At a time when mortgage rates have hit record-low numbers, HUD Secretary Shaun Donovan stressed urgency in passing housing refinance bills on President Barack Obama’s “to-do” list for Congress.
During a teleconference Friday, which preceded Obama’s stop into Reno, Nevada, to boost support for the housing proposals, Donovan outlined the three bills, which he said were introduced to Congress that week.
The first bill, sponsored by Barbara Boxer (D-California) and Robert Menendez (D-New Jersey), looks to reduce the cost for refinancing, increase servicer competition, and streamline the refinancing process. The bill would also allow borrowers with a second lien or home equity line of credit to refinance.
The second bill, introduced by Diane Feinstein (D-California), proposes to expand eligibility for refinancing to non-GSE backed loans.
Donovan said there are about 3.5 million families who are doing the right thing, paying their bills, but have been locked out of refinancing because they have a private label security loan.
The third bill looks to rebuild equity into homes of underwater borrowers. Introduced by Jeff Merkley (D-Oregon), the bill would allow borrowers to refinance into shorter terms with lower interest rates and apply their savings to reduce their mortgage balance.
Donovan said the bills would save homeowners an average of $2,500 to $3,000 a year, and overall, will help families, the economy, and even taxpayers by preventing GSE-backed mortgages from defaulting.
By Esther Cho for DSNews