Rural Housing Service Reform Act of 2025

This Act may be cited as the Rural Housing Service Reform Act of 2025.

The table of contents of this Act is as follows:

Section 363(2) of the Multifamily Mortgage Foreclosure Act of 1981 (12 U.S.C. 3702(2)) is amended—

(1) in subparagraph (D), by striking and at the end;

(2) in subparagraph (E), by striking the period at the end and inserting; or; and

(3) by adding at the end the following:

(F) section 514, 515, or 538 of the Housing Act of 1949 (42 U.S.C. 1484, 1485, 1490p).

Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)) is amended by adding at the end the following:

(3) Notwithstanding any other provision of law in managing and disposing of any multifamily property that is owned or has a mortgage held by the Secretary, and during the process of foreclosure on any property with a contract for rental assistance under this section—

(A) the Secretary shall maintain any rental assistance payments that are attached to any dwelling units in the property; and

(B) the rental assistance contract may be used to provide further assistance to existing projects under 514, 515, or 516.

Not later than 6 months after the date of enactment of this Act, the Secretary of Agriculture shall conduct a study and submit to Congress a publicly available report on the loan program under section 521 of the Housing Act of 1949 (42 U.S.C. 1490a), including—

(1) the total amount provided by the Secretary in subsidies under such section 521 to borrowers with loans made pursuant to section 502 of such Act (42 U.S.C. 1472);

(2) how much of the subsidies described in paragraph (1) are being recaptured; and

(3) the amount of time and costs associated with recapturing those subsidies.

There is authorized to be appropriated to the Secretary of Agriculture for each of fiscal years 2026 through 2030 such sums as may be necessary for increased staffing needs and information technology upgrades to support all Rural Housing Service programs.

There is authorized to be appropriated to the Secretary of Agriculture such sums as may be necessary for fiscal year 2026 for improvements to the technology of the Rural Housing Service of the Department of Agriculture used to process and manage housing loans.

Amounts appropriated pursuant to subsection (a) shall remain available until the date that is 5 years after the date of the appropriation.

The Secretary of Agriculture shall make the improvements described in subsection (a) during the 5-year period beginning on the date on which amounts are appropriated under subsection (a).

Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is amended by adding at the end the following:

The Secretary shall carry out a program under this section for the preservation and revitalization of multifamily rental housing projects financed under section 514, 515, or 516.

On an annual basis, the Secretary shall provide written notice to each owner of a property financed under section 514, 515, or 516 that will mature within the 4-year period beginning upon the provision of the notice, setting forth the options and financial incentives that are available to facilitate the extension of the loan term or the option to decouple a rental assistance contract pursuant to subsection (f).

On an annual basis, for each property financed under section 514, 515, or 516, not later than the date that is 2 years before the date that the loan will mature, the Secretary shall provide written notice to each household residing in the property that informs them of—

(i) the date of the loan maturity;

(ii) the possible actions that may happen with respect to the property upon that maturity; and

(iii) how to protect their right to reside in federally assisted housing, or how to secure housing voucher, after that maturity.

Notice under this paragraph shall be provided in plain English and shall be translated to other languages in the case of any property located in an area in which a significant number of residents speak such other languages.

Under the program under this section, in any circumstance in which the Secretary proposes a restructuring to an owner or an owner proposes a restructuring to the Secretary, the Secretary may restructure such existing housing loans, as the Secretary considers appropriate, for the purpose of ensuring that those projects have sufficient resources to preserve the projects to provide safe and affordable housing for low-income residents and farm laborers, by—

(1) reducing or eliminating interest;

(2) deferring loan payments;

(3) subordinating, reducing, or reamortizing loan debt;

(4) providing other financial assistance, including advances, payments, and incentives (including the ability of owners to obtain reasonable returns on investment) required by the Secretary; and

(5) permanently removing a portion of the housing units from income restrictions when sustained vacancies have occurred.

When the Secretary proposes to restructure a loan or agrees to the proposal of an owner to restructure a loan pursuant to subsection (c), the Secretary shall offer to renew the rental assistance contract under section 521(a)(2) for a term that is the shorter of 20 years and the term of the restructured loan, subject to annual appropriations, provided that the owner agrees to bring the property up to such standards that will ensure maintenance of the property as decent, safe, and sanitary housing for the full term of the rental assistance contract.

With respect to a project described in paragraph (1), if rental assistance is not available for all households in the project for which the loan is being restructured pursuant to subsection (c), the Secretary may extend such additional rental assistance to unassisted households at that project as is necessary to make the project safe and affordable to low-income households.

As part of the preservation and revitalization agreement for a project, the Secretary shall obtain a restrictive use agreement that is recorded and obligates the owner to operate the project in accordance with this title.

Except when the Secretary enters into a 20-year extension of the rental assistance contract for a project, the term of the restrictive use agreement for the project shall be consistent with the term of the restructured loan for the project.

If the Secretary enters into a 20-year extension of the rental assistance contract for a project, the term of the restrictive use agreement for the project shall be for the longer of—

(i) 20 years; or

(ii) the remaining term of the loan for that project.

The Secretary may terminate the 20-year use restrictive use agreement for a project before the end of the term of the agreement if the 20-year rental assistance contract for the project with the owner is terminated at any time for reasons outside the control of the owner.

If the Secretary determines that a loan maturing during the 4-year period beginning upon the provision of the notice required under subsection (b)(1) for a project cannot reasonably be restructured in accordance with subsection (c) because it is not financially feasible or the owner does not agree with the proposed restructuring, and the project was operating with rental assistance under section 521 and the recipient is a borrower under section 514 or 515, the Secretary may renew the rental assistance contract, notwithstanding any requirement under section 521 that the recipient be a current borrower under section 514 or 515, for a term of 20 years, subject to annual appropriations.

With respect to a project described in paragraph (1), if rental assistance is not available for all households in the project for which the loan is being restructured pursuant to subsection (c), the Secretary may extend such additional rental assistance to unassisted households at that project as is necessary to make the project safe and affordable to low-income households.

Any agreement to extend the term of the rental assistance contract under section 521 for a project shall obligate the owner to continue to maintain the project as decent, safe, and sanitary housing and to operate the development as affordable housing in a manner that meets the goals of this title.

Subject to subparagraph (C), in setting rents, the Secretary—

(i) shall determine the maximum initial rent based on current fair market rents established under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f); and

(ii) may annually adjust the rent determined under clause (i) by the operating cost adjustment factor as provided under section 524 of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note).

Subparagraph (B) shall not apply if the Secretary determines that the budget-based needs of a project require a higher rent than the rent described in subparagraph (B).

If the Secretary makes a positive determination under clause (i), the Secretary may approve a budget-based rent level for the project.

Before the approval of a rental assistance contract authorized under this section, the Secretary shall require, through an annual notice in the Federal Register, the owner to submit to the Secretary a plan that identifies financing sources and a timetable for renovations and improvements determined to be necessary by the Secretary to maintain and preserve the project.

Under the program under this section, the Secretary may provide grants to qualified nonprofit organizations and public housing agencies to provide technical assistance, including financial and legal services, to borrowers under loans under this title for multifamily housing to facilitate the acquisition or preservation of such multifamily housing properties in areas where the Secretary determines there is a risk of loss of affordable housing.

Of any amounts made available for the program under this section for any fiscal year, the Secretary may use not more than $1,000,000 for administrative expenses for carrying out such program.

There is authorized to be appropriated for the program under this section such sums as may be necessary for each of fiscal years 2026 through 2030.

Not later than 180 days after the date of enactment of the Rural Housing Service Reform Act of 2025, the Secretary shall—

(A) publish an advance notice of proposed rulemaking; and

(B) consult with appropriate stakeholders.

Not later than 1 year after the date of enactment of the Rural Housing Service Reform Act of 2025, the Secretary shall publish an interim final rule to carry out this section.

Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)), as amended by section 101(b), is amended—

(1) in paragraph (1)—

(A) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively;

(B) by inserting after subparagraph (A) the following:

(B) upon request of an owner of a project financed under section 514 or 515, the Secretary is authorized to enter into renewal of such agreements for a period of 20 years or the term of the loan, whichever is shorter, subject to amounts made available in appropriations Acts;

(C) in subparagraph (C), as so redesignated, by striking subparagraph (A) and inserting subparagraphs (A) and (B); and

(D) in subparagraph (D), as so redesignated, by striking subparagraphs (A) and (B) and inserting subparagraphs (A), (B), and (C);

(2) in paragraph (2), by striking shall and inserting may; and

(3) by adding at the end the following:

(4) In the case of any rental assistance contract authority that becomes available because of the termination of assistance on behalf of an assisted family—

(A) at the option of the owner of the rental project, the Secretary shall provide the owner a period of not more than 6 months before unused assistance is made available pursuant to subparagraph (B) during which the owner may use such assistance authority to provide assistance on behalf of an eligible unassisted family that—

(i) is residing in the same rental project in which the assisted family resided before the termination; or

(ii) newly occupies a dwelling unit in the rental project during that 6-month period; and

(B) except for assistance used as provided in subparagraph (A), the Secretary shall use such remaining authority to provide assistance on behalf of eligible families residing in other rental projects originally financed under section 514, 515, or 516.

Section 504(a) of the Housing Act of 1949 (42 U.S.C. 1474(a)) is amended—

(1) in the first sentence, by inserting and may make a loan to an eligible low-income applicant after applicant;

(2) by inserting Not less than 60 percent of loan funds made available under this section shall be reserved and made available for very low-income applicants. after the first sentence; and

(3) by striking $7,500 and inserting $15,000.

Subtitle E of the Consolidated Farm and Rural Development Act (7 U.S.C. 2009 et seq.) is amended by adding at the end the following:

In this section:

The term eligible entity means—

(A) a private, nonprofit community-based housing or community development organization;

(B) a rural community; or

(C) a federally recognized Indian Tribe.

The term eligible intermediary means a qualified—

(A) private, nonprofit organization; or

(B) public organization.

The Secretary shall establish a Rural Community Development Initiative, under which the Secretary shall provide grants to eligible intermediaries to carry out programs to provide financial and technical assistance to eligible entities to develop the capacity and ability of eligible entities to carry out projects to improve housing, community facilities, and community and economic development projects in rural areas.

The amount of a grant provided to an eligible intermediary under this section shall be not more than $250,000.

An eligible intermediary receiving a grant under this section shall provide matching funds from other sources, including Federal funds for related activities, in an amount not less than the amount of the grant.

The Secretary may waive paragraph (1) with respect to a project that would be carried out in a persistently poor rural region, as determined by the Secretary.

Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.), as amended by this Act, is amended by adding at the end the following:

The Secretary shall submit to the appropriate committees of Congress and publish on the website of the Department of Agriculture an annual report on rural housing programs carried out under this title, which shall include significant details on the health of Rural Housing Service programs, including—

(1) raw data sortable by programs and by region regarding loan performance;

(2) the housing stock of those programs, including information on why properties end participation in those programs, such as for maturation, prepayment, foreclosure, or other servicing issues; and

(3) risk ratings for properties assisted under those programs.

The data included in each report required under subsection (a) may be aggregated or anonymized to protect participant financial or personal information.

Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a report that includes—

(1) an analysis of how the outdated technology used by the Rural Housing Service impacts participants in the programs of the Rural Housing Service;

(2) an estimate of the amount of funding that is needed to modernize the technology used by the Rural Housing Service; and

(3) an estimate of the number and type of new employees the Rural Housing Service needs to modernize the technology used by the Rural Housing Service.

Not later than 2 years after the date of enactment of this Act, the Secretary of Agriculture shall issue regulations to establish a process for adjusting the voucher amount provided under section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) after the issuance of the voucher following an interim or annual review of the amount of the voucher.

The interim review described in subsection (a) shall, at the request of a tenant, allow for a recalculation of the voucher amount when the tenant experiences a reduction in income, change in family composition, or change in rental rate.

The annual review described in subsection (a) shall require tenants to annually recertify the family composition of the household and that the family income of the household does not exceed 80 percent of the area median income at a time determined by the Secretary of Agriculture.

If a tenant does not recertify the family composition and family income of the household within the time frame required under paragraph (1), the Secretary of Agriculture—

(A) shall consider whether extenuating circumstances caused the delay in recertification; and

(B) may alter associated consequences for the failure to recertify based on those circumstances.

Following the annual review of a voucher under subsection (a), the updated voucher amount shall be effective on the 1st day of the month following the expiration of the voucher.

The process established under subsection (a) shall require the Secretary of Agriculture to review and update the voucher amount described in subsection (a) for a tenant not later than 60 days before the end of the voucher term.

Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended by adding at the end the following:

The Secretary may provide rural housing vouchers under this section for any low-income household (including those not receiving rental assistance) residing for a term longer than the remaining term of their lease that is in effect on the date of prepayment, foreclosure, or mortgage maturity, in a property financed with a loan under section 514 or 515 or a grant under section 516 that has—

(1) been prepaid with or without restrictions imposed by the Secretary pursuant to section 502(c)(5)(G)(ii)(I);

(2) been foreclosed; or

(3) matured after September 30, 2005.

Notwithstanding any other provision of law, in the case of any rural housing voucher provided pursuant to section 542 of the Housing Act of 1949 (42 U.S.C. 1490r), the amount of the monthly assistance payment for the household on whose behalf the assistance is provided shall be determined as provided in subsection (a) of such section 542, including providing for interim and annual review of the voucher amount in the event of a change in household composition or income or rental rate.

Section 515 of the Housing Act of 1949 (42 U.S.C. 1485) is amended—

(1) in subsection (h), by adding at the end the following:

A nonprofit or public body purchaser, including a limited partnership with a general partner with the principal purpose of providing affordable housing, may purchase a property for which a loan is made or insured under this section that has received a market value appraisal, without addressing rehabilitation needs at the time of purchase, if the purchaser—

(A) makes a commitment to address rehabilitation needs during ownership and long-term use restrictions on the property; and

(B) at the time of purchase, accepts long-term use restrictions on the property.

(1) ; and

(2) in subsection (w)(1), in the first sentence in the matter preceding subparagraph (A), by striking 9 percent and inserting 25 percent.

Section 502(a)(2) of the Housing Act of 1949 (42 U.S.C. 1472(a)(2)) is amended—

(1) by inserting (A) before The Secretary;

(2) in subparagraph (A), as so designated, by striking paragraph and inserting subparagraph; and

(3) by adding at the end the following:

(B) The Secretary may refinance or modify the period of any loan, including any refinanced loan, made under this section in accordance with terms and conditions as the Secretary shall prescribe, but in no event shall the total term of the loan from the date of the refinance or modification exceed 40 years.

The amendment made under subsection (a) shall apply with respect to loans made under section 502 of the Housing Act of 1949 (42 U.S.C. 1472) before, on, or after the date of enactment of this Act.

Section 502(h)(10) of the Housing Act of 1949 (42 U.S.C. 1472(h)(10)) is amended to read as follows:

Upon the transfer of property for which a guaranteed loan under this subsection was made and the assumption of the guaranteed loan by an approved eligible borrower, the original borrower of a guaranteed loan under this subsection shall be relieved of liability with respect to the loan.

In this section, the terms State and Tribal organization have the meanings given those terms in section 658P of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858n).

The Secretary of Agriculture shall revise section 3555.102(c) of title 7, Code of Federal Regulations, to exclude from the restriction under that section—

(1) a home-based business that is a licensed, registered, or regulated child care provider under State law or by a Tribal organization; and

(2) an applicant that has applied to become a licensed, registered, or regulated child care provider under State law or by a Tribal organization.

Section 502(h)(4) of the Housing Act of 1949 (42 U.S.C. 1472(h)(4)) is amended—

(1) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively;

(2) by striking Loans may be guaranteed and inserting the following:

In this paragraph, the term accessory dwelling unit means a single, habitable living unit—

(i) with means of separate ingress and egress;

(ii) that is usually subordinate in size;

(iii) that can be added to, created within, or detached from a primary 1-unit, single-family dwelling; and

(iv) in combination with a primary 1-unit, single-family dwelling, constitutes a single interest in real estate.

Loans may be guaranteed

(2) ; and

(3) by adding at the end the following:

Nothing in this paragraph shall be construed to prohibit the leasing of an accessory dwelling unit or the use of rental income derived from such a lease to qualify for a loan guaranteed under this subsection—

(i) after the date of enactment of the Rural Housing Service Reform Act of 2025; and

(ii) if the property that is the subject of the loan was constructed before the date of enactment of the Rural Housing Service Reform Act of 2025.

It is the sense of Congress, not later than 90 days after the date on which the Secretary of Agriculture receives an application for a loan, grant or combined loan and grant under section 502 or 504 of the Housing Act of 1949 (42 U.S.C. 1472, 1474), the Secretary of Agriculture should—

(1) review the application;

(2) complete the underwriting;

(3) make a determination of eligibility with respect to the application; and

(4) notify the applicant of determination.

Not later than 90 days after the date of enactment of this Act, and annually thereafter until the date described in paragraph (2), the Secretary of Agriculture shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report—

(A) detailing the timeliness of eligibility determinations and final determinations with respect to applications under section 502 and 504 of the Housing Act of 1949 (42 U.S.C. 1472, 1474), including justifications for any eligibility determinations taking longer than 90 days;

(B) that includes recommendations to shorten the timeline for notifications of eligibility determinations described in paragraph (1) to not more than 90 days.

The date described in this paragraph is the date on which, during the preceding 5-year period, the Secretary of Agriculture provides each eligibility determination described in paragraph (1) during the 90-day period beginning on the date on which each application is received.