We have been anticipating the improvement of the government’s Home Affordable Refinance Program (HARP) for years as it has strictly limited the program to mortgages backed by Fannie Mae or Freddie Mac – leaving millions of homeowners with little options to escape their high interest rate loans.

Yesterday, Oregon Senator Jeff Merkley introduced the Rebuilding American Homeownership Act (RAHA) to help middle class families who have been unable to secure a refinance due to their negative equity position. The legislation will save countless middle class borrowers from losing their homes. HARP will be the starting point of RAHA, so that all borrowers will have equal refinancing opportunities.

Under RAHA, HARP will be modified to enable “non-federal” backed loans to qualify for an underwater refinance, direct the GSEs to price for the risk they would be assuming and institute an automatic sunset for this program after two to three years. RAHA seeks to seeks to help struggling homeowners to lock into a lower interest rate and reduce their monthly payments.

To assist homeowners who refinance into short-term loans (20-years or less),  Merkley also introduced the
Rebuilding Equity Act to cover $1,000 in closing costs for eligible borrowers.

This call for such a bill came after President Obama’s speech on July 24th, where the nation’s leader expressed the need to build and sustain a prosperous middle class. As Merkley mentioned in his statement, the 6-year recession enabled predatory lenders to hurt underwater families with high interest loans. Merkley is a firm believer that all responsible borrowers, whether they are underwater or not, should have equal access to current refinancing programs to rebuild their wealth.

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