USDA backs call to extend housing loan program

The United States Department of Agriculture is backing proposals to extend the implementation of a $1 million guaranteed housing loan packages to the islands of Tinian and Rota, following concerns aired by Mayor Benjamin T. Manglona on the exclusion of the two islands from the federal program.

This would, however, require a financing institution to request authorization to extend the USDA’s guaranteed loan program in Rota and Tinian, said Rural Development-Hawaii State Office acting director Steven Chapman.

In an electronic mail sent to Rep. William S. Torres, Mr. Chapman explained the agriculture department would immediately look into the extension of the program to Tinian and Rota should a lending agency express intention to approve Guaranteed Rural Housing (GRH) loans in the islands.

He was responding to a letter from Mr. Torres who asked that the USDA authorize Bank of Guam, the only banking institution in the CNMI that has a branch each on Tinian and Rota, to extend the GRH loan program to these islands out of Guam.

The lawmaker also mentioned that Bank of Guam is one of the seven approved lenders listed in USDA’s fact sheet, adding that the financing company has been an active participant in the agency’s home loan guarantee program in Guam.

Earlier, the mayor of Rota sought the assistance of Bank of Guam president Anthony Leon Guerrero, in the local government’s efforts to have the housing program also implemented on the island.

At the same time, Mr. Torres asked that USDA allow other qualified institutions in the Northern Marianas to implement the program on Rota and on Tinian.

The Guaranteed Rural Housing Loan Program of the United States Department of Agriculture’s Rural Development Office, which has an initial funding of $1 million, will be primarily extended exclusively to Saipan residents.

The program will be extended to Tinian and Rota residents depending on the outcome of its initial implementation on Saipan, according to the notification from the USDA on the enforcement of the GRH program in the CNMI.

The federal agriculture department earlier announced it has given the Bank of Hawaii an authorization to process at least $1 million worth of home loan packages under the program.

Aside from the USDA’s Guaranteed Rural Housing Loan Program, the Federal Housing Administration Mortgage Insurance Program under the Department of Housing and Urban Development will also be implemented in the CNMI.

The implementation of FHA in the Northern Marianas came following the visit of HUD community builders Michael S. Flores and Jill B. Hurt who discussed the possible reinstatement of the program on the islands.

Mr. Flores and Ms. Hurt had initially held discussions with Gov. Pedro P. Tenorio, Northern Marianas Housing Corporation and Bank of Hawaii officials in preparation to the finalization and execution of the agreement for the program, which will be implemented on a pilot period, during which 20 cases will be tested.

Under the program, HUD insures a qualified residential mortgage. Such insurance benefits both the borrower and the lender who can file a claim with the HUD in case the borrower defaults on payment.

The FHA Mortgage Insurance increases an applicant’s chance of getting approved for a residential loan, as it reduces the lender’s risk of not being able to get his capital back.