Senate Republicans are considering some Democrat proposals to expand refinancing to even more Fannie Mae and Freddie Mac borrowers. The Federal Housing Finance Agency expanded HARP last fall to reduce upfront fees, eliminate a cap on negative equity and reduce some repurchase risk for servicers of the original home loan to allow for more refinancings. Major banks finished installing the program in March, but a major refinancing surge remains elusive.
The Senate Banking Committee held a hearing on a bill from Sens. Robert Menendez, D-N.J. and Barbara Boxer, D-Calif., to expand the Home Affordable Refinance Program. The bill would allow a new servicer of the loan avoid repurchase and warranty risk from the government-sponsored enterprises and extend the program to cover loans originated prior to June 2010 instead of June 2009. Between 3 million and 4 million GSE borrowers are underwater, but to date, 1.2 million refinanced through HARP, and only 100,000 of them had loan-to-value ratios above 105%, according to Mark Zandi, chief economist at Moody’s Analytics.
The housing analytics firm Zillow released a report suggesting that the negative equity problem might be larger than originally thought. While the Menendez-Boxer ideas have been floating around for some time, some parts of the bill at least garnered support from opposing Republicans, suggesting that a gridlocked Senate may be nearing a compromise. “I’m open to this. I hope that we’ll have a real mark-up on this bill,” said Sen. Bob Corker, R-Tenn. Source: HousingWire