Fannie Mae recently introduced a refinance program - called Keys to Recovery^TM - that will enable borrowers struggling to keep their homes, help more prospective buyers purchase homes, and contribute to stabilizing communities hit hard by the downturn in the mortgage market.

Fannie is modifying the eligibility guidelines of our current manually underwritten Fannie Mae-to-Fannie Mae streamlined refinance option (for loans up to 100% LTV) to allow refinancing of loans with LTVs greater than 100%. This will help borrowers who are "underwater" to refinance into affordable fully amortizing Fannie Mae loans.  THIS IS HUGE!!!!!   This option has more restrictive guidelines to compensate for higher LTVs.

 Eligibility Expansion Highlights

1) Generally, those eligible for Streamlined Refi Option A; also Expanded Approval^® (EA) loans with additional restrictions, including minimum credit score

2)  12-month seasoning requirement with good pay history (one 30-day late allowed, none in most recent 3 months) - - - Last 3 months is critical.

3)  Property: Owner-occupied principal residence, one-unit only (including condos, co-ops, and PUDs; manufactured housing is not eligible)

FOR NEW LOANS  -  -  -

·         Fully amortizing Fixed Rate Mortgages, plus certain fixed-period ARMs (no interest-only or short-term ARMs)

·         Up to 120% LTV/CLTV/HCLTV if refinanced loan meets minimum MI coverage requirements (per Fannie Mae's charter)

·         No cash-out refinance, with up to 2% increase in UPB allowed for closing costs

·         If payment does not increase, stated income is allowed  Wow....this is something isn't it?  Stated income backed by Fannie?

·         If payment does increase:

o        Maximum increase is up to 120% of current payment

o        Maximum 50% DTI ratio based on current verified income and debts

·         New, full appraisal required

·         New credit report required

Availability and Lender Requirements

·         This is not a Guide product and will be available on a contractual (variance) basis.

·         Whole loan execution will be available August 1, 2008; the availability date for an MBS execution is still to be determined.

The loan is not available and here just yet.  the lender needs to be a servicer of the Fannie loan although correspondent lenders may have this option as well.  In the interim, talk to your lender to find out more.  Stay tuned...more to come