July 17, 2013 10:45 am • KAREN RIVEDAL | Wisconsin State Journal | email@example.com | 608-252-6106
Gov. Scott Walker on Wednesday signed into law a measure that could help thousands of first-time homeowners in Wisconsin get lower rates on their WHEDA mortgages.
“This bill…provides those homeowners an economic option that can lower their monthly payments, give them extra disposable income, help them build equity faster, achieve better credit scores and pay off their mortgages sooner,” Walker said in a statement.
Under the new law, the program to accomplish the refinancings will be called the WHEDA Refi Advantange. Details are available here.
Important note: not all WHEDA borrowers will be eligible for the lower rates. They’ll need to have earned at least 3 percent equity in their homes and meet some other program criteria.
Often working with community banks, the Wisconsin Housing and Economic Development Authority helps qualified borrowers get low-cost, fixed-rate mortgages on their first homes. People who haven’t owned a home for at least three years also are eligible, if they have good jobs and decent credit ratings.
But state law — not anticipating the record and near-record lows that mortgage rates would fall to following the housing crash — had prevented most WHEDA loans from being refinanced, basically to preserve agency funds for more new mortgages.
(You can read more details about the issue in this earlier Property Trax post I wrote after the measure passed the Legislature.)
WHEDA and community banks and their legislative allies argued it was time to loosen that restriction, noting some WHEDA borrowers were still locked into rates as high as 7 percent.
The bill’s chief Assembly sponsor, state Rep. Travis Tranel, R-Cuba City, said more than 16,000 current WHEDA mortgage holders now pay rates of 4 percent or higher.
WHEDA data also suggests there is demand for a remedy — nearly 80 percent of its legislative contacts in recent years were about the refinancing restriction, WHEDA spokesman Kevin Fischer said.
The measure to allow WHEDA refinancings to lower rates was approved by both the Senate and the Assembly on voice votes in mid-May. Its Senate sponsor was Paul Farrow, R-Pewaukee.
“In a bipartisan fashion, the Legislature recognized the tremendous benefit this bill provides for homeowners across Wisconsin,” WHEDA Executive Director Wyman Winston said Wednesday. “Every legislator has my sincere gratitude. WHEDA is excited to get this program rolling.”
Walker signed the bill at Mound City Bank in Platteville.