Reuters: Politics: Senate Democrats push to ease home refinancing

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Senate Democrats push to ease home refinancing May 8th 2012, 17:15 U.S. Housing and Urban Development Secretary Shaun Donovan announces February 9, 2012 in Washington that the federal government and 49 state attorneys general have reached a $25 billion agreement with the nation's five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. Credit: Reuters/Gary Cameron WASHINGTON | Tue May 8, 2012 1:15pm EDT WASHINGTON (Reuters) - Senate Democrats on Tuesday tried to drum up support for a plan that aims to boost the number of struggling homeowners able to refinance by allowing those with government-backed loans to win new loans. Although Democrats have expressed a desire to open the door to refinancing for more borrowers, lawmakers have held back from writing a bill. Republicans remain leery of broad-based housing relief programs that could be costly to the government. Senator Robert Menendez, a New Jersey Democrat, circulated a draft bill outlining proposed changes to the Obama administration's Home Affordable Refinance Program during a Senate Banking Committee session. Senator Barbara Boxer, a California Democrat, is a co-sponsor of the draft bill, which would implement some proposals President Barack Obama unveiled in his State of the Union address in January. The draft bill would provide streamlined financing options for homeowners who are current on their payments and have loans owned or guaranteed by Fannie Mae and Freddie Mac, the two government-controlled companies that have been propped up by more than $150 billion in taxpayer aid. However, it excludes a key piece of the White House plan that would let homeowners refinance into loans backed by the Federal Housing Administration, the U.S. government mortgage-insurer, even if their current loans are not backed by the government. More than 17.5 million borrowers with loans backed by Fannie Mae and Freddie Mac currently pay more than 5 percent interest, according to the draft, while mortgage rates are averaging under 4 percent currently nationwide. Many of those borrowers have been unable to access government initiatives such as HARP. "For what it's worth, I think there are some redeeming qualities to the Menendez bill. There are also some things that I think certainly need to be changed," said Senator Bob Corker, a Tennessee Republican. While lawmakers continue to bat about ideas for speeding a recovery in the lackluster U.S. housing market, little action is expected this year in the face of presidential and congressional elections. Although a Democratic bill could go to the Senate floor for a vote, analysts expect it would have slim chances of winning approval in the Republican-controlled House. In an appearance before the committee, U.S. Secretary of Housing and Urban Development Shaun Donovan endorsed the Democratic effort to encourage refinancing, citing the need to help homeowners take advantage of historically low interest rates and put more cash back into the economy. "Significant changes have been made to HARP to improve access, but additional changes can be made to increase participation and improve its effectiveness," Donovan said. "That's something I hope we can all work on, with speed, and get this done." He estimated that "millions of homeowners" would benefit from the Menendez-Boxer plan, but he declined to provide an exact count. (Reporting by Margaret Chadbourn) Link this Share this Digg this Email Reprints

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