VIII. MORTGAGE ANDREFINANCING PROGRAMS AND FORECLOSURE PREVENTION
Mortgage and Refinancing Programs for Disaster Victims Several federal agencies have home refinancing, repair, or replacement purchase
programs that may benefit a client whose home was damaged or destroyed by a major disaster even if she is not at risk of default or underwater on her mortgage.
HUD’s Section 203(k) loan program enables those who have lost their homes to finance the purchase of a new home or refinance a house along with its repair through a single mortgage. This program encourages lenders to make mortgages available to borrowers who would not otherwise qualify for conventional loans.
HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes. Borrowers from participating FHA-approved lenders are eligible for 100 percent financing, including closing costs.
USDA Rural Development Direct Loan Program: Used to buy, build, or improve the applicant’s permanent residence. New manufactured homes may be financed when they are on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under very limited circumstances, homes may be re-financed with direct loans. The home value may not exceed RD-determined area limits. The property must be located in an eligible rural area, which includes all of Vermont other than Burlington and its surrounding neighborhoods. Applicants must have very low (below 50% of area median income) or low incomes (less than 80% median income). In addition, applicants must be unable to obtain credit elsewhere, yet have an acceptable credit history. Interest payments may be subsidized down to 1%, with subsidies being recaptured when the property is resold. Application is done directly through the local Rural Development office.
USDA Rural Development Guaranteed Home Loan Program: Similar to the Direct Loan program, but available to households with moderate income (below 115 percent of AMI). Application is completed through an RD-approved lender. Interest is not subsidized.
USDA Rural Development Repair Loans and Grants Program: Provides loans and grants to very low-income homeowners (below 50% of median income) to repair, improve, modernize, or to remove health and safety hazards in their rural dwellings. Loans are arranged for up to 20 years at one percent interest. Grants may be arranged for recipients who are 62 years of age or older and can be used only to pay for repairs and improvements to remove health and safety hazards.
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