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James Parrott: The cost to the taxpayer will be zero dollars.
But to expand on it, let me explain the different components
of the plan and sort of why that would be the case for each.
The first component of the plan that goes toward sort of fixing
HARP, in essence takes borrowers who are already a risk to the
GSE's as it were, and that lowers their interest rate.
So the net effect of that is it makes these borrowers a less
risk and less cost to the GSE's.
It would cost nothing.
The second part of the proposal which is covering closing costs
for those willing to take shorter term loans,
it is actually pretty similar in the sense that it takes
borrowers in a 30 year mortgage, and it takes them down to a 15
or a 20 year mortgage and that actually lowers their
default rate.
So it saves the GSE's money.
In fact, it saves the GSE's more money than paying the
closing costs.
So it is actually a net gain to the taxpayer.
Then on the third component of the program,
the part which we extend streamline refinancing,
those who don't have government back loans,
that is a little more tricky.
Because basically you have got borrowers who aren't today on
the government balance sheet.
So the GSE's aren't guaranteeing them.
The FHA is not insuring them.
And you are actually bringing them on the government balance
sheet through refinancing them through the FHA.
But we have been very careful to pick borrowers who are low risk.
These are borrowers who have been paying their mortgages on
time for at least six months and in most cases for many years.
So we think it is a manageable level of risk.
But in any case, what Senator Feinstein has done and it is her
bill that is moving on this part of the President's package,
has proposed a pay for, basically to generate the
revenue needed to cover that cost.
So the taxpayer won't pay a dime because we have actually
generated enough revenue to pay for,
pay for the costs associated with the plan.