A proposed bill to streamline and align the refinance processes of Fannie Mae and Freddie Mac may soon make it easier for homeowners who are current on their mortgage payments but who have been previously unable to refinance to finally take advantage of record low interest rates.
NAR President Moe Veissi testified today before the Senate Banking, Housing and Urban Affairs Committee in support of the “The Responsible Homeowner Refinancing Act of 2012,” introduced in Congress earlier this month by Sens. Barbara Boxer, D-Calif., and Robert Menendez, D-N.J.
“As the leading advocate for homeownership, Realtors® knows that helping consumers remain in their homes must be a priority if we are going to move the housing market and our nation from a fragile recovery to long-term prosperity,” said Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Eliminating the refinancing barriers homeowners face with Fannie Mae and Freddie Mac loans will help bring them relief by lowering monthly payments and reducing the risk of default.”
NAR supports the “Responsible Homeowner Refinancing Act” because it offers relief to responsible homeowners who have good credit and consistently meet their mortgage obligations, but who have been unable to refinance into lower interest rates because of constraints in Fannie Mae’s and Freddie Mac’s mortgage refinance guidelines.
Veissi testified that streamlining the process and improving access to simple, low-cost refinancings will help put thousands of dollars back into the pockets of hardworking families who have stayed current on their mortgage payments and help boost the nation’s economy. Refinancing into more affordable mortgages will also go a long way to helping homeowners avoid foreclosure and aid in the recovery of Fannie Mae and Freddie Mac, he said.
Veissi said that while Fannie Mae and Freddie Mac have recently made improvements to their refinancing guidelines, the legislation will help codify many of those improvements and remove additional barriers that are preventing borrowers from currently refinancing their loans.
The proposed legislation would extend streamlined refinancings; waive loan-to-value ratios for existing, well-performing loans; make refinancings more affordable by eliminating up-front fees and appraisal costs; improve competition for lenders looking to compete with the existing mortgage servicer; and establish penalties for second lien holders and mortgage insurers who block the refinance process.
Veissi said the changes would extend refinancing opportunities to many underwater borrowers and help alleviate existing housing cost pressures and stimulate the economy.
“Realtors® thank Sens. Boxer and Menendez for their efforts to bring relief to millions of homeowners who continue to struggle through lower home values and lost equity, yet remain current on their mortgage obligations,” Veissi said. “We believe this new legislation is good for homeowners and taxpayers and will go a long way toward kick-starting the housing market and economy.”
In his testimony, Veissi also called on Congress to eliminate the use of Fannie Mae and Freddie Mac guarantee fees, or g-fees, as a means to pay for non-housing programs. He said Realtors® were strongly opposed to the use of a 10-basis point increase last year to pay for a two-month extension of payroll tax benefits, which will impact borrowers for the next 10 years who are looking to refinance their mortgages.
“We applaud Sens. Menendez and Boxer for not utilizing the guarantee fee as a pay-for to support the proposed legislation, which makes refinances more attractive by removing costs barriers associated with the process. Increasing the g-fee, which is passed on to consumers through higher interest rates, is counter-productive and effectively adds additional cost barriers,” said Veissi.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
NAR supports public policies and policymakers who support the positions of Realtors® and their clients and customers on private property rights, housing issues and homeownership, regardless of political party affiliation.