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S. 3085, Responsible Homeowner Refinancing Act of 2012 1 (August 24, 2012)

handle is hein.congrec/cbo10886 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE COST ESTIMATE August 24, 2012 S. 3085 Responsible Homeowner Refinancing Act of 2012 As introduced in the United States Senate on May 10, 2012 SUMMARY The Home Affordable Refinance Program (HARP) is administered by the Federal Housing Finance Agency (FHFA) to assist certain homeowners with refinancing mortgages that are guaranteed by Fannie Mae and Freddie Mac, also known collectively as the housing government-sponsored enterprises, or GSEs. S. 3085 would require the FHFA to expand the number of homeowners that are eligible to participate in HARP and reduce the initial costs of the program to homeowners. The bill also would: * Relieve lenders of certain representation and warranty liabilities on mortgages that they agree to refinance under HARP; * Require junior lien holders or mortgage insurers that block a mortgage from being refinanced under HARP to pay 5 percent of the first mortgage balance except in some cases; and * Allow lenders to choose whether to confirm the employment status of borrowers seeking refinancing under HARP. CBO estimates that enacting S. 3085 would cause more homeowners to refinance their mortgages through HARP than would be expected under current law. Those additional mortgages would affect the federal budget in two ways. First, we expect that more newly refinanced mortgages would lower costs to the GSEs because with lower mortgage payments, fewer homeowners would be expected to default. Although the GSEs are legally private firms, CBO has considered their operations to be a part of the federal budget since the firms entered conservatorship controlled by the Federal Housing Finance Agency in September 2008. CBO's estimates of future budget deficits include the estimated net present value of mortgage guarantees expected to be made by the GSEs, including an adjustment for market risk.

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