Last Wednesday, February 1, President Obama announced the details of a plan to help homeowners refinance their mortgages in hopes of bolstering the housing market.
According to the U.S. Department of Housing and Urban Development, this proposal will allow buyers to save an average of $3,000 a year by refinancing into loans backed by the FHA, if they are current on their mortgage.
This refinancing plan is the most recent addition to Obama’s foreclosure prevention efforts, following the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).
While this program has been out for a couple years, this new iteration is far more lenient, i.e. no limit on how far underwater a borrower is.
Here are some of the rules for the new program as we know them so far:
- Loan must be Freddie or Fannie owned AND was originated prior to June 1 2009. Here a couple of website links where you can check on your loan:
- Removes the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac
- Extends the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
- Second loans must subordinate
- Rates are generally the same as standard low Loan to Value program.
The approval system for all these loans is not available until March 17, so no lenders are able to close prior to this date. Rate adjustments are not out yet so no one can accurately quote the rates although we have seen evidence that some that are quoting.
If you or someone you know may be able to improve their financial position, feel free to contact us and we’ll put you in contact with an excellent lender that can help.