The Credit Union National Association urged the U.S. Department of Agriculture on Friday to consider credit unions as a lending source in developing programs to boost lending in rural areas.
Last month, the USDA announced sweeping changes to its Single Family Housing Guaranteed Loan Program aimed at bolstering rural housing markets, boosting availability of credit in rural areas and encouraging construction of new homes in rural areas.
Effective Sept. 1, any lender supervised and regulated by the FDIC, National Credit Union Administration, OCC, Federal Reserve or Federal Housing Finance Board is permitted to underwrite loans guaranteed by Rural Development—the changes allow community banks and credit unions, which were previously not considered eligible lenders, to participate in the program.
“Numerous credit unions operate in rural areas, and we believe this program will benefit not only credit union members in these areas but also the broader communities,” CUNA said in its comment letter to the USDA. “We urge the USDA to consider credit unions as a lending option as the Department revisits existing lending programs and develops new ones.”
Under the proposed changes, borrowers will be able to opt for home loan terms shorter than 30 years.
CUNA said, however, that in certain cases, “credit unions and their members could benefit from a longer repayment period option since federal credit unions are authorized to make mortgages of up to 40 years.”
“While we recognize that such an extended repayment period may not be appropriate for all loans, we ask Rural Development to consider extending the permissible repayment period to no more than 40 years to provide parity with the limit permissible for federal credit unions…” CUNA said.