President Barack Obama urged Congress last night in his State of the Union to pass a bill that would expand and streamline homeowners’ ability to refinance at today’s low rates.

"Today, our housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent, and construction is expanding again," Obama said.

"But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it."

The interest rate for a 30-year fixed-rate mortgage averaged 3.53 percent at the end of last week — near historic lows.

"Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates," Obama said.

"Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill. Right now, overlapping regulations keep responsible young families from buying their first home. What’s holding us back? Let’s streamline the process, and help our economy grow."

The bill, S. 249, The Responsible Homeowner Refinancing Act of 2013, is currently awaiting action by the Senate Committee on Banking, Housing and Urban Affairs after being reintroduced last week by Sen. Robert Menendez, D-N.J., and Sen. Barbara Boxer, D-Calif.

"Congress should heed the president’s call and immediately pass our refinancing bill to put $3,000 a year into the pockets of middle-class families before interest rates go up and it’s too late. We need to bring much-needed relief now to hard-working, responsible homeowners who are struggling to keep up with their high-interest-rate loans — including thousands in New Jersey whom I have heard from," said Sen. Menendez in a statement.

"It’s time that Congress finally put families first and give homeowners who have played by the rules a fair chance to refinance at today’s low rates. Not only will this bill help put thousands of dollars back into the pockets of New Jersey families who are trying to pay their bills and keep their homes, but it does so at no cost to taxpayers and will expand our economy."

The bill would streamline refinancing for borrowers who are making their payments on mortgages held by Fannie Mae and Freddie Mac regardless of whether they are underwater; increase competition between lenders in order to reduce costs for borrowers; forbid Fannie and Freddie from charging upfront fees to refinance any loan they already guarantee; eliminate appraisal costs for all borrowers; eliminate employment and income verification requirements to refinance; and extend the Home Affordable Refinance Program (HARP) an additional year to the end of 2014. The program is currently set to expire on Dec. 31.

"This bill is a win-win-win," Sen. Boxer said in a statement. "Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum. That’s why the Menendez-Boxer bill has such broad support from industry and consumer groups."

Boxer cited more than three dozen industry and consumer groups in favor of the bill, including the National Association of Realtors, the Mortgage Bankers Association, the National Association of Home Builders, the Center for Responsible Lending, and the Consumer Federation of America.

The bill differs from Obama’s State of the Union proposal in one crucial way, however: The bill applies only to borrowers with loans held by Fannie Mae and Freddie Mac, not borrowers with private loans.

One year ago, the Obama administration proposed the Federal Housing Administration (FHA) back mortgage refinancings for those without government-guaranteed loans, but that effort didn’t go anywhere when it became clear the FHA’s reserves were at risk of collapse, the Wall Street Journal reported.

Nonetheless, the administration may soon introduce a program that would allow Fannie and Freddie to purchase newly refinanced private mortgages, the Journal said.

The Obama administration has said it wants to see the government gradually reduce its role in mortgage lending to make way for the return of private capital. To that end and to shore up FHA reserves, the agency has tightened its underwriting requirements and raised mortgage insurance premiums three times in the past two years.

At the end of January, the government announced it would shut down FHA’s standard fixed-rate reverse mortgage program, reverse a policy that automatically canceled required premium payments after loans reached 78 percent of their original value, require manual underwriting of loans for borrowers with FICO credit scores below 620 and a total debt-to-income ratio of more than 43 percent, and increase the minimum down payment on jumbo mortgages to 5 percent, among other changes.

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