In April, the Making Home Affordable plan was released and in the details, it was learned that there were really two different components to the plan — a plan to help people who could benefit from loan modification and a plan to help people who could benefit from refinancing.
For those people who were interested in refinancing, one of the key things they first needed to know was whether Fannie Mae or Freddie Mac owned their loan. If Fannie Mae owned their loan, they could use any Fannie Mae approved lender. If Freddie Mac owned their loan, they were required to use their current lender (also known as a servicer).
Today it was announced that people who have a mortgage that is owned by Freddie Mac can now use whatever Freddie Mac approved lender they want when refinancing — and released some guidelines.
Key highlight of the announcement include:
- Borrowers can continue to work with their existing servicer to refinance their mortgage. In the vast majority of these cases, the current servicer will not have to re-underwrite the borrower.
- If the borrower chooses to work with another Freddie Mac-affiliated lender, the mortgage will need to be re-underwritten.
- Freddie Mac will allow the lesser of 4 percent of the new refinance mortgage amount or $5,000 of closing costs, financing costs and prepaids/escrows to be rolled into the new refinance mortgage.
- Freddie Mac’s standard post settlement delivery fees, up to a maximum of 2 percent, will apply to the Relief Refinance Program.
According to Freddie Mac Executive Vice President Don Bisenius:
“We are responding to consumers’ desires to have more refinancing options. As an added benefit, we are expanding the program and providing greater flexibility in financing closing costs. Freddie Mac is committed to doing everything we can to bring the benefits of the Administration’s Making Home Affordable program to as many borrowers as possible.”
What this means is that if you decide to work with a lender who is not your current servicer, it will be more difficult to get your refinance done — although not impossible as it was before. Freddie Mac has expanded their guidelines so that people who have been given poor service from their current lender have choices of lenders who can help them get their loan done.
Hurry before mortgage rates go up!
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Getting your mortgage loan modified is a difficult task. It needs an expert to do and review all the documents. A lawyer can renegotiate the terms with your lender so that your monthly payments will be lowered to a maintainable level.