Obama Administration Announces Mortgage Pilot Program for Rural Borrowers
Agriculture Secretary Tom Vilsack announced that the U.S. Department of Agriculture is launching a pilot program to help rural borrowers refinance their mortgages to reduce their monthly payments. This initiative is part of the Administration’s ongoing efforts to help middle class families, create jobs, and strengthen the economy.
The Single Family Housing Guaranteed Rural Refinance Pilot Program will operate in 19 states for homeowners who have loans that were made or guaranteed by USDA Rural Development. These states are among those hardest hit by the downturn in the housing market. USDA Rural Development estimates 235,000 homeowners will be eligible to refinance their loans, which is expected to save them considerable time and money. To be eligible under this pilot program, borrowers must have 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. California homeowners are eligible for this two-year pilot. The performance of the pilot will be reviewed after two years to evaluate whether to continue it, terminate it, or make it permanent.