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7 CFR part 3550 sets forth the requirements of the Rural Housing Service (RHS) Single Family Housing (SFH) direct programs, authorized by sections 502 and 504 of the Housing Act of 1949, as amended (42 U.S.C. 1472 and 1474). The "section 502 direct loan program" provides 100 percent loan financing to assist low- and very low-income applicants obtain modest housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. The section 504 loan program provides one percent interest rate loans to very low-income homeowners in eligible rural areas to repair, improve, or modernize their home or to remove health and safety hazards. The "section 504 grant program" provides grants to elderly very low-income homeowners in eligible rural areas to remove health and safety hazards, or accessibility barriers from their home, often in conjunction with a section 504 loan.

The Agency published a proposed rule on 11/20/2023 [88 FR 80641]. The public comment period ended on 1/19/2024. The proposed changes under consideration are part of the Agency’s effort to improve regulatory efficiencies and improve customer service for borrowers by: (1) creating a more efficient application process; (2) promoting consistency between the direct and guaranteed SFH loan programs where feasible; and (3) reviewing current housing market conditions and mortgage loan practices.  The Agency intends to review  procedures and regulations to potentially identify and revise unnecessary and outdated regulations, as well as simplify other policies and procedures that may impose burdensome requirements on borrowers and applicants.