WASHINGTON, DC – March 3, 2011 – (RealEstateRama) — Rep. Carolyn Maloney (D-NY) today introduced an amendment to H.R. 830, “FHA Refinance Program Termination Act”, sponsored by Rep Robert J. Dold (R-IL), to require 500,000 additional underwater mortgages be refinanced by the Federal Housing Administration before the refinance program is terminated. Maloney made the following statement in introducing the amendment today in a markup on the bill before the House Financial Services Committee:
Mr. Chairman, This amendment will allow for the termination of the FHA Refinance Program but only after 500,000 underwater mortgages have been refinanced.
The FHA Refinance program allows qualifying homeowners who are underwater and owe more money on their mortgage than the house’s value to refinance their full amount owed as an FHA insured loan.
The FHA program makes it possible for non-GSE underwater borrowers, who are still current on their payments, to obtain affordable refinancing. Refinancing is a viable and sustainable option to a loan modification especially for borrowers with exotic loan products like Option ARMS and Interest Only teaser rates.
The program was announced in March 2010, but did not become available until September 7, 2010. It is still in its infancy but it is a worthy program.
In fact, just this week, Citibank, Wells and GMAC have indicated their intent to participate in the program.
The program allows borrowers to write down at least 10% to reduce the debt burden. Then, standard FHA loan terms will apply. As with all FHA-insured loans, the property must be the homeowner’s primary residence and the borrower must meet the FHA’s full documentation.
With declining home values, borrowers are caught in mortgages that they can no longer afford because their rates have reset or because their interest-only payments have not allowed them to grow any equity in their homes.
They are making their payments – but just barely.
States across the country have this problem. Nationally, 2.3 million mortgages are underwater, or 22.5% of all outstanding mortgages. If we can help 500,000 of those, we have made an enormous difference in the lives of people who are struggling to keep their homes and make their mortgage payments each month.
Now, like the other three bills that are before the committee today, no alternatives are proposed. Instead, the choice seems to be to cut and leave these 2.3 million mortgages untouched and to allow delinquency and eventual foreclosure.
I believe that is wrong. I believe we can and should use this program to help people. And if you want to ensure termination, you can still vote for my amendment. But let’s give this program a chance to work.
I yield back the balance of my time.
A copy of Maloney’s amendment to HR 830 can be viewed here. (pdf)
Contact:
Jon Houston, 202-225-7944
