Location: Kauia, HI

Issue: Low- and very-low income rural residents often cannot qualify for traditional mortgage financing, which is an obstacle to home ownership

Outcome: RCAC acts as an intermediary to support and train nonprofit organizations including Kauai Habitat for Humanity to become U.S. Department of Agriculture Rural Development (USDA -RD) Single Family Direct Loan Program application packagers

Low- and very low-income rural residents need opportunities for home ownership, but traditional mortgage financing is too often out of reach. The U.S. Department of Agriculture Rural Development (USDA) Single Family Direct Loan Program (502 direct loans) is an affordable alternative that provides subsidized mortgage loans for modest homes in rural areas. The applicants are generally first-time homebuyers.

A high volume of loan applications and decreased administrative resources created a long wait time for applicants anxious to purchase homes, so during 2015 RCAC participated in a pilot program to expedite the loan application and review process.  RCAC staff provide training and support to nonprofit housing organizations that want to become 502 loan packagers. RCAC staff also review the completed packages to make sure they are complete before sending them to USDA for approval. The program was so successful that in 2016 USDA issued a Final Rule to make it permanent.

During 2016, staff reviewed 84 applications and helped 59 families to secure home loans, representing a total of $9,349,323 in mortgage funds. RCAC provided training to help Kauai Habitat for Humanity become a loan packager, making a total of nine qualified employment agencies in RCAC’s region.

With RCAC’s training and quality assurance, 502 direct loan processing and closing time has decreased, giving more rural families access to decent and affordable homes.