The Obama Administration announced yesterday that they were expanding the criteria for homeowners who wish to refinance their existing mortgage under the housing-rescue program. The program, which is known as refi plus in our industry, is now allowing homeowner’s whose mortgages are now worth up to 125% of the home’s current value to refinance under this program. Previously the program only allowed loans to be refinanced up to 105% of the homes value.
In addition, they announced enhanced pricing on these programs which should improve mortgage rates.
The expansion is not likely to benefit many homeowners in the Portland-metro area because home prices have not fallen so significantly. Other criteria still exist:
Among others here are the main criteria that we find inhibit our clients ability to utilize this program:
*When the existing mortgage was originated it could not have exceeded 80% of the homes value. In other words, the homeowner must have had 20% down OR taken out a 2nd mortgage in place of having 20% equity.
*If the borrower has a 2nd mortgage then we need to obtain a subordination agreement with that lender stating they agree to resubordinate the existing 2nd mortgage behind a new first mortgage. In this credit environment we don’t know of any 2nd lenders who are allowing this.
*The borrower’s existing mortgage must be a Fannie Mae or Freddie Mac mortgage. Jumbo loan amounts are NOT covered nor are loans owned by “portfolio lenders” such as Washington Federal Bank or ING Direct among others.
If you have questions about this program and if it can benefit you please let us know.