HUD secretary Shaun Donovan in a conference call Friday morning pushed for quick approval of a trio of legislative proposals backed by the president that are aimed at further expansion of refinancing opportunities to underwater borrowers with clean payment histories.
“There’s a real urgency because we don’t know how long rates will stay this low,” Donovan said.
The call came ahead of a planned presidential visit to Reno homeowners who have benefited from existing government refi program efforts.
To demonstrate the effectiveness of existing refinancing programs of this type, Donovan cited Mortgage Bankers Association data showing increased refinancing application volumes in hard-hit states in the wake of the government’s recent expansion of the Home Affordable Refinance Program.
He said nationwide refis have increased about 50% and in the hardest hit states there have been larger percentage increases. These have been as high as between 100% to 200% in areas like Nevada, Arizona and Florida.
While HARP 2.0 worked “well enough,” Donovan said opportunities should be extended to “all responsible homeowners that are underwater.”
The bills collectively propose moves such as one aimed at increasing lender competition for HARP 2.0 refis through incentives. This addresses industry complaints that the program has been limited to bigger players refinancing their own portfolios. Donovan said the move could remove some of the last barriers to refinance underwater loans and lower consumer costs.
Also proposed have been breaks to Fannie Mae and Freddie Mac borrowers who have not been able to benefit from the elimination of the need for a appraisal in areas where an automated valuation model result will suffice because they live in an area where and AVM is “not effective for them.”
Another bill would seek to extend underwater refinancing opportunities to those with loans in private-label securities. The third bill would help “accelerate the rebuilding of equity” by offering incentives for doing so.
Addressing questions about whether Republicans would support the Democratic measures, Donovan said, historically, refinancing efforts have gotten some bipartisan support.
