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Congressman Jim Costa

Representing the 16th District of California

Fresno Bee: HUD leader spreads word of mortgage help in Valley

Aug 21, 2012
In The News

HUD leader spreads word of mortgage help in Valley
Secretary pitches home loan plan in Valley visit.
By BoNhia Lee - The Fresno Bee
Tuesday, Aug. 21, 2012 | 11:12 PM

The nation's top housing official was in Fresno on Tuesday to promote federal legislation that could help more underwater homeowners refinance their mortgages.

U.S. Housing and Urban Development Secretary Shaun Donovan said federal programs now allow homeowners who are current with mortgages held by Freddie Mac or Fannie Mae to refinance them at lower interest rates, even if they owe more than the home is worth.
Congressman Jim Costa, right, with U.S. Housing and Urban Development Secretary Shaun Donovan, upper left, and Fresno Mayor Ashley Swearengin, center, meet with Fresno homeowners, from lower left, Brian Burry, Jim Huff, and Elizabeth Jonasson, upper right, as they to listen to their concerns, while sharing options available to distressed homeowners, Tuesday morning, during the refinance roundtable meeting, at the HUD Fresno Field Office in downtown Fresno

Such a refinancing through the Home Affordable Refinance Program, or HARP, could shave hundreds of dollars off a homeowner's monthly mortgage and help keep them in the home, Donovan said.

But underwater homeowners whose loans are owned by banks and private mortgage companies haven't been able to participate in the Home Affordable Refinance Program, he said. Federal legislation awaiting Senate approval would allow those homeowners to refinance their loans into a federally backed mortgage.

"We have to help (homeowners) refinance," Donovan said during a news conference in downtown Fresno. "It's one of the most important things we can do for Fresno neighborhoods and homeowners, and the most important thing we can do for the economy."

Donovan did not know what percentage of Fresno's mortgages are owned by Fannie Mae and Freddie Mac, but they hold about 40% of the mortgages in California, he said.

The HARP program was established in 2009, but few homeowners were able to qualify. The Obama administration made changes last year to allow more underwater homeowners to qualify.

During a Tuesday afternoon meeting with The Fresno Bee's editorial board, Donovan said the changes have succeeded beyond HUD's expectations. In the first two years of the program, about 1 million homeowners nationally refinanced their mortgages.

Since last year's changes, about 750,000 homeowners have completed refinancings and 500,000 more are in the process, he said.

On Tuesday morning, Donovan met with housing counselors, lenders, real estate agents and homeowners to discuss the Obama administration's plan to help homeowners. The visit was part of a swing through California to promote the legislation.

The three-bill package would give underwater homeowners who are current on their loans access to refinancing no matter who owns their loan, would lower refinancing fees by creating more competition among lenders, and help homeowners pay down their principal and rebuild equity.

"When we came together last year with the president to say, 'What are the most important ideas we can put forward to help accelerate this economic recovery,' refinancing was at the top of the list," Donovan said.

In Fresno, about 46.3% of all homes with a mortgage were worth less than the loan during the first quarter of this year, according to the latest report released by CoreLogic, a real estate tracking company in Santa Ana.

"There's still too many homeowners underwater here," Donovan said.

Clovis homeowner Brian Burry, who is a retired Fresno police officer, has tried unsuccessfully for two to three years to refinance the jumbo loan on the 2,800-square-foot house he bought in 2007.

"It's very frustrating," said Burry, who was one of three homeowners who told his story to Donovan. He hopes the federal legislation could give him a chance to get a cheaper loan.

Burry's mortgage is privately owned. The payment hovers around $3,000 a month with a 6.25% interest rate. Burry said a $500 reduction in his monthly payment would provide a helpful financial cushion.

"Right now, you're an economic house slave," Burry said. "You can't move, you can't refi. You're stuck, and that doesn't seem right in America."