By Peter Ricci
Two Democrats in the Senate have reintroduced an ambitious bill that would extend refinancing to more than 13 million borrowers through an expansion of the Home Affordable Refinance Program (HARP).
The bill, which is being proposed by Robert Menendez of New Jersey and Barbara Boxer of California, will target borrowers with Fannie Mae or Freddie Mac mortgages with the HARP expansion.
HARP Expansion Bill
The bill is very specific on what Fannie/Freddie mortgages can apply for the expansion. The mortgages must:
- Be current, with no late payments in the last six months or only one in the last 12.
- Have originated on or before May 31, 2009.
- Have an LTV ratio of less than 80 percent
As HousingWire noted, the HARP expansion will exclude services from the repurchase and warranty risk from Fannie and Freddie, and will prohibit the GSEs from charing any upfront refinancing fees. Also, there is a definite demand among borrowers for HARP refinancings – the FHFA eased some of its guidelines in late 2011, and now in 2012, with lenders implementing those guidelines, roughly 519,000 borrowers have refinanced (compared to just 400,000 for all of 2011).
Does it Stand a Chance?
And then comes the issue of Congressional support. As Barack Obama knows all too well with his lingering refinancing proposal, it can be a mighty difficult task drumming up support for refinancing legislation. Menendez, though, seems optimistic for the bills chances, which he and Boxer hope to submit to either their committee or the Senate floor by the end of the month.
“We made this change in a compromise with industry groups, and in response to issues raised by mortgage bond investors,” Menendez said in a conference call. “We’ve addressed every objection raised to the previous version … It is my hope that we can do this in this month to move forward and take advantage of the low rates. Time is of the essence.”