Senator Barbara Boxer, D-Calif., is calling on the GSE regulator to expand the Home Affordable Refinancing Program to make it less expensive for underwater borrowers that are current on their Fannie Mae/Freddie Mac loans to refinance at lower rates.
"The time to help struggling homeowners is now -- while interest rates are at near record levels," Sen. Boxer said at a press briefing Tuesday afternoon.
The California senator also has introduced a bill (S. 170) that would prohibit the GSEs from charging upfront fees (beyond a guarantee fee) on HARP refinancings.
These risk-based fees Fannie and Freddie charge can be as high as 2% of the loan amount or $4,000 on a $200,000 mortgage.
Sen. Boxer noted the Federal Housing Finance Agency director could use his existing authority to reduce these fees. (The GSE regulator could not be reached for comment as NMN went to press.)
Launched in April 2009, the HARP program makes it easier for GSE borrowers with loan-to-value ratios of 80% to 125% to refinance at lower rates and reduce their monthly payments.
So far, HARP has helped at least 700,000 borrowers with LTVs north of 80% and up to 105% to refinance.
However, only 47,500 underwater borrowers with LTVs greater than 105% to 125% have been able to take advantage of the program.
Supporters of S. 170 estimate it could open the door for 2 million homeowners to refinance and prevent 54,000 defaults on GSE backed loans.
Analysts at Amherst Securities Group have pointed out several problems associated with HARP in past reports, including the high refinancing fees. Since many of these borrowers have little if any equity or cash, the extra fees have to be refinanced into the loan amount, which disqualifies some borrowers and reduces the benefit of refinancing for others, Amherst has said.
