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Vilsack announces pilot program for rural refinancing

As part of the housing initiative that President Barack Obama announced today, Agriculture Secretary Tom Vilsack said that 235,000 rural homeowners in 19 states with loans guaranteed by USDA will eligible for refinancing and lower interest rates.

Vilsack said in a telephone news conference that to be eligible under this pilot program, 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.

Unlike the White House initiative, which would require congressional approval, the USDA initiative is part of Obama’s “we just can’t wait” approach, Vilsack said and can move forward using administrative authority.

Vilsack said that in most cases homeowners would be able to reduce their home mortgage interest rates from more than 6 percent to between 4 and 5 percent.

The two-year pilot program 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. The performance of the program will be reviewed after two years to evaluate whether to continue it, terminate it or make it permanent, USDA said in a news release.