The House of Representatives today unanimously passed the Homeowners Financing Protection Act  (HR 3834), written by Congressman Rob Andrews, that will allow over 60,000 homeowners across the nation--including nearly 2,000 in New Jersey--to refinance their mortgages and lower their monthly payments.  Under present law these mortgages, guaranteed or issued by the U.S. Department of Agriculture to rural homeowners in areas like Gloucester Township, Monroe, or Winslow, may not be refinanced.

"We are currently experiencing the greatest economic expansion in this country's history yet not all of our citizens are reaping the rewards of this success.  Homeowners that have refinanced their mortgage with private lenders have done so at rock bottom rates yet lower income homeowners who financed their mortgages with the USDA RHS are forced to pay interest rates equivalent to those of the 1970's," said Andrews.  "This legislation is a step in the right direction to ensure that all Americans are experiencing the positive effects Nation's current prosperity."

According to the General Accounting Office, more than 65,000 USDA Rural Housing Service borrowers are paying an interest rate of 9.5% or greater on direct loans from the RHS and approximately 9100 of these borrowers are paying 13% or greater on their loans.  The USDA Rural Housing Service direct loan program is available to borrowers who are at or below 80% of the area median income.  The guaranteed loan program is available to those at or below 115% of area median income.

Because of the high interest rates, these families have been unable to build sufficient equity in their homes to qualify for a private mortgage at a lower interest rate.   Rep. Andrews bill remedies this inequity by allowing the USDA to provide guarantees to those borrowers who wish to refinance. 

The Housing Assistance Council supports this legislation, saying it will "benefit those families with no other way to escape being trapped with high interest loans."  Additionally, the General Accounting Office has recommended this change in the law since 1994 and the Congressional Budget Office has determined this legislation will have no cost to the American taxpayers.

The Andrews bill now moves to the Senate, where Andrews hopes fopr action before Congress adjourns this fall.