Many Sonoma County Loans have been denied due to loan-to-value restrictions imposed by Fannie Mae and Freddie Mac and an overall tight credit market. Last year the Obama administration announced the no loan to value refinance program for loans owned or guaranteed by Fannie Mae and Freddie Mac. For the last several months, many have speculated about when this program was going to become available for homeowners to actually start benefiting from it.
More recently there’s even been advertisements locally here in Sonoma County about the program. But what is it and how does it work, specifically?
Making Homes Afforable (Harp) is the underwater refinance program.
HARP has been toted as many things; the underwater refinance program, the upside down refinance, the Obama refinance to name a few. The program changes to allow no loan-to-value restrictions beginning on March 19.
Previously, the Fannie Mae Refi DU plus and the Freddie Mac Open Access Program broke down like this:
Fannie Mae-loans were able to be refinanced up to 125% loan to value sometimes without the need for an appraisal. There could be no mortgage lates in the last 12 months and the loan being paid off would’ve had to been originated on or before June of 2009. This included primary residences, second homes and investment properties. Usually second homes and investment properties would almost always need an appraisal.
Freddie Mac-loans were able to refinance up to hundred 105% loan to value and appraisal wavers were rare. There can be no mortgage lates in the last 12 months in the loan being paid off would’ve had to of been originated on or before June of 2009. This program was eligible for primary residences, second homes and investment properties as well.
Government insured mortgages such as FHA loans or USDA loans were ineligible for the Making Homes Affordable Program.
Making Homes Affordable New Changes on March 19, 2012
Fannie Mae-loans will now have no loan to value restriction. An appraisal will still be required, but the lender cannot deny the loan due to loan to value. Your mortgage lender will run an automated underwriting through Fannie Mae’s underwriting system known as desktop underwriter, DU for short. If you pass with an “Approve Eligible”, you should be good to go for financing. You can expect an appraisal on your Sonoma County loan to cost upwards of $400.
Freddie Mac-loans will have no loan to value restriction and just like the Fannie Mae product, and appraisal will still be required. The mortgage lender will run your home loan scenario through Freddie Mac’s automated underwriting program which is Loan Prospector, LP for short. If you pass with an “Accept Accept” you are eligible to move forward with financing. Once again the appraisal will run approximately $400.
These requirements still apply:
- Loan being paid off must have been originated on or before June of 2009
- Government insured loans are ineligible for this type of financing
- If the loan being paid off contains monthly mortgage insurance, the new loan will also contain monthly mortgage insurance, yes the mortgage insurance companies are making changes as well to handle high loan to value loans.
- There can be no mortgage lates in the last 12 months.
- Primary residences, second homes and investment properties are all eligible for this new program
- Closing costs can be refinanced into the new loan amount or paid separately at the close of escrow for an even greater monthly net tangible benefit.
- Cash out on this program is ineligible. This program is for payment reduction mortgage refinances only.
If you have a Sonoma County Loan or California loan that is owned by Fannie Mae or Freddie Mac, take advantage of HARP immediately.
Not sure who owns your mortgage loan? You can visit Fannie Mae’s website http://www.fanniemae.com/loanlookup/. Freddie Mac’s site is https://ww3.freddiemac.com/corporate/. If your loan is not owned by Fannie Mae or Freddie Mac, still consider refinancing your Sonoma County loan. Mortgage rates are still quite favorable and will likely remain in the low four’s for quite some time.
Get the best Sonoma County mortgage rate and discover the making homes affordable refinance now.