Posts Tagged Emelie Maybrook

If your loan is owned by either Fannie Mae or Freddie Mac, you will now be allowed to refinance up to 125% of the current value of your home under the “Making Home Affordable” Plan approved by the Federal Housing and Finance Agency (http://www.fhfa.gov/) beginning on July 1st. The 125% loan to value rule applies to your first mortgage only. Therefore, if you have a second mortgage, you will still be able to refinance as long your second mortgage lender is willing to subordinate to your first lender.

I have many clients who have been waiting for this to happen, and are now excited to take advantage of this opportunity. One client’s specific example is the following: He had put down 20% when he bought his home, but decided to get his second mortgage for home improvement after his purchase. He wanted to refinance the existing adjustable rate mortgage on his first, but could not because the first mortgage was more than 105% of the value of his home under the old rule. This change will now allow him to refinance into a fixed and a more stable mortgage since he has decided to retire in this home and wait for the market to recover.

There are a lot of homeowners that I talk to everyday having the same dilemma, and are now finding relief from this provision. Although this proposal is finally approved, it may take at least 30-days to work out the details of this refinance solution since the mandate has to come from the top down to the lenders. I am seeing that some lender’s responses are ranging from slow to not even mentioning this option at all. I say, let’s be patient and continue to pursue every avenue to maintain homeownership stability in our communities.