Rep. Dennis Cardoza, D-Calif., has introduced legislation that he says would encourage refinancings and potentially affect up to 30 million mortgages held or backed by Fannie Mae and Freddie Mac. The Housing Opportunity and Mortgage Equity (HOME) Act would enable mortgages currently owned or guaranteed by Fannie Mae and Freddie Mac that meet certain criteria to qualify for the opportunity to refinance at historically low market rates.
According to a summary of the bill available on Cardoza's website, the subsequent refinancing activity would reduce the number of defaults and help to prevent foreclosures.
‘To fund the program, Fannie and Freddie would issue new mortgage-backed securities (MBS) to fund the refinanced mortgages and use the proceeds to pay off the existing MBS,’ the summary says. ‘Fannie and Freddie would receive the same cashflow to cover default risk that they do now, passing along the reductions in financing costs to borrowers.’
‘None of the [Obama] administration's current housing programs have been far-reaching enough to make a dent in the worst foreclosure crisis in U.S. history,’ says Cardoza. ‘Until we see a program that cuts to the heart of the recession, we will continue to see little growth in our economy, families losing their homes and lifetime investments with lost equity."
The legislation was initially introduced in January 2009 and has been modified based on input received from economists and the House Financial Services Committee, Cardoza says.
SOURCE: Office of Rep. Dennis Cardoza