§ 501 RURAL HOUSING EXCERPTS FROM HOUSING ACT OF 1949 [Public Law 171, 81st Cong., 63 Stat. 432; 42 U.S.C. 1471 et seq.] TITLE V-FARM HOUSING SEC. 501. (a) The Secretary of Agriculture (hereinafter referred to as the "Secretary") is authorized, subject to the terms and conditions of this title, to extend financial assistance, through the Farmers Home Administration, (1) to owners of farms in the United States and in the Commonwealth of Puerto Rico, the Virgin Islands, the territories and possessions of the United States, and the Trust Territory of the Pacific Islands,1 to enable them to construct, improve, alter, repair, or replace dwellings and other farm buildings on their farms, and 2 to purchase buildings and land constituting a minimum adequate site, in order to provide them, their tenants, lessees, sharecroppers, and laborers with decent, safe, and sanitary living conditions and adequate farm buildings as specified in this title, and (2) to owners of other real estate in rural areas for the construction, improvement, alteration, or repair of dwellings, related facilities, and farm buildings, and to rural residents for such purposes and for the purchase of buildings and the purchase of land constituting a minimum adequate site, in order to enable them to provide dwellings and related facilities for their own use and buildings adequate for their farming operations, and (3) to elderly persons who are or will be the owners of land in rural areas for the construction, improvement, alteration, or repair of dwellings and related facilities, the purchase of dwellings and related facilities and the purchase of land constituting a minimum adequate site, in order to provide them with adequate dwellings 1 Sec. 501 of Housing and Community Development Act of 1974, Public Law, 93-383, 88 Stat. 633, approved August 22, 1974, amended sec. 501 (a) (1) by deleting the words "Puerto Rico and the Virgin Islands" and inserting the words "the Commonwealth of Puerto Rico, the Virgin Islands, the territories and possessions of the United States, and the Trust Territory of the Pacific Islands,". Sec. 1001(a)(1), Housing and Urban Development Act of 1965, Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 497, amended sec. 501 to authorize loans to owners of farms to purchase "previously occupied" buildings. Sec. 801, Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1282, further amended sec. 501 to remove the "previously occupied" provision. 3 Sec. 1001(a)(2), Housing and Urban Development Act of 1965, Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 497, amended sec. 501 to authorize loans to owners of other real estate in rural areas and to rural residents for the purchase of "previously occupied" buildings. Sec. 801, Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1282, further amended sec. 501 to remove the "previously occupied" provision. 4 Sec. 4 (a), Senior Citizens Housing Act of 1962, Public Law 87-723, approved September 28, 1962, 76 Stat. 670, 671, added clause (3) which included loan authorization to elderly persons for the purchase of "previously occupied" dwellings, but sec. 801, Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1282, amended this clause to remove the "previously occupied" provision. and related facilities for their own use and (4)1 to an owner described in clauses (1), (2), or (3) for refinancing indebtedness which(A) was incurred for an eligible purpose described in such clause, (B) if not refinanced, is likely to result at an early date in loss of the applicant's necessary dwelling or essential farm service buildings, or, if combined with a loan for improvement, rehabilitation, or repairs and not refinanced, is likely to cause a hardship for the applicant, and 2 (C) was incurred by the applicant at least five years prior to his applying for assistance under this title.3 (b) (1) For the purpose of this title, the term "farm" shall mean a parcel or parcels of land operated as a single unit which is used for the production of one or more agricultural commodities and which customarily produces or is capable of producing such commodities for sale and for home use of a gross annual value of not less than the equivalent of a gross annual value of $400 in 1944, as determined by the Secretary. The Secretary shall promptly determine whether any parcel or parcels of land constitute a farm for the purposes of this title whenever requested to do so by any interested Federal, State, or local public agency, and his determination shall be conclusive. (2) For the purposes of this title, the terms "owner" and "mortgage" shall be deemed to include, respectively, the lessee of and other security interest in, any leasehold interest which the Secretary determines has an unexpired term (A) in the case of a loan, for a period sufficiently beyond the repayment period of the loan to provide adequate security and a reasonable probability of accomplishing the objectives for which the loan is made, and (B) in the case of a grant for a period sufficient to accomplish the objectives for which the grant is made. (3)5 For the purposes of this title, the term "elderly persons" means persons who are 62 years of age or over. (c) In order to be eligible for the assistance authorized by paragranh (a), the applicant must show (1) that he is the owner of a farm which is without a decent, safe, and sanitary dwelling for himself and his family and necessary resident farm labor, or for the family of the operating tenant, lessee, or sharecropper, or without other farm buildings adequate for the type of farming in which he engages or desires to engage, or that he is the owner of other real estate in a rural area or a rural resident without an adequate dwelling or related facilities 6 1 Sec. 807 (a), Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1282, inserted this clause. 2 Sec. 502 (1) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, amended clause (B) by adding the following: "or, if combined with a loan for improvement, rehabilitation, or repairs and not refinanced, is likely to cause a hardship for the applicant, and". 3 Sec. 502 (2) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, deleted clauses "(C)" and "(D)" and inserted a new clause “(C)". 4 Sec. 503 of Housing and Community Development Act of 1974. Public Law 93–383, 88 Stat. 633, approved August 22, 1974, substituted the words "this title" for "sections 502 and 504". 5 Sec. 4(a). Senior Citizens Housing Act of 1962, Public Law 87-723, approved September 28, 1962, 76 Stat. 670, 671, added this paragraph. Sec. 1001 (b), Housing and Urban Development Act of 1965. Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 497, inserted "or a rural resident". for his own use or buildings adequate for his farming operations, or 1 that he is an elderly person in a rural area without an adequate dwelling or related facilities for his own use, or 2 that he is the owner of a farm or other real estate in a rural area who needs refinancing of indebtedness described in clause (4) of subsection (a); (2) that he is without sufficient resources to provide the necessary housing and buildings on his own account; and (3) that he is unable to secure the credit necessary for such housing and buildings from other sources upon terms and conditions which he could reasonably be expected to fulfill. If an applicant is a State or local public agency (A) the provisions of clause (3) shall not apply to its application; and (B) the applicant shall be eligible to participate in any program under this title if the persons or families to be served by the applicant with the assistance being sought would be eligible to participate in such program.3 (d) As used in this title (except in sections 503 and 504(b)), the terms "farm," "farm dwelling," and "farm housing" shall include dwellings or other essential buildings of eligible applicants. (e) The Secretary may establish procedures whereby borrowers under this title may make periodic payments for the purpose of taxes, insurance, and such other necessary expenses as the Secretary may deem appropriate. Such payments shall be held in escrow by the Secretary and paid out by him at the appropriate time or times for the purposes for which such payments are made. The Secretary shall notify a borrower in writing when his loan payments are delinquent.* LOANS FOR HOUSING AND BUILDINGS ON ADEQUATE FARMS Sec. 502. (a) If the Secretary determines that an applicant is eligible for assistance as provided in section 501 and that the applicant has the ability to repay in full the sum to be loaned, with interest, giving due consideration to the income and earning capacity of the applicant and his family from the farm and other sources, and the maintenance of a reasonable standard of living for the owner and the occupants of said farm, a loan may be made by the Secretary to said applicant for a period of not to exceed thirty-three years from the making of the loan with interest, in the case of applicants described in clauses (1) and (2) of section 501(a), at a rate not to exceed 5 per centum 5 per annum on the unpaid balance of principal, and, in the 1 Sec. 4(a), Senior Citizens Housing Act of 1962, Public Law 87-723, approved September 28, 1962, 76 Stat. 670, 671, added "or that ne is an elderly person in a rural area without an adequate dwelling or related facilities for his own use". 2 Sec. 807 (b), Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, 80 Stat. 1255, 1282, added the remainder of this clause. Sec. 520 of Housing and Community Development Act of 1974, Public Law 93-383, SS Stat. 633, approved August 22, 1974, amended section 501 (c). Sec. 505 (a) of Housing and Community Development Act of 1974. Public Law 93-383, 88 Stat. 633, approved August 22, 1974, amended sec. 501 of Housing Act of 1949 by adding a new sec. (e). 5 Sec. 1002, Housing and Urban Development Act of 1965, Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 497, increased from 4 per centum to 5 per centum the maximum interest rate on direct loans to owners of farms and to owners of other real estate in rural areas, but made no change in the 4 per centum interest rate ceiling on loans to (a) elderly persons in rural areas, and (b) on specialized loans under secs. 503 and 504. Section 1002 of the Housing and Urban Development Act of 1965 also inserted the sentence that immediately follows which authorizes the Secretary of Agriculture to charge fees on all farm housing loans. case of applicants described in clause (3) of section 501 (a) and applicants under sections 503 and 504, at a rate not to exceed 4 per centum per annum on such unpaid balance. Loans made or insured under this title shall be conditioned on the borrower paying such fees and other charges as the Secretary may require. The Secretary may ac cept the personal liability of any person with adequate repayment ability who will cosign the applicant's note to compensate for any deficiency in the applicant's repayment ability and on the borrower prepaying to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 501 (e).2 (b) The instruments under which the loan is made and the security given shall (1) provide for security upon the applicant's equity in the farm or such other security or collateral, if any, as may be found necessary by the Secretary reasonably to assure repayment of the indebtedness; (2) provide for the repayment of principal and interest in accordance with schedules and repayment plans prescribed by the Secretary; (3) contain the agreement of the borrower that he will, at the request of the Secretary, proceed with diligence to refinance the balance of the indebtedness through cooperative or other responsible private credit sources whenever the Secretary determines, in the light of the borrower's circumstances, including his earning capacity and the income from the farm, that he is able to do so upon reasonable terms and conditions; (4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the loan with interest, protect the security, and assure that the farm will be maintained in repair and that waste and exhaustion of the farm will be prevented. LOANS FOR HOUSING AND BUILDINGS ON ADEQUATE FARMS SEC. 503. If the Secretary determines (a) that, because of the inadequacy of the income of an eligible applicant from the farm to be improved and from other sources, said applicant may not reasonably be expected to make annual repayments of principal and interest in an amount sufficient to repay the loan in full within the period of time prescribed by the Secretary as authorized in this title; (b) that the income of the applicant may be sufficiently increased within a period of not to exceed five years by improvement or enlargement of the farm or an adjustment of the farm practices or methods; and (c) that the applicant has adopted and may reasonably be expected to put into 1 Sec. 802, Demonstration Cities and Metropolitan Development Act of 1966. Public Law 89-754. approved November 3, 1966, 80 Stat. 1255. 1282, amended this sentence to permit the Secretary of Agriculture to accept a comaker in the case of any applicant for a rural housing loan. This sentence, which has been added by sec. 4(a), Senior Citizens Housing Act of 1962. Public Law 87-723, approved September 28, 1962, 76 Stat. 670, 671, permitted comakers only in the case of loans made to the elderly. 2 Sec. 505(b) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, added the words "and on the borrower prepaying to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 501 (e)". effect a plan of farm improvement, enlargements, or adjusted practices or production which, in the opinion of the Secretary, will increase the applicant's income from said farm within a period of not to exceed five years to the extent that the applicant may be expected thereafter to make annual repayments of principal and interest sufficient to repay the balance of the indebtedness less payments in cash and credits for the contributions to be made by the Secretary as hereinafter provided, the Secretary may make a loan in an amount necessary to provide adequate farm dwellings and buildings on said farm under the terms and conditions prescribed in section 502. In addition, the Secretary may agree with the borrower to make annual contributions during the said five-year period in the form of credits on the borrower's indebtedness in an amount not to exceed the annual installment of interest and 50 per centum of the principal payments accruing during any installment year up to and including the fifth installment year, subject to the conditions that the borrower's income is, in fact, insufficient to enable the borrower to make payments in accordance with the plan or schedule prescribed by the Secretary and that the borrower pursues his plan of farm reorganization and improvements or enlargement with due diligence. This agreement with respect to credits or principal and interest upon the borrower's indebtedness shall not be assignable nor accrue to the benefit of any third party, without the written consent of the Secretary and the Secretary shall have the right, at his option, to cancel the agreement upon the sale of the farm or the execution or creation of any lien thereon subsequent to the lien given to the Secretary, or to refuse to release the lien given to the Secretary except upon payment in cash of the entire original principal plus accrued interest thereon less actual cash payments of principal and interest when the Secretary determines that the release of the lien would permit the benefits of this section to accrue to a person not eligible to receive such benefits. OTHER SPECIAL LOANS AND GRANTS FOR MINOR IMPROVEMENTS REHABILITATION LOANS AND GRANTS SEC. 504. (a) In the event the Secretary determines that an eligible applicant cannot qualify for a loan under the provisions of sections 502 and 503 and that repairs or improvements should be made to a rural dwelling occupied by him in order to make such dwelling safe and sanitary and remove hazards to the health of the occupant, his family, or the community, and that repairs should be made to farm buildings in order to remove hazards and make such buildings safe, the Secretary may make a grant or a combined loan and grant to the applicant to cover the cost of improvements or additions, such as repairing roofs, providing toilet facilities, providing a convenient and sanitary water supply, supplying screens, repairing or providing structural supports, or making similar repairs, additions, or improvements, including all preliminary and installation costs in obtaining central water and sewer service. No assistance shall be extended to any one individual under this subsection in the form of a loan, grant, or combined loan and grant in excess of $5,000. Any portion of the sums advanced to |