Although they are a good start, the recently announced changes to the Home Affordable Refinance Program (HARP) do not go far enough, according to a bipartisan group of 10 U.S. senators.
In a letter to top Obama administration officials this week, eight Democrats and two Republicans said the proposed refinance reforms should be extended to higher-equity borrowers with non-delinquent Fannie Mae- or Freddie Mac-backed loans. The recent HARP changes will remove appraisal requirements in certain conditions and eliminate or lower other fees. The senators say such measures should also cover borrowers with more equity in addition to those who have little or no equity.
‘As currently structured, these reduced costs would apply only to HARP-eligible borrowers with less than 20 percent equity – a pool of approximately 3 to 4 million," they wrote. "However, there are nearly 12 million additional loans guaranteed by Fannie Mae and Freddie Mac with greater equity paying interest above five percent that could benefit from a refinance. These borrowers should have the same access to simple, low-cost refinances as those targeted by HARP.’
The senators argue that broadening HARP further is fair to consumers and smart economically.
"Allowing banks to have a single set of rules for all borrowers will simplify the process and encourage greater participation in the program," the letter states.
Signing on to the letter were Sens. Barbara Boxer, D-Calif.; Johnny Isakson, R-Ga.; Robert Menendez, D-N.J.; Jeff Merkley, D-Ore.; Sheldon Whitehouse, D-R.I.; Mark Begich, D-Alaska; John Kerry, D-Mass.; Scott Brown, R-Mass.; Ron Wyden, D-Ore.; and Frank Lautenberg, D-N.J.