983 stated that, nationwide, not less than 40 percent of section 502 loans were to be made to very low-income families or persons. The amendment defined very low- income households as those whose incomes did not exceed 50 percent of area median income with adjustments for family size. The legislation allowed some variation among states in meeting the national 40 percent requirement, but not less than 30 percent of the loans in each state are to be provided to very low-income households. s'5 --i (855 (380595)

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