Freddie Mac Extends Mortgage Refinance Programs For Troubled Borrowers

Freddie Mac has extended their offer for both their Freddie Relief Refinance Mortgage-same servicer and Relief Refinance-Open Access programs. Both of these program are supported by and part of the Federal governments Making Home Affordable Program.

This very popular program offered by Freddie Mac was set to expire on June 10, 2010 and now has been extended untill June 30, 2011. The extension is especially helpful so that borrowers can take advantage of the low current mortgage rates presently available.

If you are not aware of this excellent program, it is offered by Freddie Mac to current customers who presently have a Freddie Mac serviced loan, and they are current on their mortgage payments, the  ability to refinance to improve their financial situation when home values have declined or where there has been limited credit or mortgage insurance availability in the market.

The current mortgage must have had closed on or before May 31, 2009 to be eligible for this program

Both Same Servicer and Open Access programs offer loans to borrowers up to 125% LTV and no limit to CLTV  (Loan To Value is balance of the 1st mortgage divided by the appraised and Combined Loan To Value is the total of all mortgages associated to the property divided by the appraised value)
NOTE:  please check with a mortgage professional to determine the specific options available to you since the maximum allowed LTV/CLTV limits and guidelines will vary per lenders. Most lenders, if they are not currently the servicer of your current mortgage, will limit the LTV to between 95-105%

While there are many advantages to this program over a conventional conforming regular refinance mortgage, the main advantage is if your property has declined in value since you purchased your home. This would be especially true if you initially put a down payment of 20% (80% LTV) or greater when you purchased your home and now unfortunately, the value has declined to a point where your equity position in your home ( the difference between the amount you owe on your home and it’s appraised value) is less than 20%, less than 10%, or no equity or negative equity position. Normally for any conforming mortgage if your equity positions in less than 80% you will be required to also have mortgage insurance on your loan. With this program, if you initially had 20% equity and you were not required to have mortgage insurance then you would also not be required to have mortgage insurance with this new Freddie Mac Relief Refinance Mortgage.

This incredible feature will allow a borrower to refinance their existing mortgage into the historically low mortgage rates which are presently available and not be concerned with either having to obtain mortgage insurance or be declined all together because of their particular situation, mortgage insurance would not be available to them therefore a new mortgage would also not be an available option..

In order to be eligible for a Freddie relief Refinance Mortgage:
The Relief Refinance Mortgage must result in at least one of the following:

• Reduction in the interest rate of the first-lien mortgage.
• Replacement of an ARM, Initial Interest® Mortgage (or any mortgage with an interest-only period) or a balloon/reset mortgage with a fixed-rate, fully amortizing mortgage.
• Reduction in the amortization term of the first-lien mortgage

NOTE: If the current mortgage is a fixed rate then the new mortgage CANNOT be an Adjustable Rate mortgage even if it fits any of the above criteria

The following Occupancies are allowed:

• 1- to 4-unit primary residences
• 1-unit second homes
• 1- to 4-unit investment properties

Freddie Mac’s Relief Programs will also allow you to include up to the lesser of $5,000 or 4% of the loan amount for closing costs and prepaids as long as any residual cash back to you does not exceed $250.00

If you would like to know if your current mortgage is a Freddie Mac owned loan you may either check Freddie Mac’s Website or call Freddie Mac at 888-576-6932.

Please be aware even if your current mortgage is a Freddie Mac owned loan it may not automatically be eligible for this program.  There are certain mortgages which are not eligible and from my experience it does not necessarily have anything to do with the structure/type of your current mortgage as it has to do with how your original mortgage company you obtained your mortgage from, sold your mortgage to Freddie Mac.

Good luck with all of your mortgage purchase or refinance needs.  If you are seriously considering refinancing or purchasing a new property please check with an experienced mortgage professional by calling 877-868-2503 today.  The eligibility guidelines in this current mortgage/housing environment is like a moving target and are changing constantly.