WASHINGTON, Oct. 25, 2004 - Agriculture Secretary Ann M. Veneman today announced that USDA Rural Development has lowered its direct loan housing program gross delinquency rate by 35.6 percent and new loan delinquency rate by 61.8 percent over the past five years. The single-family direct loan housing program serves low-income Americans living in communities with populations under 25,000 in the continental United States, Puerto Rico, Hawaii, Guam and America Samoa. The effort by USDA Rural Development to implement new technologies that streamline and increase operation efficiency is part of the Bush Administration's initiative to improve the government's overall management performance.

"The Bush Administration is committed to utilizing technological and human resources to ensure that we are effective and efficient stewards of taxpayers' dollars," said Veneman. "The better we manage the program, the more people benefit."

Homeowners participating in the program recently indicated their appreciation for the streamlined efficiency of the program by scoring 86 percent average satisfaction through an externally conducted customer satisfaction survey. This compares with a 72 percent average customer satisfaction for the industry as reported by J.D.Powers, and is at the top end of the satisfaction charts.

"USDA Rural Development credits its delinquency management success with effective use of new software tools and a strong focus on increasing successful homeownership by addressing their customers' unique needs," said Agriculture Acting Under Secretary for Rural Development Gilbert Gonzalez. "At the end of 1st Quarter 2004, the USDA Rural Development portfolio had a 9.86 percent rate of delinquencies net of foreclosure."

The portfolio outperformed the delinquency rate for subprime mortgage loans as tabulated by the Mortgage Bankers Association's National Delinquency Survey. The Survey reported 1st Quarter 2004 subprime delinquency at a rate of 11.19 percent.

Gonzalez cites real-time processing, work queuing and the collections options associated with new software applications as reasons USDA Rural Development has dramatically improved delinquency rates among its client base. In 1998, the portfolio's gross delinquency rate was 20.08 percent, while the gross delinquency rate at the end of 1st Quarter 2004 was 12.93 percent. For new loans, the delinquency rate declined from 5.05 percent to 1.93 percent.

Through the use of updated technology, USDA Rural Development is able to start calling on accounts as early as the first day past-due. When delinquent borrowers are contacted, staff is able to leverage loss mitigation tools, including payment drafting options that sync payment drafting with paydays or accept drafts from third parties to secure payment. Parameters within the system allow managers to set days-past-due tolerances for populating collection queues, and can be used to prioritize the queue by factors such as amount owed, geographic area or aging. In the case of hardship, like loss of a job or health issues, collectors counsel clients about workout options available. The immediate system updating also removes clients from delinquency queues as soon as the payment is logged. USDA therefore, is not calling on clients that have become current, and instead are able to focus on delinquent accounts.

USDA Rural Development's mission is to deliver programs in a way that will support increasing economic opportunity and improve the quality of life of rural residents. As a venture capital entity, Rural Development provides equity and technical assistance to finance and foster growth in homeownership, business development, and critical community and technology infrastructure. Further information on rural programs is available at a local USDA Rural Development office or by visiting USDA's web site at http://www.rurdev.usda.gov.