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Although Republicans appear open to a bill that would make it easier for borrowers to refinance their mortgages, Democrats are balking at requests that the legislation also include measures to reform Fannie Mae and Freddie Mac, among other things.
August 21
WASHINGTON — Senate Democrats tried Monday to revive a mortgage refinancing bill by reintroducing a slimmed-down version of the measure.
The bill, sponsored by Sens. Robert Menendez, D-N.J., and Barbara Boxer, D-Calif., would make it easier for millions of homeowners with Fannie Mae and Freddie Mac mortgages to refinance into lower interest rate loans.
In a conference call with reporters Monday, Menendez and Boxer stressed that the new version of the bill has the support of a range of housing industry groups — including the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders — in addition to consumer groups. Lawmakers are hoping they can find support among Republicans, who so far have opposed the legislation.
"We have addressed every substantive concern that has been raised by Republicans, by industry," Boxer said.
Menendez added, "We do have to act now because we have historic low rates."
But Sen. Richard Shelby, R-Ala., who has been engaged in negotiations with Senate Banking Committee Chairman Tim Johnson, D-S.D., over the legislation, does not appear willing to give ground.
"Notwithstanding their rhetoric about bipartisan cooperation, the Democrats appear to be cooperating only with mortgage lenders on this legislation," said William Duhnke, Shelby's top banking aide. "Republicans remain concerned that the Menendez bill may significantly impair a program that has recently showed signs of success."
Duhnke was referring to the Obama Administration's Home Affordable Refinance Program, or Harp, under which 1.5 million homeowners with Fannie and Freddie mortgages have refinanced since April 2009.
The bill sponsored by Senate Democrats — and supported by the White House — would relax certain requirements that currently restrict eligibility to Harp.
For example, it would direct Fannie and Freddie to require new servicers to use streamlined underwriting standards currently employed by existing servicers, a move that allows new servicers to compete on more favorable terms. The bill's supporters say that borrowers today may have to pay as much as 0.5 percentage points more for a refinanced loan because there is not enough competition for their business.
The bill would also eliminate up-front fees, as well as appraisal costs, on Fannie and Freddie refinances.
Provisions that were eliminated would have imposed penalties on second-lien holders and mortgage insurers that hold up refinancing. Also gone is a provision that would have expanded eligibility for the refinancing program, which currently ends with mortgages originated in June 2009, by an additional year.
Menendez acknowledged Monday that the changes would make the program available to fewer homeowners than the original bill, but he said the new version is simpler.
In the Senate Banking Committee, the disagreements over the bill have never been about the specific refinancing provisions.
Rather, committee Republicans, led by Shelby, have been
Those include an amendment, opposed by consumer groups, that would provide lenders a legal safe harbor when loans they originate meet the qualified mortgage standards now being developed by regulators. Committee Democrats have insisted that any amendments be related to mortgage refinancing.
"I recognize that with an election approaching we are at the peak of the political season, but I implore my congressional colleagues to recognize that politics have no place in this debate," Chairman Johnson said in a statement Monday. "American families deserve this relief now, and the Senate and House should move forward quickly to pass this bill."
With no sign that the partisan impasse will be bridged, Democrats are keeping open the door to bringing their legislation directly to the Senate floor for a vote.
But time is running out on the legislative year, with Congress expected to stay in session for only two or three weeks before adjourning for campaign season.
Democratic Sens. Ron Wyden, Dianne Feinstein, Richard Durbin, Charles Schumer and Kirsten Gillibrand have all signed onto the legislation as co-sponsors, but no Republicans have pledged their support yet. The bill would need at least seven GOP votes to pass the Senate, where a 60-vote supermajority is routinely necessary.
Even if the bill passes the Senate, its chances in the Republican-controlled House, where a companion bill has yet to be introduced, appear bleak.
