Cardoza bill offers help for homeowners

WASHINGTON -- Taxpayers would help financially strapped homeowners refinance their mortgages at lower interest rates under a familiar-looking bill introduced Tuesday by Rep. Dennis Cardoza, D-Merced.

Citing the San Joaquin Valley's housing crisis, Cardoza revised a similar mortgage assistance bill he wrote last year. The concept remains the same: The federal government would assist homeowners in lowering their mortgage interest.

The bill potentially would extend to an estimated 30 million mortgages owned or guaranteed by Fannie Mae or Freddie Mac. The two government-sponsored enterprises essentially would let every mortgage holder refinance to current interest rates. For a fixed, 30-year mortgage, the going rate is about 4.3 percent.

Fannie Mae and Freddie Mac would issue new mortgage-backed securities to pay off the existing ones.

A formal cost estimate has not been prepared by the Congressional Budget Office. Cardoza predicted the bill would save the government money as mortgage interest deductions decline because of the refinancing.

A similar bill introduced in January 2009, when interest rates were higher, was estimated to cost $100 billion or more. Cardoza said his revised program "costs a heck of a lot less."

For individual homeowners, the savings could prove considerable. For example, a 30-year, fixed $250,000 mortgage at 7 percent interest would require monthly payments of $1,663. The same mortgage at 4.3 percent interest would require monthly payments of $1,237.

The prospects for Cardoza's bill are uncertain. Within days, Congress will take a break for campaigning. When lawmakers return after November, they will be confined by the prospect of political power potentially shifting next year.

Sixteen House members joined Cardoza in introducing the bill.

Bee Washington Bureau reporter Michael Doyle can be reached at or 202-383-0006.