H.R. 4957 — Rural Housing Service Reform Act of 2025

This section (1) expands the definition of multifamily mortgage under the Multifamily Mortgage Foreclosure Act of 1981 to include mortgages held by the Secretary of Agriculture pursuant to sections 514 (farm labor housing loans), 515 (rural elderly rental housing loans), or 538 (rural rental housing loan guarantees) of the Housing Act of 1949 (Thus, applying the Act's expedited nonjudicial foreclosure procedures—previously limited to HUD-held mortgages—to those USDA-held rural rental housing mortgages); and (2) requires the Secretary, during management, disposal, or foreclosure of such properties with rental assistance contracts under section 521 of the Housing Act of 1949, to maintain assistance payments attached to dwelling units and to permit use of the contract for further assistance to existing projects under sections 514, 515, or 516 of that Act (Thus, preserving rental subsidies for low-income tenants in USDA rural rental housing).

This section directs the Secretary of Agriculture to conduct a study on the loan program under section 521 of the Housing Act of 1949 (42 U.S.C. 1490a)—which provides payment subsidies to reduce interest rates and principal obligations on section 502 rural housing direct loans (42 U.S.C. 1472) for low- and moderate-income families—and to submit a publicly available report to Congress not later than 6 months after the date of enactment of this Act that includes (1) the total amount of such subsidies provided to section 502 borrowers, (2) the amount of those subsidies being recaptured, and (3) the time and costs associated with recapturing those subsidies.

This section authorizes appropriations to the Secretary of Agriculture for each of FY2026 through 2030, in such amounts as necessary, for increased staffing and information technology upgrades to support all Rural Housing Service programs.

This section authorizes appropriations for FY2026, in such sums as may be necessary, to the Secretary of Agriculture for improvements to the technology used by the Rural Housing Service—which administers USDA housing loan programs for rural homeownership, repair, and rental housing—to process and manage housing loans. Amounts appropriated remain available until five years after the date of appropriation, and the Secretary must complete the improvements during that five-year period.

This section establishes a permanent housing preservation and revitalization program for multifamily rental housing projects financed under sections 514 (farm labor housing), 515 (rural rental housing), or 516 (farm labor housing loans) of the Housing Act of 1949. (As background, these USDA Rural Development programs serve low-income rural residents and farmworkers with affordable rental housing and related rental assistance under section 521(a)(2).) The program requires the Secretary of Agriculture to (1) provide annual written notice to owners of maturing loans (within four years) of options to extend loan terms or decouple rental assistance and notice to tenants (two years before maturity) of loan status and tenant protections; (2) restructure loans as needed (e.g., by reducing or eliminating interest, deferring payments, subordinating or reamortizing debt, or providing financial incentives) to ensure projects remain safe and affordable; (3) renew rental assistance contracts for up to 20 years (the shorter of that term or the restructured loan term), subject to annual appropriations, if owners maintain decent, safe, and sanitary standards, with additional assistance for unassisted units as needed; (4) secure recorded restrictive use agreements obligating owners to comply with program requirements, with terms matching the restructured loan or extending to 20 years if rental assistance is renewed; and (5) if restructuring is infeasible, renew rental assistance for 20 years notwithstanding borrower status requirements.

This section amends rental assistance contract authority under section 521(d) of the Housing Act of 1949 (i.e., Section 521 rental assistance payments subsidizing rents for low-income tenants in USDA Rural Development rural multifamily housing projects financed under sections 514 or 515 or assisted under section 516) by (1) authorizing the Secretary, upon owner request for section 514- or 515-financed projects, to renew contracts for 20 years or the loan term (whichever shorter), subject to appropriations; (2) changing the Secretary's obligation to provide such assistance from mandatory ("shall") to permissive ("may"); and (3) requiring that contract authority freed by termination of assistance for an assisted family first be available, at owner option, for up to 6 months to assist eligible unassisted families in the same project before reallocating remaining authority to other section 514, 515, or 516 projects.

This section modifies the Section 504 rural housing repair program—which provides loans and grants to very low-income rural homeowners to repair, improve, or modernize dwellings to make them safe and sanitary—by (1) authorizing loans to eligible low-income applicants (previously limited to very low-income applicants), (2) requiring that not less than 60% of loan funds be reserved for very low-income applicants, and (3) increasing from $7,500 to $15,000 the maximum loan amount that need be evidenced only by a promissory note.

This section establishes the Rural Community Development Initiative under which USDA provides grants of up to $250,000 to eligible intermediaries (i.e., qualified private nonprofit or public organizations) for financial and technical assistance to eligible entities (i.e., private nonprofit community-based housing or community development organizations, rural communities, or federally recognized Indian Tribes). Grants require 1:1 matching funds from other sources (including related federal funds), which USDA may waive for projects in persistently poor rural regions. The initiative supports capacity building for housing, community facilities, and community and economic development projects in rural areas.

This section establishes an annual reporting requirement on Rural Housing Service (RHS) programs under Title V of the Housing Act of 1949 (i.e., USDA programs providing direct and guaranteed loans and grants for rural homeownership, home repairs, and rental housing). The Secretary of Agriculture must submit the report to the appropriate congressional committees and publish it on the USDA website, including (1) sortable raw data by program and region on loan performance, (2) housing stock details and reasons properties end participation such as maturation, prepayment, foreclosure, or other servicing issues, and (3) risk ratings for assisted properties (with data aggregated or anonymized to protect personal information).

This section directs the Comptroller General of the United States to submit to Congress, not later than one year after the date of enactment of this Act, a report on the Rural Housing Service's (RHS's) outdated technology that includes (1) an analysis of its impacts on participants in RHS programs (i.e., rural homebuyers, renters, and owners receiving USDA housing loans and grants); (2) an estimate of funding needed to modernize that technology; and (3) an estimate of the number and type of new employees RHS needs for modernization.

This section directs the Secretary of Agriculture, not later than two years after enactment, to issue regulations establishing a process to adjust rural housing voucher amounts under the rural housing voucher program (which assists very low-income families and persons to reside in rural rental housing) following interim or annual reviews of the voucher after issuance. The interim review, at tenant request, allows recalculation for reductions in income, changes in family composition, or rental rates; the annual review requires tenants to recertify household family composition and income not exceeding 80% of area median income, with the Secretary required to consider extenuating circumstances for late recertification and authorized to alter related consequences, and with updated amounts effective the first day of the month following voucher expiration (and reviews completed no later than 60 days before term end).

This section expands eligibility for the rural housing voucher program—under which the Department of Agriculture (USDA) Secretary provides rental assistance to very low-income families in rural areas, subject to annual appropriations and a cap of 5,000 units—to include low-income households (including those not receiving rental assistance) in properties financed by section 514 or 515 loans or section 516 grants (i.e., USDA programs for farm labor housing and rural rental housing for the elderly and other low-income persons). Specifically, vouchers are available to such households residing for a term longer than the remaining lease term on the date of (1) prepayment (with or without restrictions), (2) foreclosure, or (3) mortgage maturity after September 30, 2005. (Thus, eligible tenants displaced or at risk due to property owner actions may use vouchers to remain in place or relocate.)

This section requires monthly assistance payments for rural housing vouchers under the rural housing voucher program (42 U.S.C. 1490r)—which assists very low-income families and persons with rental housing in rural areas—to be calculated as provided in subsection (a) thereof (i.e., payment standard based on fair market rent minus 30% of monthly adjusted income, capped at rent minus 10% of monthly gross income), notwithstanding any other provision of law. The section further mandates interim and annual reviews of voucher amounts upon changes in household composition, income, or rent.

This section amends Section 515 of the Housing Act of 1949, which authorizes USDA Rural Development to make direct loans or insure loans for multifamily rental housing and related facilities in rural areas for low- or moderate-income families, elderly persons, or persons with disabilities (i.e., the Section 515 rural rental housing program), by— (1) adding subsection (h)(3) to authorize a nonprofit or public body purchaser—including a limited partnership with a general partner whose principal purpose is providing affordable housing—to purchase an appraised property without addressing rehabilitation needs at purchase, if the purchaser commits to addressing rehabilitation needs during ownership and accepts long-term use restrictions; and (2) increasing to 25 percent (from 9 percent) the percentage in the first sentence of subsection (w)(1) preceding subparagraph (A). (Thus, this facilitates preservation transfers of aging Section 515 properties to affordable housing nonprofits by easing purchase requirements and expanding debt restructuring flexibility.)

This section authorizes the Secretary of Housing and Urban Development (HUD) to refinance or modify the period of any loan made under the section 502 rural housing direct loan program (i.e., loans to low- and very low-income households to purchase, construct, improve, or repair modest housing and related facilities in eligible rural areas), including any previously refinanced loan, in accordance with terms prescribed by the Secretary, provided the total term from the date of refinance or modification does not exceed 40 years (previously, up to 33 years, extendable by up to an additional 5 years in aggregate for borrowers with incomes not exceeding 60% of area median income). This authority applies to loans made before, on, or after enactment.

This section provides that the original borrower of a guaranteed loan under Section 502(h) of the Housing Act of 1949 (i.e., USDA-guaranteed rural housing loans to low-income households) is relieved of liability upon transfer of the property and assumption of the loan by an approved eligible borrower.

This section directs the Secretary of Agriculture to revise section 3555.102(c) of title 7, Code of Federal Regulations—governing eligibility restrictions in the Single Family Housing Guaranteed Loan Program (which guarantees private loans for purchasing, building, repairing, or renovating single-family homes in eligible rural areas)—to exclude from the restriction (1) a home-based business that is a licensed, registered, or regulated child care provider under State law or by a Tribal organization; and (2) an applicant to become such a provider. The section applies definitions of "State" and "Tribal organization" from the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858n).

This section revises the single-family housing requirement for loan guarantees under Section 502(h) of the Housing Act of 1949 by defining an "accessory dwelling unit" (ADU) as a habitable unit with separate ingress and egress that is subordinate in size to a primary single-family dwelling and, in combination therewith, constitutes a single real estate interest. It further adds a rule of construction providing that nothing prohibits leasing an ADU or using rental income therefrom to qualify for such a guarantee after enactment of the Rural Housing Service Reform Act of 2025 for properties constructed before that date.

This section expresses the sense of Congress that the Secretary of Agriculture, not later than 90 days after receiving an application for a loan, grant, or combined loan and grant under section 502 (rural housing direct loans) or 504 (rural housing repairs grants and loans) of the Housing Act of 1949, review the application, complete underwriting, determine eligibility, and notify the applicant. The section further directs the Secretary to submit to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services, not later than 90 days after enactment and annually thereafter until five consecutive years of 90-day eligibility determinations for all such applications, a report detailing the timeliness of eligibility and final determinations (including justifications for any exceeding 90 days) and recommendations to ensure notifications within 90 days.