The Rural Housing Service (RHS) of the U.S. Department of Agriculture has proposed a new rule requiring separate deed restrictions to be recorded for properties financed under the Guaranteed Rural Rental Housing Program (GRRHP). This proposed change aims to ensure affordable housing remains available for low—and moderate-income households in rural areas even after mortgages are paid off.

Key Changes

The proposed rule would amend 7 CFR 3565.352(b) to require:

Background

Section 538 GRRHP, administered under the Housing Act of 1949, provides loan guarantees for developing housing and related facilities in rural areas. While current regulations require properties to remain affordable for the original loan term, they don't specifically mandate recording a separate deed restriction. This has created a potential loophole: Restrictive use provisions could be released upon loan prepayment if only included in the mortgage or deed of trust.

Significance

The proposed change addresses a critical preservation issue. Without recorded deed restrictions:

Implementation Details

The rule would allow three exceptions to the deed restriction requirement if the RHS determines:

Public Comment Period

Interested parties can submit comments on the proposed rule through January 6, 2025, via:

Contact Information

For more information, contact: Tammy Daniels
Finance and Loan Analyst
Multi-Family Housing Production and Preservation Division
Rural Housing Service, USDA
Phone: (202) 720-0021
Email: tammy.daniels@usda.gov