Senate Democrats may try to fast-track a bill to open up the HARP 2.0 program so more lenders can refinance high LTV Fannie Mae and Freddie Mac loans held by large servicers. But Sen. Bob Corker, D-Tenn., is warning that bypassing the Senate Banking Committee and taking it to the Senate floor without a committee markup could hurt the bill’s chances.
The HARP reform bill, sponsored by Sens. Robert Menendez, D-N.J., and Barbara Boxer, D-Calif., has “some redeeming qualities,” Corker said late Tuesday. With some changes it could “receive some bipartisan support,” he added.
Testifying at Tuesday’s hearing, Housing and Urban Development secretary Shaun Donovan said the HARP 2.0 program approved by the Federal Housing Finance Agency created some barriers to refinancing that “don’t make sense.”
He noted the FHFA doesn’t require the existing servicer to verify employment and income in refinancing a high LTV or underwater GSE borrower. However, a different servicer must meet fuller underwriting requirements to refinance the same loan, which “discourages competition,” the HUD secretary said.
The Menendez-Boxer bill is designed to level the playing field for all servicers in terms of underwriting requirements and put-back liability on HARP 2.0 refinancings.
Several Democrats said it’s important for the Senate to act quickly and pass the HARP bill so more borrowers can refinance before mortgage rates rise again.
