II 

112TH CONGRESS 

2D SESSION S. 3085 

To provide for the expansion of affordable refinancing of mortgages held 

by the Federal National Mortgage Association and the Federal Home 

Loan Mortgage Corporation. 

IN THE SENATE OF THE UNITED STATES 

MAY 10, 2012 

Mr. MENENDEZ (for himself, Mrs. BOXER, Mr. REED, Mr. MERKLEY, Ms. 

STABENOW, Mr. DURBIN, Mr. FRANKEN, Mr. BEGICH, Mrs. FEINSTEIN, 

Mr. LAUTENBERG, and Mr. SCHUMER) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To provide for the expansion of affordable refinancing of 

mortgages held by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Responsible Home5 owner Refinancing Act of 2012’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act— 


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1 (1) the term ‘‘current borrower’’ means a mort2 gagor who is current on the subject mortgage at the 

3 time of the refinancing, and has had no late pay4 ments in the preceding 6 months and not more than 

5 1 late payment in the preceding 12 months; 

6 (2) the term ‘‘eligible mortgage’’ means any 

7 mortgage that— 

8 (A) is an existing first mortgage that was 

9 made for purchase of, or refinancing of another 

10 first mortgage on, a 1- to 4-family dwelling, in11 cluding a condominium or a share in a coopera12 tive ownership housing association, on or before 

13 May 31, 2010; 

14 (B) is owned or guaranteed by an enter15 prise; 

16 (C) with respect to which, the mortgagor is 

17 a current borrower; and 

18 (D) includes existing first mortgages with 

19 a loan-to-value ratio of less than 80 percent. 

20 (3) the term ‘‘enterprise’’ means the Federal 

21 National Mortgage Association and the Federal 

22 Home Loan Mortgage Corporation; 

23 (4) the terms ‘‘FHFA’’ and ‘‘Director’’ mean 

24 the Federal Housing Finance Agency and the Direc25 tor thereof, respectively; 


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1 (5) the terms ‘‘Home Affordable Refinance Pro2 gram’’ and ‘‘Program’’ mean the Home Affordable 

3 Refinance Program, administered by the FHFA and 

4 the enterprises as part of the Making Home Afford5 able initiative announced on March 4, 2009; 

6 (6) the term— 

7 (A) ‘‘LTV’’ means loan-to-value, or the 

8 ratio of the amount of the primary mortgage on 

9 a property to the value of that property; and 

10 (B) ‘‘CLTV’’ means combined loan-to11 value, or the ratio of all mortgage debt on a 

12 property to the value of the property; 

13 (7) the term ‘‘junior lien’’ means a mortgage on 

14 the same property that is— 

15 (A) used as collateral for the eligible mort16 gage; and 

17 (B) in a subordinate position in terms of 

18 priority and recording status; 

19 (8) the term ‘‘same servicer’’ means a lender 

20 that is providing refinancing for a borrower whose 

21 loan they already service; 

22 (9) the term ‘‘qualified lender’’ means a lender 

23 who is eligible to make refinancing loans under the 

24 Program; 


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1 (10) the terms ‘‘guarantee fee’’ has the same 

2 meanings as in section 1327(a) of the Housing and 

3 Community Development Act of 1992 (12 U.S.C. 

4 4547(a)); and 

5 (11) the term ‘‘average fees’’ means the average 

6 contractual fee rate of single-family guaranty ar7 rangements by an enterprise entered into during 

8 2012, plus the recognition of any up-front cash pay9 ments over an estimated average life, expressed in 

10 terms of basis points, such definition to be inter11 preted in a manner consistent with the annual re12 port on guarantee fees by the FHFA. 

13 SEC. 3. STREAMLINED REFINANCING CRITERIA. 

14 (a) IN GENERAL.—In carrying out the Home Afford15 able Refinance Program, each enterprise shall adopt and 

16 adhere to the criteria established under this section. 

17 (b) BORROWER ELIGIBILITY.—The enterprises shall 

18 include as eligible borrowers in the Home Affordable Refi19 nance Program all current borrowers who have an eligible 

20 mortgage and meet those underwriting requirements for 

21 eligibility for same servicer refinancing in the Program as 

22 of March 1, 2012, except that the enterprises may not 

23 disqualify or impose varying rules within the Program for 

24 borrowers based on LTV, CLTV, employment status or 

25 income. 


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1 (c) REPRESENTATIONS AND WARRANTIES.—The en2 terprises shall not require of any lender providing a loan 

3 under the Program any representations or warranties for 

4 such a loan— 

5 (1) for the value, marketability, condition, or 

6 property type, as evidenced by the appraisal or alter7 native valuation methods, if that lender complies 

8 with the enterprises’ required methods and stand9 ards for ordering an appraisal under the Program; 

10 or 

11 (2) that are not required of same servicers 

12 under the Program as of March 1, 2012, whether 

13 that loan is manually underwritten or underwritten 

14 through an automated system, except that, under no 

15 circumstances shall greater representations and war16 ranties be required for a loan that is manually un17 derwritten than for one that is underwritten through 

18 an automated system. 

19 (d) PROHIBITION ON UP-FRONT FEES.—In carrying 

20 out the Program, the enterprises may not charge the 

21 qualified lender any loan level price adjustment, post set22 tlement delivery fee, adverse delivery charge, or other simi23 lar up-front fee. 

24 (e) APPRAISALS.—The enterprises shall develop and 

25 allow alternative streamlined methods to determine the 


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1 value of the property for which refinancing is sought 

2 through the Program that eliminate the costs to the bor3 rower and lender associated with such determination. 

4 Until such time as such method is developed, and when 

5 the existing automated valuation models of the enterprises 

6 are unable to determine the value of a certain property 

7 for which refinancing is sought through the Program, the 

8 enterprises shall bear the costs associated with the use of 

9 manual appraisal of that property, without passing on 

10 such costs to the borrower or lender. 

11 (f) RESUBORDINATION OF JUNIOR LIENS.— 

12 (1) IN GENERAL.—If the holder of a junior lien 

13 fails to resubordinate that lien, thereby preventing 

14 the refinancing of the eligible mortgage through the 

15 Program into a new mortgage, the holder of the jun16 ior lien shall be liable for an amount equal to 5.0 

17 percent of the first mortgage balance, unless— 

18 (A) the new mortgage would increase the 

19 first mortgage payment; 

20 (B) the new mortgage would increase the 

21 loan balance by more than 3 percent or $3,000, 

22 whichever is greater; 

23 (C) the new mortgage is an adjustable rate 

24 mortgage or has a term exceeding 30 years; 


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1 (D) the borrower has violated the due-on2 sale clause at any time; 

3 (E) the subordination would put the junior 

4 lien at risk of a bankruptcy strip down; 

5 (F) the lender seeking to originate the loan 

6 through the Program has a lien on the original 

7 loan, or services the loan for a party, that is al8 ready in a junior position to the junior lien 

9 holder; or 

10 (G) the underlying trust documents for the 

11 junior lien, as of March 1, 2012, explicitly pro12 hibit the servicer of the junior lien from impact13 ing the security interest of the notes through 

14 resubordination. 

15 (2) FHFA AUTHORITY.—At the discretion of 

16 the Director, the FHFA may add to the list of ex17 ceptions in paragraph (1) additional exceptions when 

18 the Director determines a refinance would signifi19 cantly increase the risk faced by the junior lien hold20 er, and in which a failure to resubordinate would be 

21 justifiable. 

22 (3) ACTIONS BY ENTERPRISES.—Upon submis23 sion to an enterprise of documentation by a qualified 

24 lender or eligible borrower that the holder of a jun25 ior lien has failed to resubordinate its lien, thereby 


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1 preventing the refinancing of the eligible mortgage 

2 through the Program into a new mortgage, the en3 terprise shall charge the junior lien holder and re4 coup the fine described in paragraph (1), as applica5 ble, and shall apply the payment to the balance of 

6 the borrower’s first mortgage. 

7 (4) LIMITATIONS ON LIABILITIES.—A junior 

8 lien holder shall not be liable to the enterprise or to 

9 anyone else for the fine described in paragraph (1) 

10 if, within 30 days of the enterprise’s written deter11 mination that a junior lien holder has failed to re12 subordinate its lien for any reason other than those 

13 specified in paragraph (1), that lien holder agrees to 

14 resubordinate its lien in compliance with this sec15 tion. 

16 (g) CARRYOVER OF MORTGAGE INSURANCE.— 

17 (1) IN GENERAL.—If a mortgage insurer back18 ing an eligible mortgage fails to transfer coverage to 

19 a new mortgage refinanced through the Program or 

20 places additional underwriting criteria or fees be21 yond those required by the Program as a condition 

22 of transfer approval, thereby preventing the refi23 nancing of the eligible mortgage through the Pro24 gram, that mortgage insurer shall be liable for an 


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1 amount equal to 5.0 percent of the first mortgage 

2 balance, unless the new mortgage— 

3 (A) would increase the first mortgage pay4 ment; 

5 (B) would increase the loan balance by 

6 more than 3 percent or $3,000, whichever is 

7 greater; 

8 (C) is an adjustable rate mortgage or has 

9 a term exceeding 30 years; or 

10 (D) the borrower has violated the due-on11 sale clause at any time. 

12 (2) ACTIONS BY ENTERPRISES.—Upon submis13 sion to an enterprise of documentation by a qualified 

14 lender or eligible borrower that the mortgage insurer 

15 has prevented the refinance of an eligible mortgage 

16 through the Program into a new mortgage, the en17 terprise shall charge the mortgage insurer and re18 coup the fine described in paragraph (1), as applica19 ble, and shall apply the payment to the balance of 

20 the borrower’s first mortgage. 

21 (3) LIMITATION ON LIABILITY.—A mortgage in22 surer shall not be liable to the enterprise or to any23 one else for the fine described in paragraph (1) if, 

24 within 30 days of the enterprise’s written determina25 tion that a mortgage insurer has prevented the refiVerDate Mar 15 2010 02:56 May 15, 2012 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3085.IS S3085

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1 nancing of an eligible mortgage for any reason other 

2 than those specified in paragraph (1), that mortgage 

3 insurer agrees to transfer coverage in compliance 

4 with this section. 

5 (h) LIMITATION.—Notwithstanding any other provi6 sion of law, the enterprises shall not be prevented from 

7 purchasing or guaranteeing a mortgage resulting from the 

8 refinancing of an eligible mortgage pursuant to this sec9 tion and subject to all other provisions of this section. 

10 (i) GUARANTEE FEES.— 

11 (1) IN GENERAL.— 

12 (A) AVERAGE FEE.—On each mortgage re13 financed under the Program in accordance with 

14 this section, the enterprises shall set the aver15 age fee required under this Act, as determined 

16 by the Director in an amount not less than the 

17 average fees imposed in 2012 for such guaran18 tees. The Director shall prohibit an enterprise 

19 from offsetting the cost of the fee to the mort20 gage originators, borrowers, and investors by 

21 decreasing other charges, fees, or premiums, or 

22 in any other manner. 

23 (B) AUTHORITY TO LIMIT OFFER OF

24 GUARANTEE.—The Director shall prohibit an 

25 enterprise from consummating any offer for a 


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1 guarantee to a lender for mortgage-backed se2 curities, if the guarantee is inconsistent with 

3 the requirements of this section. 

4 (2) INFORMATION COLLECTION AND ANAL5 YSIS.—The Director shall require each enterprise to 

6 provide to the Director, as part of its annual report 

7 submitted to Congress, for loans refinanced under 

8 the Program— 

9 (A) a description of changes made to up10 front fees and annual fees as part of the guar11 antee fees negotiated with lenders; and 

12 (B) an assessment of how the changes in 

13 the guarantee fees described in subparagraph 

14 (A) met the requirements of paragraph (1). 

15 (j) REGULATIONS.—Not later than 30 days after the 

16 date of enactment of this Act, the Director shall issue any 

17 regulations or guidance necessary to carry out the changes 

18 to the Program established under this section, which regu19 lations or guidance shall be put into effect not later than 

20 90 days after the date of enactment of this Act. 

21 (k) TERMINATION.—The requirements of this section 

22 shall expire concurrent with the expiration of the Pro23 gram. 


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1 SEC. 4. INFORMATION FOR BORROWERS ON ELIGIBILITY 

2 FOR THE PROGRAM. 

3 (a) NOTICE TO BORROWERS.—Not later than 60 

4 days after the date of enactment of this Act, the enter5 prises shall notify all borrowers with a mortgage owned 

6 or guaranteed by an enterprise about the Program and 

7 its eligibility criteria, and inform borrowers of the website 

8 required under subsection (b). 

9 (b) PUBLIC ACCESS TO ELIGIBILITY CRITERIA.—The 

10 Director shall establish, and the enterprises shall display 

11 a link on their homepages to, a single website where bor12 rowers may— 

13 (1) determine their potential eligibility for par14 ticipation in the Program; 

15 (2) see a complete list of and links to partici16 pating lenders; 

17 (3) use a mortgage refinance calculator to cal18 culate potential payment savings based on different 

19 interest rates; and 

20 (4) obtain tips on refinancing their loan. 

21 SEC. 5. CONSISTENT REFINANCING GUIDELINES RE22 QUIRED. 

23 Not later than 60 days after the date of enactment 

24 of this Act, the FHFA shall issue guidance to require the 

25 enterprises to make their refinancing guidelines consistent 

26 to ease lender compliance requirements, and in particular 


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1 with respect to loans with less than an 80 percent loan2 to-value ratio and closing cost policies of the enterprises, 

3 which regulations or guidance shall be put into effect not 

4 later than 90 days after the date of enactment of this Act. 

5 SEC. 6. PROGRESS REPORTS. 

6 The Director shall provide to Congress monthly re7 ports on the progress of the Program, and each enterprise 

8 shall include and disclose, as part of its filings with the 

9 Securities and Exchange Commission on Form 10–Q, 

10 Form 10–K, or any successors thereto, detailed informa11 tion on each enterprise’s progress and results in imple12 menting and executing the Program. 

Æ 


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