WASHINGTON Jan 29 Senate Democrats will propose
legislation as early as this week to extend a government program
that aims to help homeowners with government-backed loans to
refinance, according to aides on Capitol Hill.
The proposal would expand on a housing relief bill that
Senators Robert Menendez and Barbara Boxer failed to gain
traction on last year. The legislation aims to open the door to
refinancing for more borrowers who owe more than their
properties are worth.
More than 1.8 million borrowers have already won new loans
through the Obama administration's Home Affordable Refinance
Program that was enacted in 2009 to help borrowers with little
or no equity in their homes. But coaxing Congress to tackle
broader mortgage relief that was laid out by the president's
State of the Union speech last year has been a tough sell.
The new bill would extend the life of HARP through 2014,
according to aides. The program, which is currently set to
expire this year, provides 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 almost $190 billion in taxpayer aid.
The bill excludes a key piece of the White House initiative
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 Fannie
Mae and Freddie Mac.
Last year, Senate Democrats considered a few ideas, all
backed by the Obama administration, that would make it easier
for a wider range of underwater borrowers to rework their home
loans into more favorable rates.
But those plans failed due to Republican resistance.
While analysts said a Democratic bill has some chance of
clearing the Senate this year, it would have slim chances of
winning approval in the Republican-controlled House.
"Enacting this refinancing legislation will be tough," wrote
Jaret Seiberg, a senior policy analyst at Guggenheim Partners,
in a note to clients. "We detect little support among House
Republican leaders. So even if it can pass the Senate, it may
well die in the House."