Wastebook - Senator Tom Coburn - U.S. Senate

Wastebook 2013foreclosures costing $295 million. Last year, the program paid $496 million in loss claims, accordingto the USDA Office of Inspector General. 85 If trends continue, this loss will have exceeded half-billiondollars in 2013.The departmentacknowledges default rates“vary throughout the year”and “during 2012, thedelinquency rate for loans30 or more days past dueranged from 7.65 percentto 10.44 percent.” 86 Bycomparison, thedelinquency rate “in atypical housing market isaround 3 percent.” 87While designed to operateoff of loan fees, theprogram’s delinquencyUSDA is subsidizing thousands of risky and questionable mortgages, includingmore than one hundred half-a-million dollar homes in Hawaii, while threatening toevict thousands of poor disabled elderly residents.rates make a taxpayer bailout more likely according to experts who predict “it’s likely the programisn’t covering its costs and will probably require taxpayer funding.” 88While USDA was putting taxpayers on the hook for generous and increasingly risky loan guarantees,housing assistance to low-income individuals across the country, including in Hawaii, was being cut.In March, USDA threatened the “elimination of rental assistance for more than 10,000 very low incomerural residents, generally elderly, disabled, and single female households.” 89 In July the Departmentnotified hundreds of borrowers that their contracts would be cut off before the end of FY 2013, 90including a housing unit for disabled elderly in Kailua-Kona, Hawaii. 91And while USDA is quick to threaten assistance for the poor, elderly and disabled, the InspectorGeneral found the Rural Development program “did not identify and review loss claims from loanswith questionable eligibility prior to payment,” resulting in millions of dollars in improperpayments. 92Before USDA kicks out low income elderly and disabled from rural housing, the department shouldfirst discontinue its risky loan practices that are costing nearly half-a-billion dollars a year in lossclaims.12