A rule change that could help thousands of first-time homeowners in Wisconsin get lower rates on their mortgages was approved by state lawmakers this week in a bipartisan measure now awaiting Gov. Scott Walker’s signature.

If signed into law, the bill would allow those with existing mortgages issued or serviced by the Wisconsin Housing and Economic Development Authority to apply for a refinancing of their loans to a rate closer to the near-record lows now available.

“Some (WHEDA borrowers) are locked in as high as 7 percent,” said state Rep. Travis Tranel, R-Cuba City, who sponsored the measure in the Assembly. The proposal’s Senate sponsor was Sen. Paul Farrow, R-Pewaukee.

Often working with community banks, WHEDA is charged with providing low-cost, fixed-rate mortgages to qualified borrowers — typically people with good jobs and decent credit ratings who have not owned a home or haven’t owned one in more than three years. WHEDA also partners with developers to rehabilitate and finance construction of affordable housing.

Current law bars WHEDA from refinancing its mortgages, except for a few limited circumstances involving construction or rehab loans.

“The idea (behind the measure) is to free up the consumer, so that he or she has this option,” said Kevin Fischer, WHEDA’s public spokesman. “I don’t foresee any problems with this particular legislation (being signed by Walker). It’s just a matter of when.”

Tranel said he hoped Walker would sign the bill allowing broader refinancing “sooner rather than later,” acknowledging the market reality that interest rates — while still below 4 percent for qualified borrowers — have been steadily inching up in recent weeks.

“That’s the reason to get this (change) done fast,” Tranel said Friday. “We’ve spoken with the governor’s office and they seem to be in support of it.”

A call for comment left with Walker’s office Friday was not immediately returned.

The measure, which won unanimous support at the committee level, was approved by the Senate on May 14 and the Assembly on Thursday.

WHEDA research provided to Tranel’s office showed more than 16,000 current WHEDA mortgage holders now pay rates of 4 percent or higher.

Over the last few years of record-low interest rates driven by the housing slump and Federal Reserve actions, many WHEDA borrowers have complained to their lawmakers about not being able to refinance.

WHEDA data show nearly 80 percent of its legislative contacts were about the refinancing restriction.

Many of those 16,000-plus WHEDA borrowers could get a lower interest rate if refinancing were allowed, said Daryll Lund, CEO and president of Community Bankers of Wisconsin, which lobbied for the measure.

“WHEDA and community banks statewide are strong partners,” Lund said Friday. “So it’s really just another way for us to help our customers take advantage of the lower rates.”

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Karen Rivedal is the education beat reporter for the Wisconsin State Journal.