Juneau -- The Alaska House Monday passed House Bill 93, sponsored by Representative Carl Morgan (R-Aniak). House Bill 93 permits refinancing of Alaska Housing Finance Corporation rural home loans in the same manner any conventional mortgage allows. It also extends the definition of the term "housing" so that owner-occupied 3 and 4 plexes could be financed.

"Just over 1100 of AHFC's rural loans have interest rates over 8%; that's about $115 million dollars," said Morgan. "The current rate for a rural 30-year loan is 6.125%. If rural homeowners could refinance at these lower rates, it could put hundreds of dollars in buying power back into their pockets and into the local and state economies every month.

"This bill is not a "give-away" program. It does not permit any loans not allowed under conventional lending practices or industry standards," Morgan said. "But, at long last, the rural loan program will be able to make the same types of loans allowed for any conventional urban loan program."

AHFC reports that over 1100 urban loans were refinanced in 1998, allowing homeowners to take advantage of current low interest rates with minimal transaction costs. HB 93 would allow the same type of opportunity for rural homeowners.

"This is an issue of fairness for rural borrowers. But it is also good business for AHFC," said Morgan. "With rural default rates generally running at or below urban rates, these should prove to be good loans which will provide a financing opportunity that will be a great benefit to the rural housing market."