Bill in Legislature would help homeowners refinance
Updated On: May 08 2013 09:27:31 AM CDT
State lawmakers will hear testimony on a bill tomorrow that could help thousands of homeowners lower their mortgage rates.
The Wisconsin Housing and Economic Development Authority offers first-time homebuyers low-interest loans to purchase homes. But the same agency isn't allowed to refinance these loans, leaving some homeowners stuck with high-interest loans.
Lynette Hansan bought her home in 2006 at a 6.4 percent interest rate.
"I was lucky enough to get it without a down payment, and I'm one of those people that would otherwise not be able to get a loan," said Hansan.
Seven years later, she has a different job that pays half as much, and her home has dropped drastically in value. She wanted to refinance the loan through WHEDA, but found she couldn't. She called WISC-TV's Call For Action Team to let them know about the problem.
"I've done everything right," said Hansan. "I continue to make the mortgage payment, even when it is difficult."
Sen. Paul Farrow, R-Pewaukee, has heard from others in this situation. Of the 18,100 thousand outstanding WHEDA loans, more than 16,000 of them have interest rates above four percent.
"The world that we're in right now, when you see the rates below three percent or two-and-a-half percent in the 30-year fixed, they realized they are trapping people who could best use that renewal," said Farrow.
Farrow's bill, which has bipartisan support, would allow WHEDA to buy loans for refinancing. That would open the door for Hansan's mortgage to be helped.
"I can't be the only person in this situation," said Hansan. "I've worked my whole life and paid taxes. I know a lot of people walk away from their homes because they feel like they have no choice, and quite frankly that's been looming large for me."
WHEDA said Tuesday this change would allow them to help homeowners who have equity in their homes, or those who don't who purchased their homes after 2009. For homeowners like Hansan, WHEDA said it is still looking for a solution to allow those underwater on mortgages bought 2008 and prior.
The bill will get a hearing in the Senate Committee on Insurance and Housing at 1 p.m. Wednesday. It's waiting for a vote in an Assembly committee as well.
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