According to details released by Fannie Mae; today, Dec. 1st. is the first day applications can be taken for the New Obama Refinance Program. This program is an updated version of the HARP program The Federal Housing Finance Agency (FHFA) and the Department of the Treasury introduced in early 2009 as part of the Obama Administration’s Making Home Affordable program. HARP as it is more commonly referred to as provides borrowers a mortgage weapon in this horrible housing market war. There are incredible changes that will help home owners take advantage of this current low mortgage rate environment. Let's take some time and review them.
Which borrowers may be eligible for an enhanced HARP?
In general, borrowers must meet the following criteria:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
- Minimum representative credit score of 620 if payment is increasing more than 20%
- Maximum DTI ratio of 45% if payment is increasing more than 20%
There will no longer be a maximum loan to value for the updated HARP program
There is no longer a maximum LTV limit for borrower eligibility. If the borrower refinances under HARP and their new loan is a fixed rate mortgage, there is no maximum LTV. If the borrower refinances under HARP and their new loan is an adjustable rate mortgage, their LTV may not be above 105%.
There is not a limit to CLTV or HCLTV for existing subordinate financing (no new subordinate financing is permitted).This means that it's not going to matter if you have a second mortgage you will still be able to refinance the first.
What is this program useful for?
- Reduction in the borrower’s monthly principal and interest payment;
- Reduction in the interest rate;
- Reduction in the amortization term; or
- Movement to a more stable product- such as an adjustable to a fixed
This can be used for Single family, Multi family, Condos, and Non-Owner occupied properties assuming it was owner occupied at the time of purchase and falls under the Fannie/Freddie owned criteria.
What if I currently have PMI (private mortgage insurance)?
Mortgage insurance companies have experienced significant losses during the market down turn and the understand the value of assisting home owners in saving money or moving to a more stable mortgage product. The PMI companies have pledged their assistance to offer options when needing to re-write the PMI. The PMI will remain on the loan if it is currently there, unless the loan to value is under 80%.
Do I need an appraisal?
In some cases no. The lender will run the loan through the automated underwriting system and it will determine if one is required. I find that many single family homes do not require an appraisal to be completed. Appraisal will be required for condos and multi families.
These new changes are starting now but unfortunately Fannie & Freddie are not allowing us to actually close on them until March 1st. No worries though, we can get everything ready and organized to go so we can close in March and you can skip on that April mortgage payment. To find out if you qualify you can email me at themortgagebuddy@gmail.com.
To look up the property yourself please try these user friendly links.
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage
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