Rural Homeownership Continuity Act of 2025
This bill, titled the Rural Homeownership Continuity Act of 2025, would change how loans guaranteed under the Doug Bereuter Section 502 Single Family Housing Loan Guarantee Program (a USDA Rural Development program) can be transferred. It would allow a new, qualified borrower to assume an already-guaranteed 502 loan when they acquire the property, and it would relieve the original borrower (and any co-borrowers or guarantors) of liability for the loan after the transfer. The loan would continue under the terms of the guaranteed loan, or under terms the Secretary determines appropriate. The change would apply to loans guaranteed on or after the enactment date. Additionally, the bill authorizes the Secretary of Agriculture to issue rules allowing servicers to charge borrowers fees to cover transaction costs associated with the assumption process.
Key Points
- 1Assumption right: The Secretary may permit a current guaranteed 502 loan to be assumed by a qualified individual when they take title to the property, enabling continued loan guarantee protection for the new borrower.
- 2Release of liability: When the property is transferred and the loan is assumed, the transferor (and any co-borrower or guarantor) is released from liability on the guaranteed loan.
- 3Terms of assumption: The assumption must cover the obligations, rights, and interests of the guaranteed loan, potentially with terms set by the Secretary.
- 4Scope of applicability: The amendment applies to loans guaranteed under Section 502 on or after the date of enactment (i.e., future loans, not retroactive to existing guarantees).
- 5Rulemaking on fees: The Secretary of Agriculture may issue rules permitting servicers to charge borrowers fees to cover transaction costs related to the assumption process.