*** Update May 18, 2009 ***
The Fannie Mae version of the Obama refinance plan is in full implementation. The first way to determine your qualification is to complete the Refinance Application. This will give us the updated information we need to determine qualification.
Although the plan, when originally unveiled, seemed that all homeowner's with Fannie or Freddie loans would be eligible, we are now finding that the eligibility is very subjective. Fannie Mae's Automated Underwriting Engine, Desktop Underwriter, must return the appropriate call in order for you to be eligible. Interest rates are available from our various investors and range from just slightly above standard rates to higher and beyond realistic refinance parameters. To determine what rate and fee schedule you qualify for, we need to enter all information in the automated system. Loan to value, credit scores, and overall qualification will make this determination.
We are currently only able to originate these refinances for those that do not currently have mortgage insurance on their current loans. Certain exceptions can be made for monthly mortgage insurance if we can return your loan to your existing mortgage servicer. Also, keep in mind, if there are any 2nd mortgages, they will have to be subordinated and can not be paid off with the proceeds of the loan.
Due to the newness of this product, we do not always have answers as to why some loans are eligible and others are not. We suspect that if your current loan was a result of a cash out refinance, they may not be eligible, but we can only speculate as no additional information has been released from Fannie Mae. There is no need to guess - complete the Refinance Application so you can know for sure if saving thousands of dollars is available for you!
As this program can provide much needed help to many homeowners, we encourage you to complete the Refinance Application for us. We are more than happy to determine your eligibility at no cost and no obligation.
We here at Lance & Company are more than willing to help you, your family, friends and co-workers!
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President Obama unveiled his plan to help stabilize the housing market and keep millions of homeowners in their homes. The Homeowner Affordability and Stability Plan includes two separate initiatives to help struggling homeowners.
Refinance Portion
The refinance portion of this plan would allow for current homeowners whose loans now represent between 80% and 105% of the current value to refinance into current low rates. These targeted homeowners are not typically able to refinance otherwise due to declining values and/or the lack of mortgage insurance availability. This portion of the program is designed for those homeowners are current on their mortgages but are struggling. Their loans must be currently owned through Fannie Mae or Freddie Mac. If their existing loans do not have mortgage insurance because they used to be below the 80% LTV threshold, then they would not be required to obtain mortgage insurance. If they have mortgage insurance now, they would be allowed to maintain the same amount of mortgage insurance coverage despite the fact that their equity position most likely has worsened.
This program requires the mortgage insurance companies to participate and re-issue their mortgage insurance on the new loan. Because the refinance requires evidence of a true net benefit to the homeowner in the form of monthly savings, the mortgage insurance companies should see the net benefit to lowering their risk of default and claim if the payments are decreased. Each mortgage insurance company still has the ability to participate.
The borrowers are still going to be required to evidence their ability to re-pay the new loan and a new appraisal will need to be done ensuring the new loan does not exceed the maximum of 105% of current value.
As we’ve seen, even though the Fannie/Freddie agencies put forth new product parameters, does not mean the actual mortgage investors have to follow them. We are awaiting the implementation of this program which is expected April/May. This will determine what guideline overlays will be made and the actual rates/fees made available. We believe there will be additional cost involved in doing this type of refinance.
Loan Modification Portion
The 2nd portion of this plan involves the loan modification program. This is intended for those who will not be able to participate in the refinance portion of the program and wish to modify their loan through their current servicer. The goal is to “reduce the amount homeowners owe per month to sustainable levels.” Homeowners who are current but struggling can apply for this program. It allows for financial incentives to mortgage servicers to modify people’s loans to the guidelines they set forth. The program will also assist homeowner’s by paying down their principle balance each year they continue to make their modified payments.
Neither one of these initiatives will apply to investment properties or 2nd homes.
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