COLUMBUS — Ohio is one of 19 states selected to take part in a USDA pilot program designed to help borrowers with loans guaranteed by USDA Rural Development refinance their mortgages and reduce monthly payments.
The Single Family Housing Guaranteed Rural Refinance Pilot Program initiative is part of the administration’s ongoing efforts to help middle class families, create jobs and strengthen the economy.
The states chosen reflect those hardest hit by the downturn in the housing market. USDA Rural Development estimates 235,000 homeowners will be eligible to refinance their loans.
Criteria
To be eligible under this pilot, borrowers must have made their mortgage payments on time for 12 consecutive months. They do not have to obtain new credit reports, property inspections or home appraisals.
Refinanced loans must be at rates below the original interest rate. Terms cannot exceed 30 years, and no cash-out is permitted to the borrower.
In addition to Ohio, the two-year pilot is open to homeowners in Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, South Carolina and Tennessee.
The performance of the pilot will be reviewed after two years to evaluate whether to continue it, terminate it or make it permanent.
Other programs
The pilot expands upon USDA’s ongoing help for rural homeowners. In 2010, USDA Rural Development 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.
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Glad USDA rolled this out. Good for Kentucky USDA homeowners
Why only these states? I would love to refinance my mortgage in Minnesota. By the time this 2-year pilot program is up, the mortgage rates will probably be higher and this program will be useless to me. What a joke!