The Home Affordable Refinance Program®, as extended, will expire in September 2017. In its place, the Federal Housing Finance Agency has two streamlined refinance programs for borrowers with underwater mortgages. Fannie Mae’s High Loan-to-Value Refinance Option and Freddie Mac’s Enhanced Relief Refinance℠ will begin accepting applications in October 2017.
Streamlined Refinance Options This October
Fannie Mae’s High LTV Refinance Option and Freddie Mac’s Enhanced Relief Refinance℠ are open to holders of Fannie Mae and Freddie Mac mortgages whose loan-to-value ratios exceed the maximum LTVs allowed by the GSEs for their standard refinances. By having a high LTV, you owe more on your mortgage than what your house is worth.
How to qualify
Both programs go by these similar rules, as follows.
- The mortgage must be owned by Fannie Mae or Freddie Mac, i.e. Fannie Mae-to-Fannie Mae, and Freddie Mac-to-Freddie Mac.
- The new mortgage’s LTV should not go beyond the maximum allowed LTV set by Fannie Mae for its limited cash-out refinances or Freddie Mac for its no cash-out refinances.
- The mortgage must be current. This means (a) no 30-day delinquent payments for the past six months and not more than one 30-day late payment in the past 12 months.
- The mortgage being refinanced must have 12 monthly payments on it since its loan acquisition date by Fannie or Freddie.
- The mortgage being refinanced is not previously a Fannie Mae Refi Plus™ mortgage or a Freddie Mac Relief Refinance℠ mortgage.
- The mortgage can be refinanced more than once under the applicable new refi program, subject to its meeting all the other eligibility requirements.
Other notable features
Aside from sharing eligibility requirements, the new streamlined refinances for underwater mortgages have these similar features.
PMI. The private mortgage insurance taken out on the original mortgage can attach to the new refinance loan. If the original loan has no PMI, the new loan does not need to have one if it meets all the other eligibility requirements.
Documentation. Both refinance programs offer streamlined documentation for income, assets, and employment.
Underwriting. Desktop Underwriter® underwriting is available for Fannie Mae’s High LTV refinances and Loan Product Advisor℠ for Freddie Mac Enhanced Relief Refinance℠ transactions. Manual underwriting is also an option under the refinance programs as certain situations may require it.
Date of Implementation. Both programs will be available in October 2017, replacing a corresponding existing refinance program that will be retired with the HARP®.
Why should you refinance?
Fannie Mae’s High Loan-to-Value Refinance Option and Freddie Mac’s Enhanced Relief Refinance℠ have a borrower benefit. This ensures that the refinance must be able to provide benefit(s) to the borrower by (a) having a reduction in monthly principal and interest payments, (b) incurring a lowered rate, (c) having a shorter loan amortization term, and/or (d) switching to a more stable mortgage product, e.g. ARM to FRM.
Speaking of benefits, going for any of the streamlined refinance options is an advantage to you or any other borrower.
- There is no minimum credit score.
- There is no maximum debt-to-income ratio.
- There is no maximum loan-to-value ratio.
- There is usually no appraisal.
- There is no eligibility cut-off as required by HARP®.
If you have an existing HAP®, you are not eligible for the streamlined program. You may qualify if you refinanced out of HARP using the allowed standard refinance products.
Here are Fannie Mae’s High LTV refinance factsheet and Freddie Mac’s Enhanced Relief Refinance℠ factsheet for underwater mortgages.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.