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Under the authority of the Housing Act of 1949, (42 U.S.C. 1471 et seq.), as amended, the MFH Direct Loan and Grant Programs make direct loans or grants to provide affordable multi-family rental housing for low income, elderly, disabled individuals and families, or domestic farm workers in eligible rural areas. The program is implemented under 7 CFR 3560.

Borrowers are required to purchase and maintain property insurance on all buildings included as security for an Agency loan. Borrowers must also furnish fidelity coverage, liability insurance and various other insurance coverage required by the Agency to protect the security of the asset. Insurance protects the asset against loss or damage.  Failure to maintain adequate insurance coverage may lead to a non-monetary loan default.

The Rural Housing Service (RHS) proposes to amend 7 CFR 3560.4, 7 CFR 3560.62 and 7 CFR 3560.105 to implement changes related to insurance requirements for the MFH Direct Loan and Grant programs. These proposed changes to 7 CFR 3560 subparts A, B and C are intended to align insurance coverage types, amounts and deductibles with affordable housing industry standards, as well as simplify the coverage amounts and deductible limits. The intended outcome of these proposed changes is to simplify insurance coverage amounts and deductible limits which is expected to reduce Agency staff review time of insurance requirements and improve overall efficiency in managing the assets in the multi-family housing portfolio. Simplifying the coverage amounts and deductible limits will also provide a more positive customer experience.