Obama Aims for Lower Refinancing

Senators Barbara Boxer and Bob Menendez have reopened legislation to remove the barriers that limit responsible homeowners from refinancing with cheaper interest rates.


The Obama administration has expressed their plan to push for more Americans to be allowed to refinance their mortgages at affordable and lower rates; something that will is sure to create vigorous opposition in Congress.


Senators Barbara Boxer (of California) and Bob Menendez (of New Jersey) have reopened legislation to remove the limitations that prevent borrowers, of government loans, from benefitting for the lowest interest rates on refinancing mortgages.


The senators mentioned that the Responsible Homeowners Act of 2013 will serve as the foundation for improving the Home Affordable Refinance Program (HARP). This Act will eliminate appraisal costs, reduce upfront refinancing fees, and make sure that standards are kept consistent for every lender while providing equal admittance to all borrowers in refinancing options.


The legislation was not able to win the Congressional approval in 2012. According to Menendez, America needs to make necessary relief for hardworking and responsible homeowners who are already constantly struggling to stay current on their high interest loans; the senator knows that there are thousands of such individuals in New Jersey. Menendez further emphasizes that this must be done now while interest rates are still down and that it is time that Congress gives responsible homeowners a fair opportunity at refinancing.


Today, the Obama administration’s HARP program is allowing borrowers, from Fannie Mae and Freddie Mac, to refinance their mortgage loans even if they owe more than their initial, principal loan, as long as they can keep up with their payments. HARP is reported to have already helped at least 1.8 million homeowners, while keeping Wells Fargo, U.S. Bancorp, and JPMorgan Chase in good standing.


However, economic experts say that HARP needs to do more for the borrowers since interest rates can’t stay low forever and, of course, the real problem is that the program proves disadvantageous for bank lender competition. Any bank that wishes to compete with a client’s current lender will have to undergo tumultuous underwriting qualifications and face more risks because Freddie Mac or Fannie Mae can make them repurchase loans, in case the borrower cancels.


This structure only allows borrowers to refinance with their current lender, unable to find better rates from others. This also creates an opportunity for lenders to charge even more expensive rates. In fact, a study conducted, from Amherst Securities Group, discovered that HARP-back borrowers are paying at least half a percentage more in interest rates, compared to borrowers with different loans. Obviously, there is a need to restructure HARP in order to pave the way for a fair and free market, bank lending system, for both lenders and borrowers.


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About alifarahpour

Ali Farahpour is the founder and president of FNC Title Services, LLC. Farahpour has nearly 20 years of experience in residential and commercial real estate settlements, with a focus on serving senior citizens through home equity conversion mortgage (“HECM”) transactions. He is a resident title insurance producer for Maryland and in addition holds several individual title insurance licenses throughout the country. More recently, Mr. Farahpour focused his skills on serving the reverse mortgage industry. In 2007 he founded FNC Title Services, LLC, a multi-state title insurance agency that specializes in closing HECM transactions. As a means to better serve his clients, Mr. Farahpour developed on-line systems that allow FNC clients to generate fees, GFEs and open and track title orders. Clients are able to close loans throughout the nation and are guided by specific FNC divisions dedicated to reverse mortgages. Mr. Farahpour runs FNC Title Services, LLC from its corporate headquarters in Rockville, Maryland and lives with his family in Bethesda, Maryland. You can read more about FNC at www.fnctitle.com
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