0131RuralDevelopmentRefinan.cfm USDA announces expansion of refinancing program for rural homeowners
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USDA announces expansion of refinancing program for rural homeowners

Secretary of Agriculture Tom Vilsack announced that USDA is adding 15 more states and the Commonwealth of Puerto Rico to a pilot program that enables current USDA home loan borrowers to save money on housing costs by refinancing their mortgages with lower interest rates. USDA Housing Administrator Tammye Trevino made the announcement on behalf of Vilsack.

"USDA's expansion of this program will help more rural borrowers refinance their mortgages to reduce their monthly payments and ease their financial burdens," Vilsack said. "As our economy continues to recover, this program will enable rural families living in USDA-financed homes to take advantage of historically low interest rates."

USDA unveiled the initiative almost one year ago. It initially included borrowers in 19 states hardest hit by the downturn in the housing market. To date, 3,394 rural borrowers have benefited from the USDA refinancing pilot program. These loans total nearly $453 million.

The pilot expands upon USDA's ongoing effort to assist rural homeowners holding loans made or guaranteed by USDA Rural Development. In 2010, USDA established an aggressive modification policy for Guaranteed Loans that helps homeowners who are delinquent on their mortgages. These homeowners can lower their monthly payments through a loan modification that re-amortizes their payments over a term of up to 40 years, lowers their interest rate, or both. USDA also has a "Mortgage Recovery Advance" program in which the Department provides guaranteed lenders up to 12 months of mortgage payments on behalf of borrowers who have fallen behind on their payments due to job loss or other hardships.

Participants in the pilot refinancing program are required to meet income eligibility requirements, and must have made their mortgage payments on time for 12 consecutive months. Borrowers participating in USDA's Single Family Housing Direct and Guaranteed loan programs are eligible to participate. Borrowers do not have to obtain new credit reports, property inspections or home appraisals. Refinanced loans must be at least one percent below the original interest rate. Terms cannot exceed 30 years. No cash out is permitted to the borrower.

With the announcement, the pilot is being expanded to include residents in the following states: Alaska, Arkansas, Colorado, Idaho, Kansas, Missouri, Montana, North Dakota, Oklahoma, South Dakota, Texas, Utah, Washington, West Virginia, Wisconsin, and the Commonwealth of Puerto Rico. These states are being added because they have been identified as having a very high proportion of persistent poor counties, that is, those with a poverty rate of at least 20 percent in each of the last four U.S. Censuses. The Commonwealth of Puerto Rico has been included due to a poverty rate of at least 45 percent in recent years, according to a U.S. Census Bureau report.

The original states in the two-year pilot program are: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee. The performance of the pilot will be reviewed after two years to evaluate whether to continue, terminate or make the refinance program permanent.

Date: 2/11/2013



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