A housing bill introduced in the Senate could more than double the number of homeowners who refinance under a federal mortgage program and also more than double their potential savings, according to an estimate by researchers at Columbia University. To be eligible, homeowners must have a mortgage backed by Fannie Mae or Freddie Mac and be current on the payments.
Researchers at The Paul Milstein Center for Real Estate at Columbia Business School estimate that streamlining refinances would increase the total number of homeowners who refinance under the existing Home Affordable Refinance Program (HARP) to up to 13 million and produce potential savings of $35 billion a year. The research used assumptions that closely track most key provisions of S. 3085, a bill proposed by Senators Robert Menendez and Barbara Boxer.
The Menendez-Boxer bill would provide a direct financial boost to participating families, reduce future foreclosures and strengthen the economy. For more details, see CRL's issue brief, "Expanding, Streamlining Mortgage Refinances: Congress Can Help Millions of Homeowners Save Billions of Dollars."
In a separate analysis—attached to the issue brief—the Columbia researchers did a state-by-state estimate of eligible borrowers and interest savings. For example, their analysis shows that in California, more than 1.3 million homeowners would be eligible for streamlined refinances, saving these families $5.6 billion a year.
The benefits of expanding refinances have been compelling enough to attract interest on both sides of the aisle. "At a time when agreement is rare in Congress, everyone should come together to encourage more refinances," said Mike Calhoun, CRL President. "We urge Congress to go forward with this legislation as it is, with no controversial side provisions that could derail this important bill or undercut consumer protections."