House Financial Services Committee leaders sent major mortgage servicers, the government-sponsored enterprises, and banking trade groups a letter Tuesday asking for assurances they will use a refinancing program expected to become operational Oct. 1.
The program, part of the housing bill President Bush signed last week, would let the Federal Housing Administration insure more mortgages.
House Financial Services Chairman Barney Frank and a handful of other committee members asked servicers whether they plan to review their portfolios to select candidates for the voluntary refinancing option and hold off foreclosing on them until it goes into effect.
Lawmakers also asked industry representatives if they are prepared to grant the principal writedowns of at least 13% below current market value required in exchange for the guarantee, and whether previous modifications would impede their willingness to conduct FHA refinancings.
The letter was sent to major servicers like Washington Mutual Inc., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., Bank of America Corp., Option One Mortgage Corp., HSBC Holdings PLC, and Litton Loan Servicing LP.
Lawmakers asked for a response by Aug. 31; the committee plans to hold a hearing on the issue Sept. 17.