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UPDATE: USDA Announces Expansion of Refinancing Program to Help More Rural Homeowners

Good Afternoon:

We received a number of inquiries following today’s USDA-RD Alaska News Release on “Expansion of Single Family Refinancing Pilot Program” and are happy to provide this addendum.

Refinancing Pilot Program clarification:

  • Refinancing would be done through USDA-RD Alaska’s Guaranteed Housing  Program 
  • Application would be made with eligible lenders
  • Leveraged loans are not eligible for the refinance program
  • The program is designed to assist existing USDA-RD 502 Direct or Guaranteed Loan borrowers to more easily refinance their homes
  • The purpose is to help more rural homeowners with current USDA-backed home loans reduce their monthly payments.

For further information, please feel free to contact Karen LaMouria, USDA-RD Alaska’s GRH Loan Specialist: (907) 761-7732, or karen.lamouria@ak.usda.gov

Alaska Selected to Join Pilot “Expansion of Refinancing Program”

ANCHORAGE, Alaska, January 31, 2013 – USDA-Rural Development Alaska State Director Jim Nordlund today announced that15 more states, including Alaska, are being included in a pilot program that enables current USDA-RD borrowers to save money on housing costs by refinancing their mortgages with lower interest rates.  The Expansion of Refinancing Program will help more rural homeowners.

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

   USDA-RD 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 Rural Development’s refinancing pilot program.  These loans total nearly $453 million.

   The pilot expands upon ongoing effort to assist rural homeowners holding loans made or guaranteed by USDA-Rural Development.  In 2010, USDA-RD 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.  Rural Development also has a “Mortgage Recovery Advance” program in which the agency 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-RDs 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 today’s 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.

   Rural Development’s housing loans and grants make a significant difference in the lives of thousands of rural Americans across the nation. These investments boost rural economies and create jobs. The pilot refinance program complements President Obama’s continuing efforts to help responsible homeowners and boost the nation’s housing market. The measures the President and USDA are taking will help stabilize communities and help middle class families across the country.

   President Obama’s plan for rural America has brought about historic investment and resulted in stronger rural communities. Under the President's leadership, these investments in housing, community facilities, businesses and infrastructure have empowered rural America to continue leading the way – strengthening America's economy, small towns and rural communities. USDA’s investments in rural communities support the rural way of life that stands as the backbone of our American values.

   President Obama and Agriculture Secretary Tom Vilsack are committed to a smarter use of Federal resources to foster sustainable economic prosperity and ensure the government is a strong partner for businesses, entrepreneurs and working families in rural communities.

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 to improve the economic stability of rural communities, businesses, residents, farmers and ranchers and improve the quality of life in rural America.

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