Some Ohio borrowers with toxic adjust- able-rate mortgages could qualify for a new program that steers homeowners to reasonably priced fixed-rate loans. The Ohio Housing Finance Authority is offering borrowers the chance to refinance with a mortgage it's calling "the opportunity loan." Unlike the version the agency first launched in spring -- which was so picky, most home owners facing mortgage trouble couldn't qualify -- the terms associated with the refinancing loan this time around could genuinely offer many strapped borrowers a new opportunity. For instance, low credit scores alone won't be enough to disqualify borrowers. Late payments won't, either. And wisely, the agency will require borrowers to go through housing counseling.
People whose mortgages are worth more than their homes won't be able to refinance under this program (or most others). But for borrowers who do qualify, the agency could have up to $300 million to use to finance these 30-year fixed-rate loans. And based on industry data showing that an average home loan in this state is about $125,000, the agency could help many homeowners refinance. Unfortunately, very few borrowers have applied so far. The agency has reservations for just $10 million worth of loans. It is trying now to reach as many borrowers as it can. (Learn more at www.ohiohome.org/refinance/factsheet.pdf.)
A recent survey by Bankrate.com showed that about one-third of borrowers didn't know whether their loan's interest rate was fixed or floating. Considering that $14 billion in Ohio subprime adjustable-rate home loans will reset to a higher interest rate by the end of next year, the least homeowners can do is know whether their mortgage rate is on the way up. The foreclosure crisis has hit Ohio hard already, and it will get worse as rates climb. People will "go over the falls," as the agency's executive director, Doug Garver, puts it. Even though some in trouble inevitably will sink, throwing a lifeline to as many borrowers as possible is better than watching idly.
