GREENSBORO — Changes in the way a federal department views rural towns will drop Summerfield, Colfax, Eden and Reidsville from a low-interest loan program for homebuyers.
The changes make the zero-down loans unavailable in those towns. Some of Kernersville was already ineligible; now the rest of it will be, too.
Existing loans won’t be affected, only new ones.
Many of the changes result from the end of a grandfathering period that was holding back changes in demographic definitions. (Information has been corrected to fix an error. See correction at end of story. 2:45 p.m. / Sept. 11, 2013) That period runs out Oct. 1, barring an act of Congress.
Without the grandfather in place Eden and Reidsville - with populations near 15,000 - won't be small enough to qualify any more as rural areas under U.S. Department of Agriculture definitions.
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Reidsville’s city manager likely will ask the City Council today to request a change that will keep the loans available there, according to Tom Wiggins, the city’s assistant city manager for community services.
Mike Dougherty, Eden’s director of economic development, said he is talking to real estate boards across the state to mobilize a push-back.
“If Eden’s not rural, no place is,” Dougherty said, adding that losing the programs “will have a negative affect on our housing recovery.”
U.S. Rep. Howard Coble’s office said the congressman is willing to make a push on this issue. But such a change would likely be wrapped into a budget resolution to fund the federal government, which is set to run out of money Sept. 30.
An argument over the government debt ceiling likely will be part of that debate, as will a tea party push to eliminate money for the Affordabe Care Act by holding the rest of the federal budget hostage.
It’s unclear whether the changes affect only the USDA’s rural home loan programs or whether a wider swath of government grants and loans that are based on population figures will also use the new criteria.
Officials in Reidsville and Eden said they didn’t know Tuesday, and neither did Coble’s office.
The changes shouldn’t affect Reidsville’s planned senior center near downtown, Wiggins said. The city already has approval for a loan of up to $6 million through a USDA program focused on economic development, he said.
The changes affect the USDA’s 502 and 504 Rural Housing Programs, which produced more than $74.9 billion in loans, grants and loan guarantees across the country from 2009 to 2012, according to department statistics. More than $4.1 billion of that was doled out in North Carolina, split across more than 31,500 loans and grants.
The loans make up a significant portion of home loans in Eden, Dougherty said.
They are only available to low-to- moderate-income applicants who may not qualify for traditional bank loans.
“It makes me wonder how we can finance housing for the entry level population,” said Homer Wright, a developer in Eden.
Eligibility areas for these programs are shifting across the country, and those interested in specifics can look up addresses online at http://eligibility.sc.egov.usda.gov.
The map’s not always correct, though. Earlier this week it showed Lexington becoming eligible for the program, which a USDA spokeswoman confirmed was a mistake.