Charlotte Home Mortgage News

March 9th, 2009 9:10 PM

Fannie Mae and Freddie Mac have just released details on how they will handle refinance transactions authorized by the Home Affordable Refinance program. The complete details of both programs can be found by accessing the program guides from Fannie Mae and Freddie Mac, but we will discuss some of the highlights below.

In the case of all loans, they have to be delivered back to the existing owner of the loan today. Meaning, if Fannie Mae is the owner of the loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines. The same is true for Freddie Mac.

As a borrower you need to find out who owns the loan. As a borrower you have the ability to do this by contacting the servicer and asking...or I can help do this for you by using the links below. Note that the property address must be entered exactly as the agency has it on file, or it may not be found (ie: Rd or Road? St or Street?

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

Fannie Mae

Let's look at the difference between the types of refinancing available from Fannie, and know which you can qualify. The primary difference for originators is as follows between the two programs..

DU Refi Plus

Available to all Fannie Mae approved lenders using DU; borrower must credit qualify.
Available across all lending channels (retail, wholesale and correspondent).

Refi Plus

If you NOT qualify for DU Refi Plus, you may still be able to refinance, but would have to work directly with the current servicer, or one of the servicer's affiliates or retail channels.

Applications may be taken now, but DU Refi Plus loan findings may not be available until early April. As such, they will include the MI flexibility that is outlined in the guidelines from the agencies linked above. Fannie has also said that other enhancements may not be added to DU until early May. Again, this does not mean these loans cannot be originated - but you will have to check with your individual investors as to their position on these files.

Many of the guidelines are similar for both DU Refi Plus and Refi Plus. Similarities include:

That the borrower must be receiving either a lower mortgage payment or moving to a more stable type of product like an ARM to a Fixed-Rate. ARM programs are available but must have initial fixed periods of five years or greater.
The maximum LTV is 105%. There is no limitation on CLTV, but 2nd lien holders will need to re-subordinate.
If PMI does not exist on the loan today, it will not be required on the new loan, regardless of LTV. If PMI does exist on the loan, the loan will be required to be re-insured through the existing PMI company.
LLPA's (loan level pricing adjustments) exist for both loans, see guides for details or consult your investors.
The availability for appraisal waivers will exist in limited situations.

Freddie Mac
The Freddie Mac guidelines are somewhat similar to Fannie Mae's, but if you go through the detailed guidelines linked above, you will see they are a bit more vague at this time.

If you have any questions regarding your current situation please feel free to contact us at any time. We are here to assist. Every lender that we work with is going to have a different overlay as to how they will handle this program but it is sure to help quite a few people.

Posted by Angelo Datseris, CRMS on March 9th, 2009 9:10 PMPost a Comment (0)