The Senate bill that’s expected to come up for a vote, written by Democrats Robert Menendez of New Jersey and Barbara Boxer of California, would expand the HARP program by promising lenders they won’t be forced to absorb the loss on refinanced loans that default, even if the loans weren’t originated to the standards that Fannie Mae and Freddie Mac require.
Currently, liability for bad loans that were improperly originated is only waived under HARP when lenders refinance loans that they already service. Consequently, some lenders have been refusing to refinance loans for borrowers with mortgages serviced by other banks. The bill would erase the distinction.
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