II 

Calendar No. 503 

112TH CONGRESS 

2D SESSION S. 3522 

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 

SEPTEMBER 10, 2012 

Mr. MENENDEZ (for himself, Mrs. BOXER, Mrs. FEINSTEIN, Mr. WYDEN, Mr. 

DURBIN, Mr. SCHUMER, Mrs. GILLIBRAND, Ms. STABENOW, Mr. REED, 

Mr. LAUTENBERG, Mr. FRANKEN, Mr. MERKLEY, and Mr. SANDERS) introduced the following bill; which was read the first time 

SEPTEMBER 11, 2012 

Read the second time and placed on the calendar 

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, 

mstockstill on DSK4VPTVN1PROD with BILLS

2 

•S 3522 PCS

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Responsible Home3 owner Refinancing Act of 2012’’. 

4 SEC. 2. DEFINITIONS. 

5 In this Act— 

6 (1) the term ‘‘current borrower’’ means a mort7 gagor who is current on the subject mortgage at the 

8 time of the refinancing, and has had no late pay9 ments in the preceding 6 months and not more than 

10 1 late payment in the preceding 12 months; 

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

12 mortgage that— 

13 (A) is an existing first mortgage that was 

14 made for purchase of, or refinancing of another 

15 first mortgage on, a 1- to 4-family dwelling, in16 cluding a condominium or a share in a coopera17 tive ownership housing association; 

18 (B) was originated or refinanced on or be19 fore May 31, 2009, unless that date is extended 

20 by the Director under FHFA’s preexisting au21 thority to do so; 

22 (C) is owned or guaranteed by an enter23 prise; 

24 (D) with respect to which, the mortgagor 

25 is a current borrower; and 

mstockstill on DSK4VPTVN1PROD with BILLS

3 

•S 3522 PCS

1 (E) includes existing first mortgages with 

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

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

4 National Mortgage Association and the Federal 

5 Home Loan Mortgage Corporation; 

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

7 the Federal Housing Finance Agency and the Direc8 tor thereof, respectively; 

9 (5) the terms ‘‘Home Affordable Refinance Pro10 gram’’ and ‘‘Program’’ mean the Home Affordable 

11 Refinance Program, administered by the FHFA and 

12 the enterprises as part of the Making Home Afford13 able initiative announced on March 4, 2009; 

14 (6) the term— 

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

16 ratio of the amount of the primary mortgage on 

17 a property to the value of that property; and 

18 (B) ‘‘CLTV’’ means combined loan-to19 value, or the ratio of all mortgage debt on a 

20 property to the value of the property; 

21 (7) the term ‘‘same servicer’’ means a lender 

22 that is providing refinancing for a borrower whose 

23 loan they already service; 

24 (8) the term ‘‘qualified lender’’ means a lender 

25 that is participating in the Program; 

mstockstill on DSK4VPTVN1PROD with BILLS

4 

•S 3522 PCS

1 (9) the term ‘‘guarantee fee’’ has the same 

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

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

4 4547(a)); and 

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

6 contractual fee rate of single-family guaranty ar7 rangements charged by an enterprise on April 1, 

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 UNDER 

14 THE PROGRAM. 

15 (a) IN GENERAL.—In carrying out the Home Afford16 able Refinance Program, each enterprise shall adopt and 

17 adhere to the criteria established under this section. 

18 (b) BORROWER ELIGIBILITY.—The enterprises shall 

19 include as eligible borrowers in the Home Affordable Refi20 nance Program all current borrowers who have an eligible 

21 mortgage and meet those underwriting requirements for 

22 eligibility for same servicer refinancing in the Program as 

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

24 disqualify or impose varying rules within the Program for 

mstockstill on DSK4VPTVN1PROD with BILLS

5 

•S 3522 PCS

1 borrowers based on LTV, CLTV, employment status or 

2 income. 

3 (c) ADDITIONAL RELIEF FROM REPRESENTATIONS

4 AND WARRANTIES.—The enterprises shall not require of 

5 any qualified lender executing a loan under the Program 

6 any representations or warranties— 

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

8 property type of the loan, as such loan characteris9 tics are evidenced by an appraisal or alternative 

10 valuation method, provided that the lender complies 

11 with the enterprises’ required methods and stand12 ards for ordering an appraisal under the Program; 

13 or 

14 (2) that are not required of same servicers 

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

16 that loan is manually underwritten or underwritten 

17 through an automated system, except that, under no 

18 circumstances shall greater representations and war19 ranties be required for a loan that is manually un20 derwritten than for one that is underwritten through 

21 an automated system. 

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

23 out the Program, the enterprises may not charge the 

24 qualified lender any loan level price adjustment, post setmstockstill on DSK4VPTVN1PROD with BILLS

6 

•S 3522 PCS

1 tlement delivery fee, adverse delivery charge, or other simi2 lar up-front fee. 

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

4 allow alternative streamlined methods to determine the 

5 value of the property for which refinancing is sought 

6 through the Program that eliminate the costs to the bor7 rower and qualified lender associated with such determina8 tion. Until such time as such method is developed, and 

9 when the existing automated valuation models of the en10 terprises are unable to determine the value of a certain 

11 property for which refinancing is sought through the Pro12 gram, the enterprises shall bear the costs associated with 

13 the use of manual appraisal of that property, without 

14 passing on such costs to the borrower or qualified lender. 

15 (f) LIMITATION.—Notwithstanding any provision of 

16 the Federal National Mortgage Association Charter Act 

17 (12 U.S.C. 1716 et seq.) or the Federal Home Loan Mort18 gage Corporation Act (12 U.S.C. 1451 et seq.), an enter19 prise may purchase or guarantee any new mortgage result20 ing from the refinancing of an eligible mortgage pursuant 

21 to this section, if at the time of origination of the eligible 

22 mortgage, the eligible mortgage complied with the applica23 ble limitation governing the maximum original principal 

24 obligation on conventional mortgages that may be pur25 chased or guaranteed by that enterprise. 

mstockstill on DSK4VPTVN1PROD with BILLS

7 

•S 3522 PCS

1 (g) GUARANTEE FEES.— 

2 (1) IN GENERAL.— 

3 (A) AVERAGE FEE.—On each mortgage re4 financed under the Program in accordance with 

5 this section, the enterprises shall set the aver6 age fee required under this Act, as determined 

7 by the Director in an amount not less than the 

8 average fees charged by the enterprises as of 

9 April 1, 2012, for such guarantees. The Direc10 tor shall prohibit an enterprise from offsetting 

11 the cost of the fee to the mortgage originators, 

12 borrowers, and investors by decreasing other 

13 charges, fees, or premiums, or in any other 

14 manner. 

15 (B) AUTHORITY TO LIMIT OFFER OF

16 GUARANTEE.—The Director shall prohibit an 

17 enterprise from consummating any offer for a 

18 guarantee to a qualified lender for mortgage19 backed securities, if the guarantee is incon20 sistent with the requirements of this section. 

21 (2) INFORMATION COLLECTION AND ANAL22 YSIS.—The Director shall require each enterprise to 

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

24 submitted to Congress, for loans refinanced under 

25 the Program— 

mstockstill on DSK4VPTVN1PROD with BILLS

8 

•S 3522 PCS

1 (A) a description of changes made to up2 front fees and annual fees as part of the guar3 antee fees negotiated with qualified lenders; and 

4 (B) an assessment of how the changes in 

5 the guarantee fees described in subparagraph 

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

7 (h) REGULATIONS.—Not later than 30 days after the 

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

9 regulations or guidance necessary to carry out the changes 

10 to the Program established under this section, which regu11 lations or guidance shall be put into effect not later than 

12 90 days after the date of enactment of this Act. 

13 (i) TERMINATION.—The requirements of this section 

14 shall expire concurrent with the expiration of the Pro15 gram. 

16 (j) RULE OF CONSTRUCTION.— 

17 (1) IN GENERAL.—Nothing in this section shall 

18 be construed to supersede, preempt, or otherwise 

19 nullify the requirement that a loan refinanced under 

20 the Program must benefit the borrower. 

21 (2) DEFINITION.—For purposes of paragraph 

22 (1), a loan refinanced under the Program benefits 

23 the borrower, if the refinanced loan results in— 

24 (A) reduction in payment; 

25 (B) reduction in interest rate; 

mstockstill on DSK4VPTVN1PROD with BILLS

9 

•S 3522 PCS

1 (C) movement to a more stable product, 

2 such as from an adjustable rate mortgage to a 

3 fixed rate mortgage; or 

4 (D) reduction in amortization term. 

5 SEC. 4. INFORMATION FOR BORROWERS ON ELIGIBILITY 

6 FOR THE PROGRAM. 

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

8 days after the date of enactment of this Act, the enter9 prises shall notify all borrowers with a mortgage owned 

10 or guaranteed by an enterprise about the Program and 

11 its eligibility criteria, and inform borrowers of the website 

12 required under subsection (b). 

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

14 Director shall establish, and the enterprises shall display 

15 a link on their homepages to, a single website where bor16 rowers may— 

17 (1) determine their potential eligibility for par18 ticipation in the Program; 

19 (2) see a complete list of and links to qualified 

20 lenders; 

21 (3) use a mortgage refinance calculator to cal22 culate potential payment savings based on different 

23 interest rates; and 

24 (4) obtain tips on refinancing their loan. 

mstockstill on DSK4VPTVN1PROD with BILLS

10 

•S 3522 PCS

1 SEC. 5. CONSISTENT REFINANCING GUIDELINES RE2 QUIRED. 

3 Not later than 60 days after the date of enactment 

4 of this Act, the Director shall issue guidance to require 

5 the enterprises to make their refinancing guidelines con6 sistent to ease the compliance requirements of qualified 

7 lenders, and in particular with respect to loans with less 

8 than an 80 percent loan-to-value ratio and closing cost 

9 policies of the enterprises, which regulations or guidance 

10 shall be put into effect not later than 90 days after the 

11 date of enactment of this Act. 

12 SEC. 6. PROGRESS REPORTS. 

13 The Director shall provide to Congress monthly re14 ports on the progress of the Program, and each enterprise 

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

16 Securities and Exchange Commission on Form 10-Q, 

17 Form 10-K, or any successors thereto, detailed informa18 tion on each enterprise’s progress and results in imple19 menting and executing the Program. 

20 SEC. 7. SEVERABILITY. 

21 If any portion of this Act or the application thereof 

22 to any person or circumstance is held invalid, such inva23 lidity shall not affect the portions or applications of this 

24 Act which can be given effect without the invalid portion 

25 or application. 

mstockstill on DSK4VPTVN1PROD with BILLS

mstockstill on DSK4VPTVN1PROD with BILLS

Calendar No. 503 

112TH CONGRESS 

2D SESSION S. 3522 

A BILL 

To provide for the expansion of affordable refiHome Loan Mortgage Corporation. tional Mortgage Association and the Federal nancing of mortgages held by the Federal NaSEPTEMBER 11, 2012 

Read the second time and placed on the calendar 

mstockstill on DSK4VPTVN1PROD with BILLS