Rental Housing:

Distribution and Use of FmHA's Rural Rental Housing Program Funds

RCED-94-141: Published: Jun 1, 1994. Publicly Released: Jul 1, 1994.

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Pursuant to a congressional request, GAO reviewed the Farmers Home Administration's (FmHA) Rural Rental Housing Program, focusing on: (1) FmHA procedures for allocating funds to states and selecting projects within states; (2) whether FmHA allocation procedures have resulted in project concentration in a relatively small number of states; (3) whether FmHA allocation and project award procedures reflect actual housing needs; (4) states' use of program funds; and (5) the size and status of the rural rental housing portfolio as of September 30, 1992.

GAO found that: (1) FmHA procedures reflect the program's purpose of providing suitable and affordable housing for low-income individuals living in inadequate housing; (2) the allocation formula estimates each state's rural rental housing needs based on its rural population, occupied substandard housing units, and families with income below the poverty level; (3) FmHA reserves about 15 percent of the program's annual appropriation to meet specified or unexpected program needs during the year; (4) FmHA project award procedures are similar to FmHA allocation procedures; (5) 56 percent of all projects are concentrated in 15 states, but those states also account for 51 percent of the states' total housing needs; (6) FmHA estimates of rural housing needs may differ from actual needs because they are based on outdated decennial census data; (7) FmHA funding processes do not guarantee that the neediest areas will receive program assistance, since project developers determine their project sites; (8) in recent years, most states have used their annual allocations due to decreased program funding and numerous project proposals, and few unused funds have been reallocated to states with outstanding loan demands; (9) the number of outstanding loans is increasing; and (10) 84 percent of the loans made since 1962 were still outstanding with a delinquency rate of 3 percent as of September 30, 1992.

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