Rural Housing:

Opportunities To Reduce Costs and Better Target Assistance

RCED-86-33: Published: Feb 18, 1986. Publicly Released: Feb 18, 1986.

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GAO discussed a variety of measures that the Farmers Home Administration's (FmHA) county offices could take to reduce housing costs and target more assistance to very low-income households and those occupying substandard housing.

GAO found that: (1) FmHA county offices generally did not adopt cost reduction measures suggested in FmHA guidelines; (2) as of October 1, 1985, FmHA had not issued regulations to extend the mortgage period from 33 to 38 years and to finance manufactured/mobile homes, which would have enhanced the targeting of very low-income households; (3) many of the FmHA county offices did not follow the guidance provided for increasing targeting to very low-income households and reducing costs because it was not mandatory; and (4) a variety of measures might be taken to help improve program targeting to very low-income households. The FmHA national office provided guidance proposing that county offices initiate outreach programs to locate more eligible very low-income households in need of adequate housing; however, GAO found that about half of the county offices did not initiate outreach programs. According to the 1980 census, more than 2 million rural households occupied substandard housing. The FmHA national office also provided guidance to its county offices on a number of suggested measures to reduce housing costs by 15 percent, which would help more very low-income households qualify for loans and reduce program costs, but few county offices followed the guidance. In 1984, most county offices were financing houses similar to those they financed in 1983, and housing costs had not been reduced.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Agriculture (USDA) approved regulations to finance mobile homes in November 1986. Regulations to extend the mortgage period from 33 to 38 years were implemented on January 14, 1987.

    Recommendation: The Secretary of Agriculture should implement regulations to extend the mortgage period from 33 to 38 years and to finance manufactured/mobile homes.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: USDA issued an instruction on November 7, 1985, to eliminate costly features and increase the use of townhouses and duplexes. Training was given to ensure not exceeding fair construction standards. Regulations to limit house size and eliminate costly features were approved in May 1987.

    Recommendation: The Secretary of Agriculture should consider reducing housing costs, which include: (1) limiting housing size, establishing occupancy levels, and relating size limits and occupancy levels to the number of bedrooms in houses financed, in a manner similar to the criteria in the FmHA section 515 multifamily housing program; (2) eliminating certain features, such as bay windows, sliding glass doors, decks, and half-baths, where appropriate; (3) increasing the use of townhouses and duplexes; (4) financing houses built to the fair construction standards to ensure uniform-quality housing among all offices; and (5) increasing the financing of suitable, less expensive, existing houses from the private market.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: Discussions were held in November 1985 during training sessions to consider measures to target more housing assistance to very low-income people. Each state was requested to develop a management plan, and USDA will monitor performance during coordinated assessment trips.

    Recommendation: The Secretary of Agriculture should consider a variety of measures that could be taken to target more housing assistance to very low-income people in rural areas, which include: (1) establishing targeting performance goals for county offices; (2) pursuing a more aggressive outreach program to identify very low-income households and those living in substandard housing; and (3) following up on county office efforts to target assistance to very low-income households and those living in substandard housing.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Not Implemented

    Comments: This recommendation is no longer applicable, since USDA has taken, or is in the process of taking, action to reduce housing costs and meet targeting goals.

    Recommendation: The Secretary of Agriculture should consider the merits of a variety of measures that could be implemented to improve targeting and reduce costs. These include pursuing a more aggressive outreach program, and revising FmHA regulations to require county offices to take appropriate measures, such as limiting housing sizes and eliminating certain features to reduce housing costs.

    Agency Affected: Department of Agriculture

  5. Status: Closed - Not Implemented

    Comments: This recommendation is no longer applicable, since USDA has taken, or is in the process of taking, action to meet targeting goals.

    Recommendation: If FmHA finds it is unable to meet targeting goals or reduce housing costs, it should advise Congress of this.

    Agency Affected: Department of Agriculture: Farmers Home Administration

  6. Status: Closed - Not Implemented

    Comments: This recommendation is no longer applicable, since USDA has reduced, or is in the process of reducing, housing costs.

    Recommendation: If FmHA is unable to reduce housing costs to make housing more affordable to lower income households and reduce program costs, its should advise Congress of this.

    Agency Affected: Department of Agriculture: Farmers Home Administration

 

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