A collection of nine housing industry trade groups sent a letter to Democratic Senators Tuesday, backing their new version of a bill that would expand the Home Affordable Refinance Program to more Fannie Mae and Freddie Mac borrowers.
But Senate Republicans are still against the plan.
Sens. Robert Menendez, D-N.J., and Barbara Boxer, D-Calif., tweaked their earlier version of the bill to keep the HARP eligibility cut-off date at June 2009, not an expansion to June 2010 as was in their earlier plan.
The new bill also eliminates proposed penalties to mortgage insurers and second-lien holders who hold up a potential refinance.
It still standardizes borrower eligibility requirements for both GSEs and prohibits them from pricing the new loan based how far underwater the borrower is. Buyback risk on the old loan will be eliminated for all servicers, along with all upfront fees and appraisal requirements.
“We appreciate your willingness to work with key constituencies in the housing finance system, as reflected by the significant improvements made to the bill since it was first introduced,” the groups, including the Mortgage Bankers Association and the National Association of Realtors said in the letter.
Mortgage departments at the major banks reported massive profits during the second quarter because of the new HARP originations and stand to make even more off of the new business from the Menendez-Boxer bil.
Republicans however will continue to push against the plan, leaving it little chance of making it out of the House even if a Senate majority clears it this month as Democrats hope.
“Notwithstanding their rhetoric about bipartisan cooperation, the Democrats appear to be cooperating only with mortgage lenders on this legislation,” said William Duhnke, the Republican staff director on the Senate Banking Committee. “Nonetheless, Republicans remain concerned that the Menendez bill may significantly impair a program that has recently showed signs of success.”
HARP spiked this summer after the Federal Housing Finance Agency eliminated negative equity caps and repurchase risk from the original servicer. The more than 519,000 HARP refis completed in the first seven months this year already passed the 400,000 in all of last year.
