The Senate Banking Committee convened a hearing in an effort to make Home Affordable Refinance Program (HARP) a more effective and accessible option for responsible, underwater borrowers. During the hearing, testimony from experts was given on how to broaden HARP to reach more of these borrowers. Currently, only mortgages backed by Fannie May and Freddie Mac are eligible for refinancing under HARP.
The Obama Administration has worked with the Federal Housing Finance Agency (FHFA) to bring about lower loan-to-value ratio requirements, remove obstacles for lenders and servicers and allow homeowners to trade up on their mortgages at the current low rates.
The consensus of the testimony at Wednesday’s hearing is that the number one priority should be to allow for competition by permitting different servicers to refinance a borrower on the same terms that apply to the current servicer. Laurie Goodman, Senior Managing Director of the Amherst Securities Group, testified that “this will allow for much better rates to the borrower and much more refinancing of the targeted HARP population”.
In addition, testimony noted that the FHFA has resisted requests for principal reductions which, according to Chris Mayer, a professor of real estate and finance at Columbia Business School, would provide the opportunity for an estimated 2 million to 3 million homeowners to refinance and prevent foreclosure.
In an election year, it will be interesting to see how and what refinance expansions materialize.
As always, the Law Office of R. Spencer Lauterbach will keep abreast of developing legislation and continue to advocate on behalf of homeowners’ rights.