I’ve been fielding quite a few calls lately from people wanting to get their mortgage modified. Although we don’t provide loan modification services, I quickly realized that the majority of the callers really didn’t need their loans completely altered by their servicer/provider – they just needed to refinance. The one problem that was preventing them from doing so was their value. Either they experienced a drop in the home values in their specific area, or they had a higher rate and hadn’t been in the home long enough to accrue any equity. Either way would prevent most people from refinancing, but through some not so new programs, the value obstacle is eliminated. The programs at hand: the Freddie Mac Relief Refinance & the Fannie Mae DU Refi Plus. Each has slightly different eligibility requirements but both will help you move down to a lower rate effectively lowering your monthly payments. These are not standard transactions; much of the usually considered information may be ignored while lots of additional non-standard requirements will be weighed.
1. The main item that needs to be looked at before even considering either of the programs is the owner of your loan. To qualify for either of these programs, your loan must be owned by either Fannie or Freddie – not sure about your loan? Not a problem; you can check both entities on these two websites.
- Check with Fannie Mae. http://loanlookup.fanniemae.com/loanlookup/
- Check with Freddie Mac. https://ww3.freddiemac.com/corporate/
2. The next most important item is your current payment status. You must be up to date with regards to your payments and cannot have any late payments over the last 12 months. This item really represents a simple risk evaluation on their part – up to date?~~not much of a risk , a couple lates?~~more likely (in theory) to default.
3. The loan to value considerations are quite lenient. Both programs allow up to 105% loan to value and if you’re slightly over that, you’ll have to pay the balance down to 105% with your own funds and provide documentation to show that you did.
4. Neither of these programs offer much relief for those with run-away seconds. Both do not allow new subordinate financing or replacement financing. What this basically means is you’re not going to be able to roll both loans together and if you’re having trouble paying your mortgage because of a high rate second, these programs won’t be much help. There are other ways to deal with situations like this – give us a ring and we’ll help you find a solution.
5. Some other limitations and items to note:
- Mortgage Insurance is not always required
- Unlimited CLTV
- Limited Cash-Out
There are plenty of other requirements and caveats, but if you’re good on these first four – you’re definitely on the right track. We’ll need to gather a full loan application from you in order to qualify you, but total time needed for that is around 30min (20 filling out the loan application on-line and about 10-15 minutes on the phone speaking with one of our loan consultants.
As with any of my blog posts, if you’ve got questions, I can help. (919)459.6533
1350 Sunday Drive
Raleigh, NC 27607