The FHFA has also made changes to the Home Affordable Refinance Program (HARP) in an optimistic attempt to attract more qualified borrowers who can benefit from refinancing their mortgage loans. In these efforts Fannie Mae will make changes to their program with Freddie Mac following.
Changes to the program:
- Fannie Mae will now make loan to values secured by fixed rate mortgages with a term to 30 years. This will include those loans with terms of 15 years and were previously restricted to 105% loan to value. There will not be a limit to the combined loan to value (CLTV); first mortgage and second, if applicable or home equity line total value ratio, (HCLTV).
- there will be no maximum loan to value ratio for fixed-rate mortgages with a term up to 30 years,
- 105% loan to value for fixed-rate loans with terms greater than 30 years and up to 40 years, and
- ARM loans with initial fixed periods greater than or up to 5 years and terms up to 40 years; will have a maximum limitation of 105% also. (when the loan program permits)
Current Mortgage Payment History:
- the borrower cannot have any mortgage delinquency on the existing mortgage in the most recent 6 month period. No more than one (1) 30 day late payment in the months seven (7) through twelve (12).
- the middle (representative) credit score can be no lower than 620
- maximum DTI (debt to income) ratio of 45%
- income verified per policies already in place
- assets to close (if applicable) will be verified as normal policy
Fannie Mae has announced that they are not restricting the borrowers on the new loan to meet the standard waiting period and re-establishment of credit criteria for bankruptcy and foreclosure. They have also removed the same guideline and requirement on bankruptcy and foreclosure for the original loan in effect at the time the loan was originated. Please remember that you must qualify in all aspects other than this for the Home Affordable Refinance Program.
As always it is necessary the you; the borrower receive a benefit from the transaction to qualify for the Refi Plus; Home Affordable Refinance.
- This can be done by reducing the monthly payment, principal and interest
- changing the program from an ARM to a fixed rate
- reduction of interest rate or
- a reduction in the loan term, ie: (30 to 20) (20 to 15)