Refinancing - Fannie Mae/Freddie Mac Owned or Controlled Mortgages
Homeowners (owner-occupants, 1 to 4 unit property) may be eligible for refinancing. Under this program Fannie Mae and Freddie Mac may refinance certain mortgages loans that they own or control.
- Borrower current on mortgage (or not more than 30-days late during the last 12 months)
- Balance owed on first mortgage is about equal (up to 105%) to the current value of the home (value determined after application)(agreement of any second mortgage holder may be required)
- Homeowner has stable income to support the new mortgage payment
- Interest rate per market rate (may vary by lender and over time)
- 30 to 15 year fixed rate loans
- No prepayment penalty
- No balloon
- No reduction in principal amount
- Transaction costs, such as appraisal or title report may be included in refinancing
- Apply through mortgage servicer or lender
- Determine Fannie Mae/Freddie Mac Ownership or Control per inquiry with mortgage servicer or confirmation with Fannie Mae (800) 7FANNIE or Freddie Mac (800) FREDDIE
- Gather paycheck stubs, recent tax return, information on second mortgage, information on monthly payments for credit cards, student loans, and car loans
- Streamlined processing by lenders/brokers using Fannie Mae platform
- Fannie Mae "expanded refinance flexibility ends in June 2010"
Modification - "Most Conventional Mortgages" (Excluding Second Mortgages)
Homeowners (owner-occupants, 1 to 4 unit property) who are already behind or are struggling with a mortgage may be eligible for modification.
- May be current, delinquent or struggling with present mortgage
- Unpaid principal balance is equal to/less than $729,750.00 (higher for 2 -4 unit property)
- Loan originated before 1/1/09
- Present mortgage payment (including taxes/insurance/association dues) is more than 31% of gross (pre-tax) monthly income
- Present mortgage payment no longer affordable
Include "most conventional loans" (except second mortgages) held by private lenders or owned or controlled by Fannie Mae or Freddie Mac or held by a mortgage backed security including
- prime mortgages
- subprime mortgages
- adjustable mortgages
- FHA, VA, and USDA mortgage not yet eligible (but may be soon, but presently may be modifiable under other programs)
- Participating servicers/mortgage holders to be posted at www.financial stability.gov
- Patience requested as Treasury just published program requirements on 3/4/09
- Mortgage servicer to evaluate eligibility if behind more than two or more payments
- Mortgage servicer participation is voluntary, but there are incentives to servicer
- No cost to borrower for "Home Affordable Modification"
- No charge for assistance from HUD-approved housing counseling agency (888) 995-HOPE
- HUD-approved housing counseling required if mortgage payment as modified together with second mortgage, car loan, credit car, and child support exceed 55% of gross monthly income
- Servicer to determine if cost of modification (including government incentive) less costly than foreclosure
- Trial modification - 3 months at new rate as low as 2% to reach payment of 31% of gross monthly income
- Permanent modification thereafter if current after 3 months
- If modified interest rate is below market rate -fixed for first 5 years and then may increase not more than 1% per year until reaches cap based on prevailing interest rate as of date of modification
- If modified interest rate is at or above market rate, modified rate is fixed for life of loan
- Modification payment to include escrow for taxes and insurance
- Successful borrowers on modified mortgage may receive success incentive by U.S. Treasury over 5 years up to $5,000.00
- Extension of mortgage term up to 40 years
- Deferring of payment on portion of amount with later balloon payment ("principal forbearance")
- Forgiveness of portion of debt may be done but is not required ("principal forgiveness")
Borrower Q&A's is also set forth regarding refinancing and modification.
The federal government's "Homeowner's HOPE Hotline" is (888) 995-HOPE.