I finally have some great news of those of you who might be living where the property values are declining and you have been able to refinance your current mortgage. Fannie Mae now has a product that Lenders can use to help you and it is called; Home Affordable Refinance. I think that we all know who FNMA (Fannie Mae) and FHLMC (Freddie Mac) is by now since we have been watching all the talking about the bail outs and that they are mostly owned now by the Feds. These investors are the primary sources the Banks and Mortgae Companies use to sell their loans to after closing.
The last article I wrote was about the standard refinancing terms for those mortgages where the values are stable and no other issues. This article is giving hope to those who have higher interest rate loans or ARMS (adjustable rate mortgaes) and loan to values higher with declining values within the subject property immediate area.
The Home Affordable Refinance is made possible to provide refinance opportunities to borrowers with an existing Fannie Mae loans who have demonstrated an acceptable payment history on their mortgage but due to declining home prices and values they have not been able to refinance to obtain a lower payment/interest rate or move to a more stable product.
The Refi Plus options offered must do one of the following for your loan to be eligible :
- reduce monthly principal and interest payment or
- a more stable mortgage loan product; for instance refinancing from an ARM to a fixed rate loan. *note that Fannie Mae encourages lender to always give applicants a fixed rate loan when possible on any loan.
Here are the parameter:
- Loan purpose: must be a limited cash-out to you the borrower only; payoff existing first-lien mortgage, financing of closing costs and no more than $250 cash to the borrower
- Maximum LTV(loan to value): up to 125%
- Maximum CLTV/HCLTV: None
- Subordinate Financing: All existing subordinate financing must be resubordinated and No new subordinate financing permitted
- MI: required for LTV's > 80%
- Eligible borrowers: Borrowers on existing mortgage must match borrowers on the new loan. Borrowers may be added to the title and on the new transaction provided the original borrowers remain on the loan. Borrowers may NOT be removed in the new loan.
- borrowers on the existing mortgage must match borrowers on the new loan
- borrowers may be added to title and loan but the original borrowers must remain on the loan
- borrowers may not be removed on the new loan
The LTV's for up to 105%: must be fully amortizing 1st lien, fixed rate loans and ARM with a period less and 5 years, up to a 40 year term.
The LTV 105.01 -125%: must be fully amortizing 1st lien, fixed rate loans with terms > 15 years up to 30 years.
Ineligible Loans: No loan to 105% with these parameters: ARMs with less than 5 year fixed period, Interest only loas, balloon mortgages, My Community Mortgage, Homestyle Renovation laons and no new subordinate.
Ineligible Loans up to LTV's to 125% cannot be any loan that is not fully amortizing 1st lien fixed rate mortgage >15 years up to 30 years and no new subordinate financing. **note this says that is not....
Occupancy and Property Type:
1 to 4 unit primary residences (owner occupied), second homes
1 t0 4 unit investment properties
All preperty types including condos, co-ops, manufactured housing and PUDs
Payment History and Payment Increase:
No 60 day lates in the past 12 months (any mortgage trade)
No limit on payment increase, subject to the borrower benefit requirements
Minimum credit scores are being less important for this product but the Lender may have certain guidelines they follow and they must be assessed to determine the risk factors.
There are certain warranties that the Lender must apply for property values for this loan type with the marketability of the dwelling as usual.
**Please note that these guidelines that I have listed here are some facts about what I know about this product. There "may" be additional guidelines for each borrower, each property type, each occupancy type *NOO borrowers and other parameters I do not know about but this is some standard information that I believe will help you know if you can qualify for one of these Home Affordable Refinance Loans.
This appears to be a great product for those who are living in declining areas and if you have decent credit and do not have more than (1) 30 day late mortgage payment with your debt to income ratios in line as to not make your situation worse than what it is....you have a possible way to get your payment lowered and that is something good.