Senator Boxer Calls for Rapid Action on Housing Refinancing Plan to Assist Homeowners

Washington, D.C. – July 10, 2009 – (RealEstateRama) — Today, U.S. Senator Barbara Boxer (D-CA) sent a letter to Federal Housing Finance Agency Director James Lockhart applauding the Administration’s recent decision to expand the Home Affordable Refinance plan, which allows responsible borrowers whose home values have declined to refinance their Fannie Mae or Freddie Mac loans and take advantage of historically low mortgage rates.

In the letter, Senator Boxer urged the agency to implement these changes as quickly and consistently as possible so that homeowners do not miss out on the opportunity to refinance their loans at a lower interest rate. Boxer had first pushed for an expansion of the program in a letter to Treasury Secretary Geithner and Housing and Urban Development Secretary Donovan on March 12, 2009.

The text of the letter follows:

July 10, 2009

The Honorable James Lockhart, III
Director
Federal Housing Finance Agency
1700 G Street, NW
4th Floor
Washington, DC 20552

Dear Director Lockhart:

I was very pleased that the Administration acted last week to expand the Home Affordable Refinance plan to include borrowers with a loan to value (LTV) of up to 125 percent. This move, which I had urged in my letter to Secretary Geithner and Secretary Donovan on March 12, 2009, will open the door to increased savings for millions of additional borrowers suffering from the greatest crisis of price declines and negative equity our nation has seen.

I write now to urge you to ensure that these changes are implemented consistently and quickly. It is my understanding that while some high loan-to-value borrowers with loans held by Freddie Mac will be able to refinance immediately, most Freddie Mac borrowers and all those with Fannie Mae will have to wait between two and three months to participate in the program. Rapid implementation of this program is essential as further increases in mortgage interest rates from their previous lows will reduce the effectiveness of the program. Furthermore, the gap between announcing the expansion of the program and its implementation is likely to lead to frustration among homeowners who are desperate for help now.

I also urge you to resolve other differences in the implementation of the Making Home Affordable program – both for refinances and modifications – between Fannie Mae and Freddie Mac. The two agencies have at times established different guidelines for the program on issues such as underwriting standards and whether closing costs can be rolled into the new loan. This has made it difficult for private sector lenders to explain and offer these opportunities to their customers and created confusion and frustration among borrowers. Both agencies are now under conservatorship by the Federal Housing Finance Agency, and borrowers should have the same opportunities for assistance, no matter who holds their loan.

Again, I applaud the Administration for taking this latest step to increase the program’s effectiveness at preventing avoidable foreclosures. Lowering the monthly payments for underwater borrowers, whose home values have declined through no fault of their own, provides the right incentive for homeowners to stay in their homes and stabilize our communities. It is essential that these borrowers now receive access to the new refinancing opportunities as quickly and consistently as possible.

Sincerely,

Barbara Boxer
United States Senator