U.S. Senator Robert Menendez, co-author with Senator Barbara Boxer of the Responsible Homeowner Refinancing Act, underscored the President's call today for Republicans in Congress to join Democrats in passing their bill which will expand opportunities to access historically low interest rates for borrowers who make their mortgage payments on time. In his radio address to the nation, President Obama said the plan is one that " we know will work. It has the support of independent, nonpartisan economists and leaders across the housing industry. But Republicans in Congress banded together and kept this plan from even coming to a vote."
"I agree wholeheartedly with President Obama that our plan to help responsible homeowners refinance is a no-brainer and should have passed already," said Senator Menendez. "Homeowners in New Jersey have waited long enough and I hope that once the political pressure of election day is done, Republicans will be ready to stand with us to give middle class families the relief they need."
Specifically, the Senator's plan would:
Remove barriers to competition. This bill would direct the GSEs to require the same streamlined underwriting and associated representations and warranties for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers' business.
Guarantee equal access to streamlined refinancing for all GSE borrowers. This bill would ensure that all GSE borrowers who are making their payments have the same access to simple, low-cost refinances, regardless of the level of equity they have in their home. This is not only a simple matter of fairness- it also makes good business sense. Providing a single set of rules for all lenders and all GSE borrowers will simplify the process for all involved, allowing all lenders to offer a single, streamlined program to all GSE borrowers who have been paying their loans on time.
Eliminate up-front fees completely on refinances This bill prohibits the GSEs from charging up-front fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSE's and taxpayers.
Eliminate appraisal costs for all borrowers. This bill requires the GSEs to develop additional streamlined alternatives to manual appraisals, eliminating a significant barrier and reducing cost and time for borrowers and lenders alike, especially in rural areas. Again, this just makes good economic sense. Taxpayers are already on the hook for these loans and will benefit from providing the borrowers with an easier path to refinancing.
Further streamline refinancing application process. HARP already restricts participation to borrowers who are current on their loans and have demonstrated a commitment to making their payments on time -- even in the face of loss of income or employment. There is thus no reason to require proof of employment or income for these loans, particularly given that the GSEs already retain the risk, and that risk will only go down with lower interest rates. So this bill eliminates employment and income verification requirements, further streamlining the refinancing process and removing unnecessary costs and hassle for lenders and borrowers alike.
Save taxpayers money. According to the CBO, the bill pays for itself through reduced default rates on GSE loans, which saves taxpayers.