The Responsible Homeowners act of 2013 (SB 249) attempts to make it easier for homeowners to refinance to a lower rate by scaling back some of the previous restrictions for home loans.
U.S. Senators Barbara Boxer (D-CA) and Robert Menendez (D-NJ) are the chief sponsors of the bill. According to Sen. Menendez, “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.”
SB 249 was originally introduced in congress in 2012 but it failed to gain the support it needed in order to pass in the House of Representatives. It constructs new guidelines for the Federal National Mortgage Association Fannie Mae and Freddie Mac relating to nearly every aspect of the home loan process.
Proposed SB 249 Changes
• Extend HARP by a period of one year thereby allowing more people to take advantage of the program.
• Prohibit certain up-front fees.
• Allow for alternative streamlined methods in order to assess a home’s value.
• Allow homeowners to refinance through streamline methods regardless of whether or not their mortgage is underwater.
• Offer additional relief from representations and warranties.
Such provisions could help save homeowners thousands of dollars each year on their loan. One of the new changes would remove a previous eligibility requirement that would help pave the way for a flood of new potential HARP 3.0 applicants. HARP 2.0 required homeowners to have a perfect payment history on their mortgage for the past 12 months in order to qualify.
That requirement has been reduced to six months and allows for one delinquent payment in the past 12 months. The new requirement along with other incentives offered by SB 249 is expected to bring in a new wave of struggling homeowners looking for relief.
Of course, other qualifications still apply in order to be eligible for HARP. Homeowners still must have a mortgage that is guaranteed by either Fannie Mae or Freddie Mac. It must also have been securitized by Fannie or Freddie at or sometime before May 31, 2009. And finally, the loan-to-value (LTV) ratio on the mortgage must be at or above 80 percent.
Every version of HARP has further widened the number of homeowners who can refinance their loan. So, even if you were not able to qualify for HARP in the past, the newly relaxed standards make it worthwhile to speak with a loan officer about whether or not you currently qualify.
SB 2013 will be seen as welcome relief to millions of new homeowners who are in a constant struggle to make their monthly payments. In all, it makes the process of refinancing faster, easier and eliminates many of the upfront fees which have acted as roadblocks in the past. With rates ticking up over the past two weeks, now is an excellent time to begin saving money each month by switching over to a lower rate.
