U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) will introduce legislation this week to help millions of responsible, struggling homeowners refinance at lower rates and save thousands of dollars each year.
The measure would help check off a main element of President Obama’s “to do list” for Congress. Earlier today, Obama called on lawmakers to act on a number of measures to create jobs and restore security for middle class families, including housing refinance legislation.
“I agree with President Obama’s ‘to do’ list to create jobs and strengthen our middle class,” said Menendez. “That’s why I am introducing legislation this week to knock down barriers and help responsible homeowners refinance at lower rates. It will put thousands of dollars back in the pockets of hard working families and boost our economy. I look forward to moving this bill to our ‘done’ list quickly.”
“We know that helping responsible homeowners refinance is a win-win – for our families and for the economy – and the legislation we will introduce this week will help families save money by refinancing at today’s record low rates,” Boxer said. “By introducing more competition into the mortgage market, our bill will ensure that the benefits of refinancing will flow to homeowners struggling to make ends meet, not to banks.”
This morning, at a Senate Banking Committee hearing featuring HUD Secretary Shaun Donovan, Menendez discussed the forthcoming legislation, the Responsible Homeowner Refinancing Act of 2012. To remove the barriers preventing Fannie Mae and Freddie Mac borrowers who are making their payments from refinancing their loans, the Menendez-Boxer bill would:
· Extend streamlined refinancing for Fannie and Freddie borrowers
· Eliminate up-front fees completely on refinances
· Eliminate appraisal costs for all borrowers
· Remove additional barriers to competition
· Require second lien holders who unreasonably block a refinance to pay restitution to taxpayers
· Require mortgage insurers who unreasonably fail to transfer coverage to refinanced loans to pay restitution to taxpayers
· Pay for itself since reducing homeowners’ mortgage payments also reduces default rates and foreclosures, reducing Fannie and Freddie’s reliance on taxpayer bailouts.
During the hearing, HUD Secretary Donovan underscored that the bill would provide significant cost-savings to homeowners.
At a speech today outlining his “to do list” for Congress, Obama said “Congress needs to help the millions of Americans who have worked hard, made their mortgage payments on time, but still have been unable to refinance their mortgages with these historically low rates. This would make a huge difference for the economy.
“Families could save thousands of dollars and that means they’ve got more money in their pocket which means they can either build their equity back up on their homes or they go out and use that money to do things like helping their kids to finance a college education. So Congress should give those responsible homeowners a chance to refinance at a lower rate. We estimate they would save at least $3,000 a year. So that’s on our to-do-list. It’s not complicated.”