One of the nation’s largest mortgage lenders currently has policies in place that may work to prevent some borrowers from refinancing their existing home loan, and top lawmakers are calling them out on it.
Three U.S. Senators recently wrote a letter regarding the American International Group’s mortgage insurance unit, the United Guaranty Corp, to say that it is the only mortgage issuer in the U.S. to not yet remove the policies it has in place against refinancing in the wake of the recession, according to a report from Bloomberg News. The lawmakers — Democratic Sens. Barbara Boxer of Calif., Robert Menendez of N.J. and Herb Kohl of Wis. — addressed the letter to AIG chief executive officer Kim Garland.
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“United Guaranty’s policies are harmful both to your customers and to the taxpayers,” the senators wrote in the letter. “This is particularly troubling given that United Guaranty is a subsidiary of American International Group, which itself has benefited from taxpayer assistance.”
For its part, United Guaranty notes it has participated in the federal government’s Home Affordable Refinance Program, which has helped to restructure more than $5.3 billion worth of mortgages across the country, the report said. However, late last year it was discovered that the company has not afforded borrowers the protections its competitors have under HARP, which has come into more stark focus as a result of the government attempting to expand the program in recent months so that more homeowners can qualify.
HARP — and the associated Home Affordable Modification Program, or HAMP — has long been criticized by some housing experts as being too restrictive in the kinds of homeowners it covers, hence the attempts to broaden qualifications over the past few months. In its original form, even some of the most financially distressed borrowers found that their applications for a government-assisted refinance were rejected.
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Today, housing affordability is at an all-time high thanks to a confluence of factors, including record-low mortgage rates, which may aid in helping more troubled borrowers get more affordable home loans terms so that they can keep their properties and not face the strain of foreclosure. However, even those who do not qualify may be able to find other, similar programs that can likewise help them to stay in their homes.
Image: magic_bee, via Flickr