U.S. Sens. Robert Menendez (D-NJ) and Barbara Boxer (D-CA) have unveiled legislation to help millions of responsible homeowners refinance at lower rates and save thousands of dollars each year. The senators originally introduced this legislation in the 112th Congress. “We need to bring much-needed relief now to hard working, responsible homeowners who are struggling to keep up with their high interest rate loans—including thousands in New Jersey whom I have heard from,” said Sen. Menendez. “We need to do this before interest rates go up again. It’s time that Congress finally put families first and give homeowners who have played by the rules a fair chance to refinance at today’s low rates. Not only will this bill help put thousands of dollars back into the pockets of New Jersey families who are trying to pay their bills and keep their homes, but it does so at no cost to taxpayers and will stimulate our economy. Making these reforms should be, as my Republican colleague Senator Corker said last year, a ‘No-Brainer’, and I urge my colleagues to do so immediately.”
“This bill is a win-win-win,” Sen. Boxer said. “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 common-sense plan immediately while interest rates remain low so American families can realize major savings.”
The current average interest rate for a 30-year mortgage is 3.53 percent–a rate that remains near its historical low. Nevertheless, there are nearly 12 million homeowners with loans guaranteed by Fannie Mae and Freddie Mac who could benefit from refinancing, many of whom cannot refinance at a lower rate because of unnecessary red tape and high fees. That red tape has limited competition among banks, so borrowers–even those who are able to refinance–end up paying higher interest rates than they would if they were able to shop around.
Under the Administration’s current refinancing program (HARP), an average homeowner saves about $2,500 per year. This bill would increase the amount they could save and expand refinancing opportunities for millions of eligible borrowers.
S. 249, The Responsible Homeowner Refinancing Act of 2013 removes the barriers preventing these Fannie Mae and Freddie Mac borrowers from refinancing their loans at the lowest rate possible. The bill would:
►Ensure that streamlined refinancing is available and consistent for all Fannie and Freddie borrowers, regardless of whether they are underwater or not
►Reduce up-front fees on refinances
►Eliminate appraisal costs for all borrowers
►Remove additional barriers to competition
►Extend HARP by one year, to allow eligible borrowers more time to access the program.
The legislation is supported by a broad array of stakeholders representing borrowers, lenders, and other experts, including the Mortgage Bankers Association, Housing Policy Council of the Financial Services Roundtable, National Association of Realtors, National Association of Home Builders, Amherst Securities, Americans for Financial Reform, and the Center for Responsible Lending.
