Mortgage Stimulus
GREAT NEWS!!!
If you are one of the millions of American Homeowners whose property values have decreased but still made your payments on time, you may be able to refinance and take advantage of today’s LOW RATES. As part of the recent Obama Stimulus Program, recent legislation has created a temporary opportunity that will allow many homeowners to refinance who previously could not due to declining property values. The program has certain requirements that must be met, and I’ve highlighted a few below. This is a temporary opportunity and potential borrowers should ACT NOW. Please call me and I can help you determine if you qualify for the program. See the full article below.
Call today at 206-799-9966.
Highlights Include:
- Current Loan Amounts Between 80% and 105% of Appraised Value
- No Late Payments on the Mortgage
- Fannie Mae or Freddie Mac MUST currently own the loan (You can call your current loan servicer to confirm or I can assist)
- If there is a 2nd Mortgage, they must agree to remain in 2nd position (called subordination)
Since this is a temporary opportunity. Lenders are still sorting out the details and determining how they will proceed. This is a voluntary program and lenders are not required to participate. Call us today to learn more at 206-799-9966.
Feel free to Contact Us online or Call 206-799-9966
Better news on the mortgage refi front
Fannie Mae and Freddie Mac have published the rules for their mass refinancing campaigns, and they’re more favorable — especially for owners of second homes and small investment properties — than indicated by the White House and Treasury Department last month.
By Kenneth R. Harney
Syndicated columnist
WASHINGTON — Fannie Mae and Freddie Mac have published the rules for their mass refinancing campaigns, and they’re more favorable — especially for owners of second homes and small investment properties — than indicated by the White House and Treasury Department last month.
Although initial reports suggested the refis would be for owner-occupied primary residences, the guidelines sent to lenders March 4 say second homes and small rental properties also are eligible, provided their mortgages already are in the companies’ portfolios or securitizations and have been paid on time.
Brad German, a spokesman for Freddie Mac, said second homes and investment properties with one to four units are important because they may “help stabilize neighborhoods and housing markets.”
Refinancing investor-owned rental units, he added, can “help reduce renter evictions by putting landlords in a (more-affordable) refi that improves their chance of success.”
Under both companies’ new programs, undertaken at the behest of the Obama administration, an estimated 4 million to 5 million owners with mortgages held by Fannie and Freddie will be eligible for refinancing to lower rates even though they’d normally not qualify because of property value declines.
Applications are being taken by participating lenders, though no loans are scheduled for funding by Fannie or Freddie until early April.
To illustrate how it might work: Say you bought a house several years ago for $400,000 with a $350,000 first mortgage at 6.5 percent. Because of local property devaluation, your house is now worth the amount of your loan balance, making it impossible to refinance into today’s rates in the low 5 percent range.
The Fannie/Freddie programs would allow you to refinance, provided you’ve got a solid repayment record, your loan balance exceeds your property value by no more than 5 percent, and your loan is either owned outright or contained in a mortgage bond guaranteed by either corporation.
To make their programs as widely accessible as possible, Fannie and Freddie’s March 4 instructions offered concessions. Tops on the list: Credit scores.
Both companies plan to waive their usual minimum credit-score requirements for most applicants. Participating lenders will still pull your scores and credit files, but generally there’s no specific point below which you’ll be rejected.
Equally important for some highly leveraged homeowners, the companies are setting no limits on the amounts of existing second mortgages or home-equity-line balances, as long as the secondary loan creditors agree to re-subordinate their liens behind the new Fannie- or Freddie-funded mortgage.
Both companies also are suspending their standard rules requiring purchase of private mortgage insurance (PMI) coverage when borrowers’ equity stakes are less than 20 percent. If loans carried mortgage insurance coverage when Fannie or Freddie first acquired them, that coverage will remain in force. But borrowers who never had insurance, and now have depressed equity stakes below 20 percent, will not be required to purchase new coverage.
Fannie and Freddie also plan to lessen the burden of other typical costs in connection with the mass refinancings — including appraisals, lender fees and closing expenses. Fannie Mae will permit borrowers to finance those fees entirely by rolling them into the replacement loan amount. Freddie Mac will allow financing of escrow fees, prepaid items and closing charges up to a limit of $2,500.
Both companies emphasize that their refinancings will be limited strictly to customers who have paid their mortgages on time — people who haven’t been late by 30 days or during the most recent 12 months.
One major area of divergence between Fannie and Freddie involves where you obtain your new replacement loan. Freddie requires borrowers to apply to their existing lender or servicer for rate quotes and terms. Fannie Mae, by contrast, allows borrowers to contact any of its 30,000 approved servicing and lending partners nationwide for quotes.
Fannie spokesman Brian Faith said “being able to shop their refi business can help (borrowers) reduce rates and terms.”
Freddie Mac’s German said his company is keeping refis with the current lender or servicer because that will cut down on time and costs — “a simpler process with no re-underwriting for most borrowers.” The current servicer has the detailed files on the existing mortgage, knows the customers, and is in the best position to offer a fast and less-expensive refi.
How do you know if you’re one of the millions of homeowners who might be eligible? First, you need to find out if your mortgage is owned or guaranteed by Fannie or Freddie. Your current servicer can tell you, or you can visit the companies’ special Web sites: www.fanniemae.com/homeaffordable or www.freddiemac.com/avoidforeclosure.
Kenneth R. Harney
Copyright © 2009
