U.S. Agriculture Secretary Tom Vilsack has announced that USDA is adding 15 more states, including Missouri, and the Commonwealth of Puerto Rico to a pilot program that enables current USDA borrowers to save money on housing costs by refinancing their mortgages with lower interest rates.
U.S. Agriculture Secretary Tom Vilsack has announced that USDA is adding 15 more states, including Missouri, and the Commonwealth of Puerto Rico to a pilot program that enables current USDA borrowers to save money on housing costs by refinancing their mortgages with lower interest rates. USDA Housing Administrator Tammye Treviño made the announcement on behalf of Secretary 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. Missouri Rural Development State Director Janie Dunning commented, "We recognize the importance of having a place to call home. We also recognize some of our borrowers are struggling with making their house payment because of economic events which are beyond their control. Allowing Missouri rural borrowers to refinance their mortgages will assure families can remain in their homes and communities' housing stock can remain strong."
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 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 were 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. USDA, through its Rural Development mission area, has an active portfolio of more than $176 billion in loans and loan guarantees. These programs are designed with the intent to improve the economic stability of rural communities, businesses, residents, farmers and ranchers and improve the quality of life in rural America.