Federal bills would help underwater homeowners refinance

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Back in February, President Obama announced a package of initiatives designed to make refinancing easier for underwater homeowners. The proposals have been crafted into legislative language and need Congressional approval to help homeowners take advantage of historically low interest rates, saving homeowners an estimated $3,000 per year.
Negative equity is a significant drain on the housing market, making it harder to sell homes and driving new foreclosures. RHOPI partner Woodstock Institute's research has shown that negative equity is a big problem in the Chicago area, particularly in communities of color. Nearly half of homeowners with mortgages in communities of color have little to no equity in their homes, compared to less than one-in-five homeowners with mortgages in predominantly white communities. Due to declining home values, communities of color have lost substantial wealth and have limited access to refinances that could help make homeownership more affordable. 
The refinance proposal has been broken into three separate pieces of legislation:
-The Responsible Homeowner Refinancing Act of 2012 (S.3085, introduced by Sens. Menendez and Boxer): This bill would make it easier for underwater homeowners with mortgages backed by Fannie Mae and Freddie Mac to refinance. Homeowners must be current on their loans to qualify. Specifically, the bill would encourage competition among lenders so borrowers can get lower rates, streamline the application and qualification process, prohibit upfront fees, and fine junior lienholders and mortgage insurers who try to block a refinance.
- The Rebuilding Equity Act of 2012 (S.2909, introduced by Sen. Jeff Merkley): This bill encourages homeowners to refinance into a shorter-term loan (up to 20 years), which would allow them to pay down equity faster. The Obama administration estimates that homeowners choosing this option could bring their homes above water within five years. Fannie Mae and Freddie Mac would be required to pay the closing costs of participating homeowners.
- Expanding Refinancing Opportunities Act of 2012 (S.3047, introduced by Sen. Feinstein): This bill would create a $6 billion fund within the Federal Housing Authority (FHA) through which current, underwater homeowners with non-GSE-backed mortgages could refinance their loans. The program would be funded by existing fees lenders pay to Fannie Mae, Freddie Mac, and FHA.
For more details on what’s in the proposal, you can read Woodstock Institute's summary from the State of the Union address or watch the White House video below explaining its key components.
Find out if you would qualify to refinance under the proposed legislation. 
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