You could call these special refinance and mortgage modification programs from the U.S. Department of Agriculture (USDA) “HARP and HAMP For The Boonies” – if you consider “boonies” (short for boondocks) a term of endearment.
But just because the programs are sponsored by USDA doesn’t mean you have to raise chickens, grow corn or herd cows to qualify.
Eligible areas include everything from the exurbs, just beyond the suburbs, all the way to the nation’s Bread Basket. However, income requirements narrow things down.
USDA Eligibility for these Obama Administration programs are based on an area’s population (usually less than 20,000), area household income guidelines (usually less than $70,000) , and other requirements for homeowners who currently hold loans from the USDA’s Rural Development (USDARD) division.
First, the Single Family Housing Guaranteed Rural Refinance Pilot Program is designed to help rural borrowers in the downturn’s hardest hit states refinance their mortgages to reduce their monthly payments. Refinanced loans must be at rates below the original interest rate.
An estimated 235,000 homeowners are eligible.
The two-year pilot, introduced earlier this year, is open to homeowners in 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. After two years it will be reviewed, evaluated and terminated or mad permanent.
To be eligible, existing USDARD borrowers won’t have to obtain new credit reports, property inspections or home appraisals, but they must have made their mortgage payments on time for 12 consecutive months. Terms of the new loan cannot exceed 30 years. No cash out is permitted to the borrower.
Allowing rural homeowners in good standing that have home loans that were made or guaranteed by USDA to refinance their homes will bring increased capital to rural America and ease the financial burdens on homeowners. This pilot program will not cost taxpayers additional dollars.
USDA borrowers, because of stringent lending standards in place before the bust, have better rates of loan payments than the population at large. All USDARD housing loans meet rigorous underwriting standards and are made only to qualified borrowers. USDARD loans are made to lower income households but they are not subprime loans.
“The Obama Administration is taking aggressive steps to fight for middle class homeowners who have played by the rules and are trying to get ahead,” said Agriculture Secretary Tom Vilsack.
“This pilot program will help homeowners’ to take advantage of historically low interest rates, and by working closely with lenders, we are helping rural homeowners protect one of the most important investments they will ever make,” he added.
The refinance program builds on a USDARD-established mortgage modification program for borrowers who are delinquent on their mortgages. These homeowners can lower their monthly payments through a loan modification that reamortizes their payments over a term of up to 40 years, lowers their interest rate, or both.
USDA also offers a “Mortgage Recovery Advance” program. USDA 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.