Late last month, David Frandsen lost his job.
For 17 years, he oversaw a federal program in Cache Valley that helped lower-income people in rural communities become homeowners by offering them low-interest loans and reducing building costs, so long as they were willing to help construct their houses.
But in February, the initiative fell into peril after the U.S. Department of Agriculture changed its rules, reducing the loan amount for which families could apply.
Frandsen and his coworkers found that the new cap — about $325,000 in Cache and Box Elder counties — was unworkable in the area’s pricey housing market, and hoped the USDA’s decision would be reversed.
That reversal hasn’t come.
Without a clear path forward, Neighborhood Nonprofit Housing Corp. decided to dissolve its implementation of the program — and with it, Frandsen’s job.
Now, the organization is trying to secure enough federal funding to make sure people who are currently building houses through the initiative can finish.
‘Incredibly frustrating’
The new loan limits were made to ensure the program remains a viable option for families seeking homeownership in rural America, according to a USDA spokesperson.
“Rising loan values in recent years,” the spokesperson said, “meant that fewer families could be assisted with the resources available.”
Organizations like Neighborhood Nonprofit Housing, the spokesperson added, can still operate the Mutual Self-Help Grant Program — the portion of the initiative that saves construction costs as people help build their homes— for potential homeowners who receive mortgages from lenders other than the USDA.
This option, however, would take away from one of the program’s key benefits — low-interest mortgage rates.
“That’s the power of this program,” said Josh Runhaar, the executive director of Neighborhood Nonprofit Housing Corp. “Having a good mortgage product that we can use through the federal government.”
After seeing the program weather the storms of administration changes, Frandsen was upset to see it fall apart, especially when it’s helped more than 700 families in Cache and Box Elder counties in the past 25 years
“It’s just incredibly frustrating and disappointing and honestly just doesn’t seem right that an appointed administrator has the authority and ability to change a program in so drastic of a way and to affect so many people so negatively,” Frandsen said. “That kind of decision-making and authority, it feels like, ought to come from an elected representative.”
He said he’s seen Republican and Democratic administrations attempt to defund the USDA’s rural development initiative, which encompasses the self-help program and the low-interest loans that are often used in conjunction. Each time, he said he’s seen Congress step in to ensure the programs would continue.
“But we’ve never — I’ve never — experienced, during the 17 years, an administrator who it feels like … they’re more interested in dismantling programs than trying to see what the purpose is and help further the cause,” Frandsen said.
Neighborhood Nonprofit Housing Corp. leaders are not alone in their concerns.
Sheldon Israelsen and his wife, Laura, both 28, spent two years preparing to apply for the program. As a self-employed barber with his own shop, Sheldon said he needed to show two years worth of profitable income. The pair also used the time to save for a down payment.
The couple, who live in Sheldon’s parents’ basement with their 2-year-old son, had their plans derailed when they learned that the self-help option would no longer be available in Cache Valley.
“We just wanted a house and a yard,” Sheldon said. “I think moving forward, we might just go and try to find a town home that’s right for us, or, if that’s not the case, then we might just go back to just renting.”
Congressional reaction
In a March 20 letter to Agriculture Secretary Brooke L. Rollins, Utah Republican Sen. John Curtis joined a group of nine other senators in asking the USDA to rescind the changes.
The program, they said in the letter, has been “instrumental” in the USDA’s efforts to help rural Americans become homeowners since 1949, and the revisions “severely curtail program eligibility and make it more difficult for nonprofit partners to place rural families in homes.”
Madison Weber, spokesperson for Rep. Blake Moore, R-Utah, said Moore is working with Neighborhood Nonprofit Housing Corp. as it deals with fallout from the federal shakeup.
“Rep. Moore is actively engaged on this and will continue working to make housing more affordable for northern Utahns,” Weber said.
No other representatives from Utah’s congressional delegation responded to questions about the program’s alterations.
Rebuilding a housing program
While the self-help initiative has been Neighborhood Nonprofit Housing’s largest program, Runhaar said it wasn’t the organization’s only offering.
But as the USDA’s new rules remain in effect, the nonprofit is facing changes — and downsizing.
“I mean, there’s always hope,” he said, “but hope is not a business strategy, so we had to be realistic about things.”
Last year, he said, his nonprofit was able to finish two homes that it then sold below market price.
“We have a lot of land and lots developed, and we can still build housing,” Runhaar said. “It’s just not going to be quite as beneficial for families.”
Still, he added, “if we can’t help everybody, we’ll still help some.”