TAHLEQUAH, Okla. – Even a brief loss of federal funds could have detrimental effects on the housing market, Northeast Oklahoma real estate agents say.
The Jan. 27 pause on the distribution of federal funds, which was then blocked by U.S. District Judge Loren L. AliKhan Jan. 28, has been rescinded by President Donald Trump’s administration. But many fear similar actions are forthcoming.
The panic was widespread, and one element that didn’t get a lot of attention during those two days was how it would affect the real estate business.
Javan Hickman, a real estate agent with Century 21 Wright Real Estate, said that if federal monies for home loans are taken away or even paused, the housing market will take a “major hit,” because people attempting to obtain loans won’t be able to buy.
Government-backed loan programs through the U.S. Department of Agriculture allow people to buy with no down payments and with low credit scores.
The USDA Guaranteed Loan, also known as the Section 502 Guaranteed Loan Program, lets lenders offer 100% financing in designated rural areas. The USDA reimburses up to 90% to the lender if the mortgage holder defaults on the loan, states the website for Direct Mortgage Loans at directmortgageloans.com.
USDA Direct Loans are for very low-income individuals and families in eligible rural areas. The loans often include payment assistance to help people afford their mortgage, states the site.
The USDA Repair Loan program, also known as Section 504 Home Repair, gives loans up to $40,000 to very low-income individuals, and those over age 62 qualify for grants of up to $10,000 to address health and safety hazards, states the site.
“The investors will probably be the only ones able to purchase, and they will do as before – purchase and hold,” Hickman said. “It makes it harder for the everyday, average person trying to buy a home.”
Loans through the Federal Housing Authority would also be affected, as would Veteran Affairs loans. There are multiple programs available for housing assistance, including rentals that could be cut off.
“A woman walked into the office yesterday wanting to know how she could purchase a home, and I sent her to a [mortgage broker]. He is going to try to get her a USDA loan, but that could be affected,” Hickman said. “If it is, then that young woman won’t be able to purchase a home.”
The woman was paying $1,000 in rent and she wanted to be able to put that to a mortgage instead. It is easier for people to qualify for a government-backed loan than a conventional one if they have low credit scores or no down payment money, Hickman said.
Another aspect of real estate that could be affected with Trump’s effort to eradicate DEI – diversity, equity and inclusion – initiatives is the anti-discrimination rules of the Fair Housing Act, which was signed into law in 1968.
The Fair Housing Act prohibits discrimination because of race, color, national origin, religion, sex – including gender, gender identity, sexual orientation, and sexual harassment, familial status or disability.
“The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing aid, or engaging in other housing-related activities,” states the USDA site, www.hud.gov.