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Mortgage Market News - Financial Stability Plan / Some Refinance Details Released

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Mortgage and Lending with Premier Capital Mortgage

 

 
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Joe Farro

Certified Mortgage Planner
Phone: (678)289-6600
(800)613-0650
Fax: (678)289-6601
jfarro@joefarro.com


www.premiercapitalmortgage.com

Loan Officer

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This is somewhat long and I apologize, please take time to read as it explains many questions that homeowners have on the current status of the refinance details for the Financial Stability plan.  I have been hard at work trying to keep you up to date of the information as it is released.  Yes, I am here at 11 pm on Monday night - thanks Red Bull. 

First of all do not panic and feel that you will miss out by not responding this week.  Time is actually on your side with this right now as more details are coming.

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.

Many mortgage professionals are not aware of the guidelines so do not be surprised if you have more information than they do with what is provided here.   

You may have seen that lenders are in a holding pattern, as they determine if, when and how they will accept these transactions. Even though this legislation has passed - they are not all required to participate. For right now, the very first step is to determine if it makes sense to refi at prevailing rates and to see if you are eligible.

To see if you are eligible you may do this by a couple of ways.You may contact your loan servicer and ask...or you can visit one of the links below.  Also I am available however It may take a bit to validate since I am only 1 person.  I am attempting to release this info to be proactive and form the response generated from my message over the weekend I was not able to call everyone back today and I apologize.  The good news is that this program will be available for a while so as to accommodate those that qualify.   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? You may want to compare it to how it appears on your mortgage statement.

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

these links are also available on our website - Home Loan Toolbox

Let's look at the guidelines for both Fannie Mae and Freddie Mac and point out some of the key factors we see that will impact or enhance your ability to participate. While we point out the highlights, once again, we highly encourage you to both read the guidelines and then address them with both your underwriters and account executives for specific details on how you can proceed.

One key point to remember is that these are the guides as they are originating from the agencies. And just as participation in the programs is voluntary, individual investors and servicers may choose to implement constraints that deviate from the guidelines, much in the same manner that we are seeing additional underwriting overlays in the processing of loan files today.

Fannie Mae

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

DU Refi Plus (Desktop Underwriter - DU is the computer generated underwriting that approves your home loan)

  • 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 a client does NOT qualify for DU Refi Plus, they 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 your loan cannot be taken - but please keep in mind everything not all guidelines have been released as of yet.

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(private mortgage insurance) 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 there are some points that are vague.  Most of my clients participated in Fannie Mae loans over the years.    There still are some questions as to who may be able to assist you should you have a Freddie Mac loan - details are still to come and I will keep you updated. 

Additional Resources:

Fannie Mae

Freddie Mac

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?


Home Loan Toolbox

As always I do appreciate your business and loyalty.  As you can tell from my message above I have fortunately been overwhelmed with responses from this past weekend.  My goal is contact you this week if you have already responded. If you respond via email I will get back with you as soon as possible.   If you matter is of a more urgent nature please do not hesitate to call.   Please remember all details are not yet released and I felt it better to be proactive rather than not provide details at all.  I will be working late hours all week as well as weekends to assist you.      

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Joe Farro
Premier Capital Mortgage

 

 

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