how would menendez boxer bill remove those barriers? >> appreciate the question. so i can't speak to what the fha denies or doesn't deny. from a practicality perspective we have conversations with gs. on a regular basis. we've looked at the guidelines and understand how they operate. if i'm originating a loan, i have to fully underwrite income, assets, everything associated with it as i would with a normal loan. a servicer does not have to do that. there is no verification of income, no verification of assets. it's a very streamlined process. so it's faster for the servicer but there's also less risk. at the end of the day if we originate a loan and document income and assets and for some reason there's a mistake in that origination process the gse will put that loan back to us. when you take a look at the ltd -- gse on the risk. when you start looking at increasing loan risk to values above 25% you're going to see those loans, somebody under water will have a prior propensity to default. when that happens a person that has more risk such as a new originator today

as outlined in the menendez-boxer discussion draft would actually gave the gses money because of the reduced defaults once mortgage payments are lowered? >> all of our modeling suggests that there would be significant savings to the gses in terms of lower default rates. i think chris mayer here, professor at columbia, testified about specific numbers that he expected that exceeded $20 billion. our expectations of takeup are somewhat lower than his. but still, you're talking about substantial sums that could be saved from lower defaults. >> as a matter of fact, professor mayer at our subcommittee hearing that i chaired a few years ago estimated that the results in gse profits of as much as $23.7 billion. so whether it's your lower range or that range, the reality is you're talking about significant saving taxpayers money and reducing the size of any fiscal challenge in the future. the other question i have is, do you believe that the h.a.r.p. 2 policies, some implemented by gses, some implemented by services themselves, are reducing competition among banks and ultimately decreasing th

. >> i have one last question then shift over to the menendez and boxer legislation we've been talking about. given that a lot of the menendez-boxer proposal has been adopted or addressed through h.a.r.p. 2.0, how many additional homeowners fun, mr. secretary, how many additional homeowners do you estimate would be helped by the menendez-boxer legislation that aren't already being helped by h.a.r.p. 2.0? >> so these kind of predictions where you have a voluntary program as we just talked about are particularly hard to make. and so i'm not going to give you a specific number. what i will tell you is a range. at the very high end, christopher mayer who was here testifying before the committee thought that it would increase refinances by close to 12 million. our expectations are significantly lower than that. there's some who would estimate that it's as low as 1 million. we think that's probably too low. but somewhere in that range, i think it's fair to say millions of homeowners would be able to benefit through refinancing. there are 11 million homeowners who are what we call in the mone

applauds the menendez boxer legislation to not utilize the g fees to pay for. home ownership is inextricably linked to a healthy community and a healthy american economy. this is why the national association of realtors supports any and all efforts that support the ownership in investment and real estate and we so say. >> thank you. doctor, please begin. >> thank you, chairman johnson, senator shelby, corker, goob to be here. >> i'm chief economist at moody's and these are my views. i'm on the board of directors of ngic, a large mortgage insurer in the company. i'll make four points in my remarks. first, policy steps to facilitate more refinancing, i think, are among the most trait forward ways to help the housing market and the economy. both the economy and the housing market are making progress. we're moving in the right direction. but clearly conditions are still very weak and the risks are significant. the threat from europe, fiscal cliff, lots of threats to this very fragile recovery. i think it is important that policymakers continue, think about ways abo

how would the menendez-boxer bill remove those barriers? >> appreciate the question. i cannot speak to what the fhfa denies or does not deny but from a practicality perspective we have conversations with the gses on a regular basis and we looked at the guidelines. we understand how they operate so today i have to do a full underwrite on that transaction. i do fully underwrite an common assets and everything associated with it as they would with a normal loan. the same service or does not do that. there's no verification of income or verification of assets and it's a very streamlined process. there is also less risk because at the end of the day, if we originate loan and document incoming assets and for some reason there is a mistake in the origination process the gses will put that loan back to us. when you take a look at the ltp, when you start looking at at increasing loan-to-value above 125%, you will see that those loans, something goes bump in the night for somebody was underwater they will have a higher propensity to default them and that happens the person and

. >> one last question that shift to the menendez boxer legislation we've been talking about. given that a lot of the menendez boxer proposal has been adopted or addressed through t.a.r.p. 20, if you know mr. secretary, how many additional homeowners do you estimate would be held by the menendez boxer legislation that aren't already being hauled by h.a.r.p. 20? >> these predictions for you have a voluntary program as we just talked about are particularly hard to make. so i'm not going to give you a specific number. i will tell you range. at the very high-end, christopher mayer who was here testifying before the committee that it could increase refinances that close to 12 million. our expectations are significantly lower than now. there are some who would estimate it is as low as a million. we think that is probably too low, but somewhere in that range i think it is fair to say that millions of homeowners appealed to benefit your refinancing. as 11 million homeowners who will be called in the many could benefit from the refinance with gse loans that haven't refinanced. we don't

the proposal has been adopted -- menendez-boxer.any additional homeowners do you estimate would be helped by the menendez-boxer legislation that are not already being helped? >> these kinds of predictions where you have a voluntary program are particularly hard to make. i will not give the a specific number. i will tell you a range. at the high-end, christopher mayer thought it could increase refinances by close 12 million. our expectations are lower. some say as low as a million. we think that's probably too low. millions of home owner would be able to benefit. we do not think all of them under the criteria that were laid out -- >> how do you get them to do that? interest rates are at historic lows. the best thing anybody could do was to lower their house payments from 5.5% to 3.6%. that would put money in their pocket every month. they can refinance without penalty. >> they are not allowed to refinance. they may be above water on the first lien but have a second lien that makes it impossible for them to refinance. this would allow

menendez had, and it was a good hearing. i thought we had some good witnesses. for what it is worth, i think there are some redeeming qualities to the boxermenendez bill, also some things that i think certainly need to be changed. mr. chairman, what i am hearing -- i'm hearing rumors that some of these bills may go straight to the floor and not come through the committee. i think you can see by the committee attendance that people have come to think that not much is going to happen here a consequence. we haven't dealt with a technical corrections bill, which i think people on both sides would like to see happen. in the dodd-frank bill, we certainly haven't dealt with the gse. i am pleading with you today to please not let a bill that candidly could receive some bipartisan support go to the floor and turned to something that is certainly not that. i hope that the chairman will not let the rumors that we are hearing become a reality -- any of these bills going directly to the floor and not to the committee. i do want to get back to the secretary. i know you spent time on the ag settlement. i think one of the things that is coming out right

senators menendez and boxer very well a substantive bill that seeks to provide relief and assistance to responsible homeowners. and i hope we can work together to move it forward. >> mr. chairman, before you -- >> yes. >> -- close the hearing. what i said to senator corker as he was leaving -- unfortunately, he had to leave. just for the record, the question -- our legislation does not prevent data collection. it simply does not require it. and there's a fundamental difference. but i look forward to working with him and other members of the committee to get to where we want to be. >> this hearing is adjourned. >>> finishing up this senate banking committee hearing. by the way, you can find out more about this committee or any congressional committee in c-span's congressional directory. there's biographical and contact information for each member of congress along with district maps, committee assignments and more. information on cabinet members, supreme court justices and the nation's governors also included. get your copy for $12.95 plus shipping and handling. order at contraction s

the proposal has been adopted -- menendez-boxer. how many additional homeowners do you estimate would be helped by the menendez-boxer legislation that are not already being helped? >> these kinds of predictions where you have a voluntary program are particularly hard to make. i will not give the a specific number. i will tell you a range. at the high-end, christopher mayer thought it could increase refinances by close 12 millioin. n. our expectations are lower. some say as low as a million. we think that's probably too low. owner would home be able to benefit. we do not think all of them under the criteria that were laid out -- >> how do you get them to do that? interest rates are at historic lows. the best thing anybody could do was to lower their house payments from 5.5% to 3.6%. that would put money in their pocket every month. they can refinance without penalty. >> they are not allowed to to refinance. they may be above water on the first lien but have a second lien that makes it impossible for them to refinance. this would allo

hearing in the housing and transportation subcommittee two weeks ago, senator menendez outlined legislation and senator boxer are working on to expand refinancing opportunity for the borrowers. i look forward te further discussion of that legislation and anio proposals today? >> as stated during our state of the housing market hearings on this topic, i share the concern that ongoing challenges and the housing market are acting as a drag on economic recovery. as we have heard many times in this committee, there isn't a silver bullet solution that will save the housing plarkt, but several options implemented together would provide stability to the market. i hope that this committee can work in a bipartisan fashion to find practical solutions to help overcome the barriers that are weighing down our housing recovery. with that, i'll turn to senator shelby. >> thank you, mr. chairman. welcome again, secretary donovan. you've been up here a lot and we appreciate it. today the committee will consider ways to aid our troubled housing market by expanding refinancing opportunities. and while this topic is timely, i th

boxer. >> thank you so much. we're going to go senator menendez. please. >> thank you, madam chair and to all distinguished members of the conference. you know, we need to pass this bill quickly in order to generate and protect two to three million jobs. we need to pass this bill quickly to boost our economy in the short term and protect an essential asset for every business in america in the longer term. and from my perspective we also need a bill that will protect dedicated transit funding. by way of example, this is true for hundreds of millions of people across the country but new jersey transit hosts 250 million passenger trips each year and therefore it's essential to my state's economy but also true for many states throughout the country and we worked hard, i worked hard with senators johnson and shelby to develop a robust transit title. and that passed unanimously out of the banking committee and we'll work from text that in this conference. but we all know that the senate transportation bill by virtue of what happened both in committees an

boxer. going to go to senator menendez. >> we need to pass this bill quickly to generate and protect 3 million jobs. we need to pass this bill quickly to boost our economy in the short term and protect an essential asset for every business in america in the longer-term. we also need a bill that will protect dedicated transit funding. by way of example, this is true for hundreds of millions of people across the country. users the trans the hosts 250 million -- new jersey transit hosts 250 million transit passengers a year. we have worked hard with senators to develop a robust transit title that passed unanimously out of the banking committee. we will work to protect that in this conference. we know the senate transportation bill, by virtue of what happened in committee and on the floor, is supported by senate democrats, senate republicans, and house democrats. the only question is whether the house republican colleagues will also work in a constructive way to pass the bill. after years of work, we are on the cusp of giving our states, businesses, and workers they need to make infrastructure inv