Freddie Mac recently provided information on its new high LTV refinancing option, which will eventually replace HARP in roughly a year from now. Known as the Enhanced Relief Refinance Mortgage, this new product will become effective for mortgages with applications received on or after November 1, 2018.
The Enhanced Relief Refinance Mortgage aligns with the FHFA’s directive, and will provide refinancing opportunities to borrowers with existing Freddie Mac mortgages that cannot utilize the GSE’s “no cash-out” option due to the LTV of the new loan exceeding that program’s maximum limit.
To qualify for this new product, a borrower must receive one or more benefits that include a reduction in the interest rate or of the principal and interest payment of the first lien mortgage, or replacing an ARM with a fixed-rate mortgage or a shorter amortization term. The mortgage being refinanced cannot have been delinquent for 30 or more days in the most recent 6-month period, or delinquent more than once in the previous 12-months.
The mortgage must be underwritten through Freddie’s Loan Product Advisor or a manual underwriting program, and the originator in not required to verify a borrower’s income and assets. There is also no minimum Indicator Score requirement, except in some special circumstances – such as an increase in the monthly payment of more than 20%, or if the new mortgage is a Higher-Priced Mortgage Loan.
In addition, the mortgage being refinanced must be owned or securitized by Freddie Mac, and cannot be a Freddie Mac Relief Refinance Mortgage. It must also have a note date on or after October 1, 2017, and have at least 15-months of seasoning.
To determine the property value, an originator may use the GSE’s Home Value Explorer or obtain a new appraisal report with both an interior and exterior inspection. So long as all these requirements are met, there is no limit on the amount of times an Enhanced Relief Refinance Mortgage can be used.
For more information, check out the following resources from Freddie Mac: