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Lawmakers Press Officials Over Mass Refinance Program

Sixteen lawmakers from both parties inked their names to a ""widely circulated letter"":http://boxer.senate.gov/en/press/releases/101111.cfm Wednesday that called for the implementation of a massive refinance program first proposed by ""President Barack Obama"":http://www.whitehouse.gov/administration/president-obama/.

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Addressing several high-ranking officials, the bipartisan group pressed in the letter for the elimination loan-to-value ratio caps, risk-based loan fees, and barriers like second lien holders.

""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 senators wrote. ""All of these changes can be accomplished administratively and we urge that you take immediate steps to do so.

""We also support efforts to address other hurdles that have limited the success of current refinance programs, including representations and warranties, mortgage insurance, and high lender origination fees,"" the senators added.

The 16 signators include ""Sen. Barbara Boxer"":http://boxer.senate.gov/ (D-California), ""Sen. Johnny Isakson"":http://isakson.senate.gov/ (R-Georgia), and ""Sen. Robert Menendez"":http://menendez.senate.gov/ (D-New Jersey), among a host of others from states across the country.

The officials to whom the senators addressed their public letter include ""Treasury Secretary Timothy Geithner"":http://www.treasury.gov/about/Pages/Secretary.aspx, ""HUD Secretary Shaun Donovan"":http://portal.hud.gov/hudportal/HUD?src=/about/hud_secretary, ""National Economic Council Director Gene Sperling"":http://www.whitehouse.gov/administration/eop/nec/director, and ""Federal Housing Finance Agency"":http://www.fhfa.gov/ ""Director Edward DeMarco"":http://www.fhfa.gov/Default.aspx?Page=67.

Past sources told _MReport_ that DeMarco remains a potential stumbling block for the administration and lawmakers in favor of Obama's mass refi plan.

News outlets allege that the Obama administration means to lift loan-to-value ratios for the ""Home Affordable Refinance Program"":http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx (HARP), which the GSEs offer to eligible homeowners with the desire to refinance their government loans.

For a ""past story"":https://themreport.com/articles/industry-insiders-react-offer-alternatives-to-refi-proposal-2011-09-09, ""Mark Calabria"":http://www.cato.org/people/mark-calabria, director of financial regulation studies with the conservative-leaning ""Cato Institute"":http://www.cato.org/, described DeMarco as someone who isn't above persuasion but whose bottom line is the conservation of GSEs ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/.

DeMarco himself ""continues to push back on the proposal"":https://themreport.com/articles/fhfa-chief-gse-guarantee-fees-going-up-2011-09-19, saying at a recent conference, ""HARP is not a mass refinancing program; it was designed to address a particular segment of borrowers with loans guaranteed by the Enterprises.

""The Enterprises control certain features of HARP, but they do not make loans to borrowers nor set the rates that borrowers pay,"" he added.

Supporters remain fixed in opposition, saying an expanded refi program would allow for an unprecedented surge in refinancing activity across the country, allowing homeowners to save cash and reap benefits from historically low mortgage rates.

Wrote the senators: ""It is equally important that in reducing these barriers, the benefits of today's low rates are not lost to borrowers. With interest rates having hit an all-time low of 3.94 percent, there are nearly 19 million loans guaranteed by Fannie Mae and Freddie Mac paying interest above 5.0 percent that could benefit from a refinance.

""Any changes to existing programs must enable as many of these borrowers as possible to refinance and to do so at rates comparable to those received by any other current borrower who has not suffered a drop in home value,"" their letter added.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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