A proposed bill to streamline and align the refinance processes of Fannie Mae and Freddie Mac may soon make it easier for home owners who are current on their mortgage payments but who have been previously unable to refinance to finally take advantage of record low interest rates.
“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 NATIONAL ASSOCIATION OF REALTORS® President Moe Veissi. “Eliminating the refinancing barriers home owners face with Fannie Mae and Freddie Mac loans will help bring them relief by lowering monthly payments and reducing the risk of default.”
Veissi made the remarks today during a Senate hearing on the bill, 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.
The bill would eliminate Fannie Mae and Freddie Mac mortgage refinance guidelines that are preventing home owners who have good credit and consistently meet their mortgage obligations from refinancing into lower interest rates.
Veissi said that while Fannie Mae and Freddie Mac have recently made improvements to their refinancing guidelines, the legislation will help codify many of the those improvements and remove additional barriers.
The proposed legislation would:
- extend streamlined refinancing
- allow home owners to refinance even when they owe more on their mortgage than their home is worth
- eliminate up-front fees and appraisal costs
- improve competition among lenders
- create penalties for second mortgage lenders and mortgage insurers who block the refinance process
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. Last year, NAR opposed the use of a 10-basis point fee increase 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.