President Obama traveled to a couple's home in Reno, Nevada, on Friday in his effort to pressure Congress into passing legislation that would allow more Americans to refinance their mortgages.
Standing on the driveway outside the home of Val and Paul Keller, Obama said, "I'm calling on Congress to give every responsible homeowner the chance to save an average of $3,000 a year by refinancing their mortgage."
The Kellers have a $168,000 mortgage on their home, which is currently only worth $100,000, according to the White House. Unable to get a new loan, they heard about the Obama administration's refinancing program — known as the Home Affordable Refinancing Program, or Harp — when eligibility was broadened last year.
"So they called their lender, and within a few months, within 90 days, they were able to refinance under this new program that we set up. Their monthly mortgage bill has now dropped $240 a month," Obama said.
The White House used the couple's car port as a backdrop because they fit the administration's narrative about more Americans being able to refinance in the last several months.
Harp has been considered by many to be a disappointment. Through February, 1.1 million homeowners had taken advantage of the program, which is far below a 2009 estimate that it could help as many as 5 million households.
But since last fall, refinancing activity has intensified. The White House said Friday that nationwide refinancing applications have increased by 50% since the administration announced it was making the program available to more borrowers. That rate has been even higher in states with some of the sharpest drops in real estate values, such as Nevada, Arizona and Florida. (The data released by the Obama administration did not show how many of the refinancing applications were approved, or how many of the applications were for Harp refinancing.)
Still, Obama is pushing congressional Republicans to approve three bills that would further expand eligibility for refinancing.
One of the bills, sponsored by Sen. Dianne Feinstein of California, would allow homeowners whose mortgages are not backed by Fannie Mae or Freddie Mac to participate. Under the legislation, those borrowers would be able to refinance into government-backed loans.
Shaun Donovan, secretary of the Department of Housing and Urban Development, argued Friday that the proposal is a matter of fairness.
"Most families have no idea whether they have a Fannie Mae or Freddie Mac or a private label securities mortgage," Donovan said on a conference call with reporters.
The White House originally proposed covering the estimated $6 billion cost of the Feinstein legislation by imposing a fee on the largest financial institutions, but that idea was dropped this week with little fanfare.
Instead, the legislation calls for its projected cost to be covered by extending higher guarantee fees on government-backed mortgages for an additional year.
An extension of the payroll tax cut passed by Congress late last year imposed higher guarantee fees on Fannie and Freddie mortgages until October 1, 2021. The Feinstein legislation would extend the higher fees for 12 additional months.
But Donovan said that the Obama administration is open to other ideas on paying for the legislation.
"What I would say is we are open to looking at and working with Congress on alternatives," he said. "So we're not taking a particular position on the pay-for at this point."
Regardless, the Feinstein bill faces long odds, given the strong opposition of congressional Republicans to the idea of expanding the federal government's exposure to the housing market.
A second refinancing bill, sponsored by Democratic Sens. Robert Menendez and Barbara Boxer, appears to have a somewhat better chance of passage, at least in the Senate.
That bill would address barriers that are still preventing some homeowners with Fannie and Freddie loans from refinancing.