USDA COMPLETES MASSIVE AUTOMATION PROJECT FOR HOME LOAN PROGRAM Release No. 0327.97 Clark Ray (202) 720-5579 cray@rurdev.usda.gov Dan Campbell (202) 720-6483 dcampbell@rurdev.usda.gov USDA COMPLETES MASSIVE AUTOMATION PROJECT FOR HOME LOAN PROGRAM WASHINGTON, Sept. 19, 1997--Agriculture Secretary Dan Glickman today announced that the U.S. Department of Agriculture has completed a massive conversion effort which has modernized the system it uses to service $18 billion in home loans held by rural Americans. "The result of this effort will be greatly improved service to the 565,000 rural Americans who depend on USDA for direct, single-family home loans," Glickman said. "This project will reduce operating costs for USDA's Rural Housing Service, saving taxpayers some $250 million over a five-year period, and $100 million annually thereafter. I am proud that this effort -- one of the most ambitious modernization projects ever undertaken by USDA -- was completed on schedule." The loan conversion effort was launched with two states in October, 1996, then expanded in phases until all 50 states had been converted to the new system earlier this month. The new, automated loan servicing system has allowed USDA's Rural Development mission area to reduce staff by about 600 positions and to consolidate its network of rural housing field offices from over 1,200 to about 700 offices nationwide. In the past, USDA's single family home loans were serviced by Rural Development field offices. Now all loan servicing is being conducted through USDA's newly created Centralized Servicing Center in St. Louis. The 633 employees at the center now handle all phases of loan servicing, from risk management to borrower assistance. Field offices still handle the loan application process. Antiquated office equipment -- such as card files and typewriters -- which field offices relied on in the past have now been replaced with computers. The centralized servicing system provides swifter processing of loan applications and enhanced customer services, such as a toll-free telephone number and extended hours of operation, said Under Secretary for Rural Development Jill Long Thompson. "We are putting customers first and empowering USDA employees to use their knowledge and skills to improve customer service," she said, noting that USDA is the nation's largest provider of rural housing loans. -more- -2- The St. Louis center services USDA's 502 direct housing loan program, which provides home ownership opportunities for low-income families in rural areas who are without adequate housing and cannot obtain credit from other sources. The typical 502 borrower earns about $15,000 annually. "There is no other program in rural America that enables so many impoverished families to achieve the dream of home ownership," said Long Thompson. One major benefit of the modernization program is that USDA can, for the first time, now offer escrow accounts for property taxes and insurance to its home loan borrowers, as was directed by Congress. These escrow accounts enhance borrowers' success in meeting their housing costs and retaining their homes. "This project is a prime example of Vice President Gore's National Performance Review and his call to reinvent government so that it works better and costs less," Glickman said. "USDA's ability to offer more efficient, centralized loan servicing to home borrowers will help us meet the Clinton Administration goal of creating 8 million new homeowners by the year 2000." Future plans being studied by USDA Rural Development include using the St. Louis facility as a national debt-collection center for other government finance programs. # NOTE: USDA news releases and media advisories are available on the Internet. Access the USDA Home Page on the World Wide Web at http://www.usda.gov