Fannie Mae and Freddie Mac have “lookup” forms on their respective websites. Check Fannie Mae’s first because Fannie Mae’s market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

2. If my mortgage is held by Fannie Mae or Freddie Mac, does that mean I’m instantly eligible for the Home Affordable Refinance Program?

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

3. Is “HARP” the same thing as the governments “Making Home Affordable” program?

Yes, the names HARP and Making Home Affordable are interchangeable.

4. My mortgage is held by Fannie/Freddie. Now what do I do?

Find a recent mortgage statement and write “Fannie Mae” or “Freddie Mac” on it — whichever group backs your home loan — so you don’t forget. Give that information to us when you apply for your HARP refinance.

Even though this legislation has passed - all lenders are not all required to participate.  For right now, your first step is to contact a mortgage professional and get information as to their participation.

In the case of all loans, your loan must be delivered back to the existing owner of the loan.  Meaning, if Fannie Mae is the owner of the loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines.  The same is true for Freddie Mac.  You must first determine who owns your loan.  A borrower has the ability to do this by contacting their servicer and asking…or by using the links below.

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

Let’s look at the guidelines for both Fannie Mae and Freddie Mac and point out some of the key factors we see that will impact or enhance your ability to participate.

Here are a few of the new HARP Program qualifying guidelines:

Loan is backed by Fannie or Freddie [click to check the respective "look-ups"].
Your current mortgage home loan must have been securitized prior to June 1, 2009 by FNMA or FHMLC.
You  must have paid your mortgage on-time for the prior 6 months.
You must have paid on time for 11 of the last 12 months, or have no more than one 30 day late payment in that period.

It may be until early March before the banks will start accepting applications for HARP Refinances, but the numbers of packages are already stacking up… and if the program is all that we hope it will be for Arizona home owners, there will be a bunch of people running to get through the door.

No Loan-To-Value HARP Refinance for Phoenix Home Owners Underwater

Since there are many reasons a homeowner may choose to refinance their Phoenix home mortgage, we’ll take a look at the four most common.

1. Mortgage Rates Drop:

Typically, the most common reason that homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost that a borrower will pay over the life of the loan. The lower the interest rate, the less the overall cost will be. Interest is calculated on a daily basis and usually paid back to the lender on a monthly basis.

2. Lower Payments:

Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans, removing mortgage insurance or a combination of these. 

3. New Mortgage Program:

Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.

4. Debt Consolidation:

If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly mortgage payment can significantly reduce the short-term deficits in a budget. However, it’s important to keep in mind the total cost of that debt by adding it into a 30 year mortgage payment.

Even if you don’t think you can benefit from a refinance, there’s usually no cost to have your mortgage professional review your situation and pass along some money saving tips to help minimize overall interest expense with your liabilities.

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Frequently Asked Refinance Questions:

Q: Do I have to refinance with my current mortgage company?

No, you may choose any company to refinance your mortgage since the new loan will replace the existing mortgage.

Q: Is it easier to refinance with my current mortgage company?

It is possible your current mortgage company may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you’re getting the best deal.

Q: Will I automatically qualify if I’ve never made any late payments?

No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance. The most common problem in the Phoenix market is currently appraised value.

Is your home loan owned by Fannie Mae?

If so, Fannie Mae now offers the Desktop Underwriter (DU) Refi Plus Program.  This home mortgage refinancing program will prevent unnecessary foreclosures by lowering monthly mortgage payments for millions of eligible homeowners.

What This Means For You…

Through refinancing, borrowers like you can take advantage of today’s low rates and reduce their monthly payment. This will help monthly cash flow for millions of families across the nation.

Another goal of the DU Refi Plus Program is to help homeowners who live paycheck-to-paycheck, stabilize their finances. This means that Fannie Mae and other lenders will now turn riskier loans, such as Adjustable-Rate Mortgages (ARM), into more stable loans, such as Fixed-Rate Mortgages (FRM).

Easier to Qualify Than Before…

The purpose of the DU Refi Plus Program is to help the economic burden that many of us face today. One way to help with this is to offer assistance to homeowners who were previously ineligible. Under the new DU Refi Plus Program, Fannie Mae reduces eligibility restrictions and requires less documentation.

• Previously, Fannie Mae required applicants to show two current pay stubs as income verification. Under the DU Refi Plus Program, applicants can show only one current pay stub.
• On certain loans, Fannie Mae will now waive appraisals.
• Previously, Fannie Mae would not handle loans over 80% of your home’s market value. Now, applicants may have a loan-to-value between 80-105% and NO MORTGAGE INSURANCE is required on the new loan.
• Fannie Mae will now accept applicants with a credit score less than 580, if their LTV is 80% or less.

DU Refi Plus Terms and Conditions

Though Fannie Mae will now help more homeowners than ever before with DU Refi Plus, there are still certain restrictions that will apply.

• Loans must be owned by Fannie Mae.
• Any existing subordinations must to be re-subordinated.
• Limited cash-out refinancing (less than 2% of loan, or $2,000).

Ineligible new loan products for the DU Refi Plus Program are:

• An Adjustable-Rate Mortgage with fixed terms less than 5 years.
• An interest-only mortgage.
• A balloon mortgage.

You may also be ineligible to participate in the DU Refi Plus program if you made a payment more than 30-days late within the past year.

Even though this legislation has passed - all lenders are not all required to participate.  For right now, your very first step is to contact a mortgage professional, and get information as to their participation.  They can tell you if your loan is owned by Fannie Mae or Freddie Mac.

In the case of all loans, they have to be delivered back to the existing owner of the loan today.  Meaning, if Fannie Mae is the owner of the loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines.  The same is true for Freddie Mac.

You must determine who owns the loan.  A borrower has the ability to do this by contacting their servicer and asking…or by using the links below.  Note that the property address must be entered exactly as the agency has it on file, or it may not be found (ie: Rd or Road? St or Street?  You may want check how it appears on your statement.)

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

Let’s look at the guidelines for both Fannie Mae and Freddie Mac and point out some of the key factors we see that will impact or enhance your ability to participate.

One key point to remember is that these are the guides as they are originating from the agencies.  And just as participation in the programs is voluntary, individual investors and servicers may choose to implement constraints that deviate from the guidelines, much in the same manner that we are seeing additional underwriting overlays in the processing of loan files today.

Fannie Mae

Let’s look at the difference between the types of refinancing available from Fannie.  The primary difference for originators is as follows between the two programs.

Desktop Underwriter (DU) Refi Plus

Available to all Fannie Mae approved lenders using DU; borrower must credit qualify.  Available across all lending channels (retail, wholesale and correspondent).

Refi Plus

If a client does NOT qualify for DU Refi Plus, they may still be able to refinance, but would have to work directly with the current servicer, or one of the servicer’s affiliates or retail channels.

Many of the guidelines are similar for both DU Refi Plus and Refi Plus. Similarities include:

* That the borrower must be receiving either a lower mortgage payment or moving to a more stable type of product like an ARM to a Fixed-Rate.  ARM programs are available but must have initial fixed periods of five years or greater.

* The maximum LTV is 105%.  There is no limitation on CLTV, but 2nd lien holders will need to re-subordinate.

* If PMI does not exist on the loan today, it will not be required on the new loan, regardless of LTV.  If PMI does exist on the loan, the loan will be required to be re-insured through the existing PMI company.

* The availability for appraisal waivers will exist in limited situations.

Freddie Mac

The Freddie Mac guidelines are somewhat similar to Fannie Mae’s, but if you go through the detailed guidelines linked above, you will see they are a bit more vague at this time. Although Freddie Mac initially stated that these refinances may ONLY be originated by the servicer or one of their retail or affiliate channels, right as this article of the release of this article, we have learned from a source at Freddie Mac that they are looking at options that could enable more originators to be involved in refinances under this program.  Click here for more clarification.

One potential area that could cause a problem is that while no cash out is allowed, funds extended to cover closing costs may not exceed $2,500.

Additional Resources:

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?

But what happens next?  Investors that have secured a hard money loan are now typically saddled with a short-term loan holding an extremely high interest rate.  Alternatively, purchasers that facilitated these transactions utilizing their own funds, while initially giving them the upper hand, may not want all of their funds wrapped up in the property.  The most logical option for many of these investors is to refinance.  Please note that a mortgage placed on a property that is currently held free and clear is always considered a cash-out refinance. 

Given the ever changing requirements within the mortgage industry today, the following is an overview of some of the current guidelines to help these individuals:

Seasoning Requirements –

• Rate/Term – There are NO seasoning requirements for the borrower to be listed as the owner of record.
• Cash-Out – The borrower must be listed as the owner of record for a minimum of 6 months prior to the loan application date.  No title transfers are allowed during this period.

Qualifying Ratios –

• Loan-to Value – The LTV on the subject property must be less than or equal to 75 percent
• Debt-to-Income – The maximum DTI for investment properties is 50 percent

History of Rental Management –

• Borrower must have a 2 year history of managing rental properties evidenced by the most recent 2 years tax returns in order to use rental income for qualification factors.
• EXCEPTION: 
  • The 2 year history can be waived if the borrower qualifies for the mortgage with the full payment (PITI) of the subject property, excluding rental income. 
  • OR……
  • Rate/Term refinance has an LTV greater than or equal to 75 percent
  • Cash-Out refinance has an LTV greater than or equal to 70 percent           

We have closed an increasing number of these types of transactions over the last year.  The absence of seasoning requirements for rate/term refinances has saved borrowers a tremendous amount of money in high interest payments by allowing them to take advantage of current market rates.  Cash-out refinances has also allowed borrowers to liquidate the majority of their initial investment.  Either way, having the knowledge surrounding the current regulations will assist borrowers in making educated decisions on what is their best option moving forward.

We also have a resource if you’re an investor looking to sell your property and have concerns about seasoning, click here.