WASHINGTON A bipartisan group of senators has urged federal housing regulators to spur mortgage refinancing and help more borrowers with little or no equity in their homes win new loan terms.
"Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates," the letter, dated Tuesday and signed by 16 senators, said.
Interest rates on a 30-year fixed mortgage dropped to 3.94 percent for the first time last week, according to Freddie Mac. There are nearly 19 million loans guaranteed by both mortgage-finance companies Fannie Mae FNMA.OB and Freddie Mac FMCC.OB in which borrowers pay interest rates above 5.0 percent that could benefit from refinancing, the senators wrote.
The bipartisan group, led by Senators Barbara Boxer and Johnny Isakson, sent the letter to Treasury Secretary Timothy Geithner, Department of Housing and Urban Development Secretary Shaun Donovan, Federal Housing Finance Agency Acting Director Edward DeMarco and National Economic Council Director Gene Sperling.
The Obama administration is working with FHFA to ease rules to make refinancing more accessible under its two-year old initiative called the Home Affordable Refinance Program, or HARP. The program is open to borrowers whose loans are backed by Fannie and Freddie and are having trouble making loan payments since they owe a large portion of their home's value.
Specific changes to HARP are expected in a few weeks, Geithner told lawmakers on Capitol Hill.
The group of lawmakers said they support improvements to HARP that address hurdles that have limited its success, "including representations and warranties, mortgage insurance, and high lender origination fees."
"All of these changes can be accomplished administratively and we urge that you take immediate steps to do so," the letter stated.
(Reporting by Margaret Chadbourn; Editing by Kenneth Barry)