Fannie Mae and Freddie Mac Refinancing Guidelines
On March 4, 2009, Fannie Mae and Freddie Mac released guidelines on refinancing and loan modification options that implement President Obama's Making Home Affordable Program.
Fannie Mae
Fannie Mae Announcement 09-04 implements the Obama Home Affordable Refinance program but provides even greater flexibility for refinancing Fannie Mae mortgages under new Refi Plus programs. One significant additional flexibility is that Fannie is allowing refinancing of eligible second home and investor loans. In addition, mortgages that do not have private mortgage insurance in force are not required to obtain it even if the new loan-to-value ratio exceeds 80 percent. The Announcement states that Fannie Mae is not permitting the refinanced mortgage to be a jumbo conforming loan (a loan above $417,000 up to $729,750 in high cost areas), but accompanying Frequently Asked Questions state that the new loan may be a jumbo conforming loan (either under the original 2009 permanent limits or under the new higher 2009 temporary limits once Fannie announces eligibility criteria for the temporary limits later this month). Fannie has lowered fees for some borrowers between 25 and 50 basis points, but is under pressure to slash fees as Freddie has done. The program begins on April 1, 2009.
Freddie Mac
Freddie Mac Bulletin 2009-5 establishes Freddie's Relief Refinance Mortgage program that also provides even greater flexibility for refinancing Freddie mortgages. Like Fannie Mae, Freddie is also allowing refinancing of eligible second home and investor loans and is not requiring private mortgage insurance if the mortgage being refinanced does not have insurance in force. The Freddie Mac announcements this week appear to conflict on whether jumbo conforming mortgages are eligible for refinancing, and NAR has asked for clarification. Freddie has slashed fees for the refinanced mortgages and is only charging the 0.25% market condition fee but not additional fees based on the borrowers' credit scores and loan-to-value ratios. This is a huge advantage for borrowers with Freddie Mac mortgages, and Fannie is under pressure to match the fee cuts. The program begins on April 1, 2009.
Fannie Mae Press Release/Highlights
Fannie Mae [Servicer] Announcement 09-04 (3/4/09), Home Affordable Refinance - New Refinance Options for Existing Fannie Mae Loans
Freddie Mac Announces Two Initiatives Supporting President Obama’s Making Home Affordable Plan (Relief Refinance Mortgage program and Home Affordable Modification)
Freddie Mac: Relief Refinance Mortgages Fact Sheet
Freddie Mac [Servicer] Bulletin 2009-05: Relief Refinance Mortgage Program
Making Home Affordable Program>
