I 
109TH CONGRESS 
1ST SESSION H. R. 2656 
To amend section 502(h) of the Housing Act of 1949 to improve the rural 
housing loan guarantee program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 26, 2005 
Mr. ANDREWS introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To amend section 502(h) of the Housing Act of 1949 to 
improve the rural housing loan guarantee program, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Rural Housing Oppor-
tunity and Enhancement Act of 2005’’. 
SEC. 2. GUARANTEES FOR RURAL HOUSING LOANS. 
(a) INCOME LIMITATION.— 
(1) IN GENERAL.—Section 502(h) of the Hous-
ing Act of 1949 (42 U.S.C. 1472(h)) is amended— 
(A) by striking paragraph (3); and
(B) in paragraph (11), by striking ‘‘ for 
low and moderate income families’’. 
(2) REPEAL.—Section 751 of the Agriculture, 
Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2001 (42 
U.S.C. 1472 note) is hereby repealed: 
(b) GUARANTEE FEE.— 
(1) IN
GENERAL.—Section 502(h)(8) of the 
Housing Act of 1949 is amended by striking ‘‘not 
more than 1 percent’’ and inserting ‘‘0.9 percent’’. 
(2) REPEALS.—The following provisions are 
hereby repealed: 
(A) Section 739 of the Agriculture, Rural 
Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2001 
(42 U.S.C. 1472 note). 
(B) Section 726 of the Agriculture, Rural 
Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2005 
(118 Stat. 2842). 
(c) REPAYMENT ABILITY.—Section 502(h) of the 
Housing Act of 1949 is amended by inserting after para-
graph (2) the following new paragraph: 
‘‘(3) ELIGIBILITY OF BORROWERS.—Any regu-
lations of the Secretary limiting eligibility of bor-
rowers for loans guaranteed pursuant to this sub-
section based upon the ratio between the debt and 
income of the borrower shall provide for a higher in-
come-to-debt ratio with respect to loans for newly 
constructed properties’’. 
SEC. 3. GUARANTEES FOR REFINANCING LOANS. 
Section 502(h)(14) of the Housing Act of 1949 (42 
U.S.C. 1472(h)(13)) is amended as follows: 
(1) GUARANTEE FEE.— 
(A) In subparagraph (A), by striking 
‘‘(F)’’ and inserting ‘‘(I)’’ 
(B) In subparagraph (E), by striking 
‘‘(8),’’. 
(C) By redesignating subparagraphs (E) 
and (F) as subparagraphs (H) and (I), respec-
tively. 
(D) By inserting after subparagraph (D) 
the following new subparagraph: 
‘‘(E) GUARANTEE FEE.—With respect to a 
refinancing loan under this paragraph, the Sec-
retary may collect from the lender at the time 
of issuance of the guarantee a fee equal to 0.5 
percent of the principal obligation of the loan.’’. 
(2) REFINANCING
OTHER
TYPES
OF
MORT-
GAGES.—In subparagraph (A)—
(A) by inserting ‘‘(i)’’ before ‘‘under this 
section’’; and 
(B) by inserting before the last comma the 
following: ‘‘, or (ii) to acquire or construct a 
single-family residence that meets the require-
ments of paragraph (4)’’. 
(3) LOAN AMOUNT.—In subparagraph (D), by 
striking ‘‘and such closing costs’’ and all that follows 
through ‘‘prescribe’’ and inserting the following: 
‘‘and closing costs, which shall include amounts paid 
as an origination fee, but not in excess of 1 percent 
of the principal obligation of the loan, amounts paid 
as a discount fee, but not in excess of 200 basis 
points, any amounts required to be paid into escrow 
upon loan origination, and such other closing costs 
as the Secretary may prescribe’’. 
(4) ELIMINATION OF INCOME RESTRICTION.— 
In subparagraph (H), as so redesignated by para-
graph (1)(B) of this section, by striking ‘‘(3),’’. 
(5) LOAN REQUIREMENTS.—By inserting before 
subparagraph (H), as so redesignated by paragraph 
(1)(B) of this section, the following new subpara-
graphs: 
‘‘(F) PROHIBITED
LOAN
TERMS.—The 
Secretary may not require, for a refinancing
loan to be eligible for a guarantee under this 
paragraph— 
‘‘(i) that an appraisal credit report or 
underwriting be conducted in connection 
with the loan; or 
‘‘(ii) in the case of a loan described in 
clause (i) of subparagraph (A), that the 
residence in connection with which the loan 
is made be located in a rural area. 
‘‘(G) REQUIRED LOAN TERMS.—The Sec-
retary shall require, for a refinancing loan to be 
eligible for a guarantee under this paragraph, 
that— 
‘‘(i) the borrower is not delinquent 
with respect to payment of the existing 
loan being refinanced; and 
‘‘(ii) the monthly payments required 
by the borrower under the refinancing loan 
be at least $50 less than the monthly pay-
ments so required under the existing loan 
being refinanced.’’. 
SEC. 4. RECORDING OF LOANS. 
Section 501 of the Housing Act of 1949 (42 U.S.C. 
1471) is amended by adding at the end the following new 
subsection:
‘‘(k) RECORDING REQUIREMENTS.—The Secretary 
shall provide that each loan made, insured, or guaranteed 
under this title shall be recorded, in accordance with any 
applicable State and local laws requiring recordation of 
loans, as a loan made, insured, or guaranteed (as appro-
priate) by the Department of Agriculture, and not as a 
conventional loan.’’. 
SEC. 5. RURAL AREA DEFINITION. 
Clause (3) of the first sentence of section 520 of the 
Housing Act of 1949 (42 U.S.C. 1490) is amended by 
striking ‘‘and (A)’’ and all that follows through ‘‘mod-
erate-income families,’’. 
SEC. 6. INCOME LIMITATION FOR DIRECT LOANS. 
The first sentence of paragraph (4) of section 501(b) 
of the Housing Act of 1949 (42 U.S.C. 1471(b)(4)) is 
amended by inserting before the period at the end the fol-
lowing: ‘‘, except that in determining such respective levels 
for purposes of direct loans made under section 502, sec-
tion 3(b)(2) of such Act (42 U.S.C. 1437a(b)(2)) shall be 
applied by substituting ‘150 percent’ for ‘80 per centum’ 
each place such term appears and by substituting ‘93.75 
percent’ for ‘50 per centum’ each place such term ap-
pears’’. 
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