Obama Announces New Refinance Plan
President Obama’s New Refinance Program
On Monday October 24th, President Obama announced a new plan to make refinancing your mortgage a possibility, even if your mortgage is severely underwater.
UPDATE: You can learn about the even NEWER PLAN here.
The new refinance plan will bolster inclusion in the existing FHFA HARP Program.
As an extension to the Home Affordable Refinance Program or HARP, the Federal Housing Finance Agency, in conjunction with Fannie Mae and Freddie Mac, announced a series of changes to the program which will help more borrowers take advantage of record low interest rates.
The HARP Program had been under review for some time after the agency had determined the existing guidelines were not helping enough borrowers, FHFA had expected 4,000,000 borrowers would take advantage of the program and to date only 894,000 homeowners had taken advantage of the relief program.
Maximum Loan to Value Ratio Allowable for The New Refinance Program
Previously, the maximum mortgage amount that could be financed under the HARP Program was equal to or lesser than 105% of the current market value of the property.
Under the new extension to the program the maximum loan to value limit has been lifted. THERE IS NO LIMIT TO THE LOAN TO VALUE RATIO!
Regardless of how far your property value has dropped and how much you owe, as long as your mortgage amount is within the FANNIE / FREDDIE limit of $417,000 and you qualify from an income and credit standpoint, you are eligible for inclusion under the new program.
The only exception to this Loan To Value Ratio will be if the borrower chooses an Adjustable Rate Mortgage on their new mortgage. In this case the limit would be 105% of current market value.
Fannie Mae and Freddie Mac Mortgages
Fannie Mae and Freddie Mac owned mortgages that were originally taken out prior to May 31, 2009.
You will not be eligible if you have previously refinanced under the HARP Program.
Neither the Federal Housing Finance Authority nor Fannie Mae or Freddie Mac have the authority to provide the HARP Program to borrowers who have a mortgage that is not currently owned by Fannie Mae or Freddie Mac.
Are Mortgage Late Payments Acceptable Under the New Refinance Program?
The homeowner must be current on their mortgage with no late payments in the 6 months leading up to application.
The mortgage may have had up to 1 x 30 day late payment during the prior 12 months as long as it occurred between months 7 and 12.
What Property Types Are Eligible for the New Refinance Program?
Owner Occupied Single Family Residences and Previously Approved Condominium Units are eligible for inclusion under the program.
When Will the New Refinance Program Be Available?
Guidelines and Operational Regulations will be issued to Mortgage Lenders by November 15th, 2011 and most lenders will be able to begin underwriting the new mortgages by December 1, 2011.
How to Find Out If Your Property Is Eligible for the New Program?
Both Fannie Mae and Freddie Mac will have loan lookup tools on their websites. You can check your property here:
Be sure to check with both Fannie and Freddie, if one does not have your loan, the other may.
You can Download the Official Federal Housing Finance Agency News Release from October 24th, 2011 here:
If you are having trouble looking up your loan please contact Poli Mortgage and one of our Mortgage Professionals will help you determine your eligibility.
It is impossible to know for sure if your mortgage is eligible without checking with Fannie and Freddie.
However, there are a few loan characteristics that you can check against here:
- Single Family Homes with a balance of less than $417,000 could be eligible, while much larger loan amounts probably were not
- 3 yr, 5 yr, 7 yr and 10 year Adjustable Rate Mortgages were somewhat common during the period when eligible loans were written
- 2 year Adjustable Rate Mortgages were NOT written by Fannie or Freddie
- Fannie and Freddie Mortgages never had pre-payment penalties
- Properties with Commercial Square Footage were never eligible under Fannie and Freddie
- Properties with more than 4 units have never been eligible for this type of Fannie Freddie Mortgage
- Mortgages made on a “No Doc” basis were never made by Fannie or Freddie however, certain credit grades were not required to supply bank statements, paystubs or W-2 statements but, a verifiable income source was always required
What Does this New Refinance Program Do For Me?
Here is an example of a loan scenario which would have been previously excluded from the HARP Program:
Borrowing Family with Good Credit History, who lives in an area where property values had dipped by 28%. Job history was good with a steady career path over at least 24 months.
The family owed $300,000 on their single family home.
The property value had dipped from a high of $360,000 in 2006 to a present value of $259,000.
Previously this borrower would have not been eligible to take advantage of low interest rates. NOW THEY CAN REFINANCE AT INTEREST RATES IN THE 4% RANGE!
Needless to say this new refinance program from the US Government still needs ironing out and it is a possibility that guidelines and rules will change, please stay tuned as things change, Poli Mortgage Group will keep you up to date.
If your home is in Massachusetts, New Hampshire, Connecticut, Rhode Island, Vermont, Maine, Maryland, Florida, Georgia, Alabama, Tennessee, North Carolina, Virginia or Kentucky please do not hesitate to call Poli Mortgage and let us help you through details of this new HARP Refinance Program.