Friday, January 20, 2012

Home loan refinance program to get more attractive

Local banks can choose to participate

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By TONY EVANS
Express Staff Writer

A federal program geared toward helping homeowners refinance their home loans is going to get more attractive to borrowers next month, but bank officials will decide whether to participate in the program.

The Home Affordable Refinance Program, established in 2009, provides an option for homeowners to refinance mortgages at a lower 30-year fixed rate, even if they are "under water," meaning the home's value has dropped below the amount owed on the loan.

Until October, the program required that a home's value had dropped at least to only 75 percent of the originally assessed value, and required a credit score of 670 or above.

A new, streamlined version allows homeowners to refinance no matter how far their home values have dropped. The program no longer has the same credit score requirements and other fees.

The new version goes into effect in March and has been extended to Dec. 31, 2013.

"If you've been turned down for a loan refinance in the past three years, Blaine County Housing Authority encourages you to check back with your lender to further evaluate your eligibility," said Nancy Smith, Housing Authority program director, in a prepared statement.

Smith said in an interview that she knows of no one in Blaine County who used the program, and that banks can choose not to participate.

It applies only to borrowers who originated loans with Fannie Mae or Freddie Mac and finalized their loan by 2009. Borrowers also must live in the home being refinanced, demonstrate the ability to repay the loan and not have been late on payments within the past year.

Karen McNary, branch manager of Mountain West Bank in Hailey, said she knew of people who could qualify for the new refinance program now that the loan-to-value requirements have been dropped.

McNary said borrowers who qualify could refinance a 30-year $200,000 loan from 5.5 percent to 3.9 percent, which would result in a drop in monthly payments from $1,135 to about $940.

"That's almost $200 a month. That's something for someone if they've been laid off," McNary said.

"With the new program there's a good chance we could get them in a lower payment. It might just be a matter of education. I think a lot of people just don't know about it."

Tony Evans: tevans@mtexpress.com

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