A new refinance program has the government-sponsored housing enterprises refinancing real estate loans regardless of the loan-to-value ratio.
Fannie Mae and Freddie Mac have revealed new high-LTV products for borrowers who have existing loans with either secondary mortgage lender.
A borrower benefit provision requires either a lower principal-and-interest payment, a lower interest rate, a shorter term or a more stable product.
The details were discussed in Fannie Mae Lender Letter LL-2017-05 and Freddie Mac Bulletin 2017-17.
According to the GSEs, there is no maximum LTV, combined LTV or HCLTV ratio as long as the rate on the new loan is fixed. On adjustable-rate mortgages, the maximum LTV ratio is 105 percent.
There are no minimum credit scores, though a new credit report is needed
for payment history and pricing purposes. There is also no maximum debt-to-income ratio.
Either an employment verification or income documentation can be used.
Borrowers can have an unlimited number of financed properties, and the lender doesn’t need to verify if the property is listed for sale.
Eligible loans must have been on the books for at least 15 months.
No 30-day lates during the most-recent six months are allowed on the loan being refinanced, and only one 30-day delinquency is allowed during the past year.
Modified loans are eligible for the program as long as the borrower benefit provision is met using the prevailing payment and the payment history.
Cash back to borrowers can’t exceed $250.
Loans can be underwritten through Desktop Underwriter or manually.
Note dates on loans qualified for refinance must be on or after Oct. 1, while application dates are Nov. 1, 2018, or later. Until then, borrowers can take advantage of a recent extension of the Home Affordable Refinance Program.
