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Sens. Menendez and Boxer reintroduce refinance legislation.

On Feb. 7, Senators Robert Menendez (D-New Jersey) and Barbara Boxer (D-California) reintroduced legislation to ease refinancing barriers for borrowers with Fannie and Freddie loans and extend the Home Affordable Refinance Program (HARP) by an additional year.

The legislation would also reduce upfront fees on refinances; eliminate appraisal costs for borrowers; and ensure that streamlined refinancing is available and consistent for all Fannie Mae and Freddie Mac borrowers whether or not they are underwater.

The Responsible Homeowner Refinancing Act (S. 249) is supported by several housing industry trade groups, as well as consumer groups. These groups include the Mortgage Bankers Association, Housing Policy Council of the Financial Services Roundtable, National Association of Realtors [R], National Association of Home Builders, Amherst Securities, Americans for Financial Reform, U.S. Conference of Mayors, American Land Title Association and the Center for Responsible Lending, according to a press release from Sen. Menendez's office.

The legislation would ensure that borrowers with Fannie or Freddie loans who are making their payments on time have guaranteed equal access to simple, low-cost refinances, regardless of the equity they have in their home. It would provide a single set of rules, allowing all lenders to offer a single streamlined program to Fannie and Freddie borrowers who have been paying their loans on time.

Another provision of the legislation would prohibit the government-sponsored enterprises (GSEs) from charging upfront fees to refinance any loan that they already guarantee. A press release explaining the terms of the legislation says that the GSEs lowered upfront fees for HARP loans with less than 20 percent equity but left them in place for borrowers with more equity. The bill would eliminate the disparity in upfront fees to refinance.

The legislation also requires the GSEs to develop added streamlined alternatives to manual appraisals for refinancing loans where automated valuation models (AVMs) cannot be relied upon, such as areas without a significant number of recent home sales. This will save borrowers from paying hundreds of dollars for a manual appraisal for a HARP refinance.

The bill would eliminate employment- and income-verification requiremerits for HARP refinancings.

Finally, the legislation also extends for another year the HARP program, which is scheduled to expire on Dec. 31, 2013. This would give homeowners an additional year to take advantage of today's historically low rates, the bill's sponsors point out.

Sen. Menendez said, "We need to bring much-needed relief now to hard-working, responsible homeowners who are struggling to keep up with their high-interestrate loans--including thousands in New Jersey whom I have heard from." He added, "We need to do this before interest rates go up again."

The bill's other main sponsor, Sen. Boxer, said, "This bill is a win-win." She added, "Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum. That's why the Menendez-Boxer bill has such broad support from industry and consumer groups. We should take action on this commonsense plan immediately, while interest rates remain low, so American families can realize major savings."
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Title Annotation:NEWS ROOM
Comment:Sens. Menendez and Boxer reintroduce refinance legislation.(NEWS ROOM)
Publication:Mortgage Banking
Date:Mar 1, 2013
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