Fannie and Freddie Raise Refinance LTV Limits

The federal regulator overseeing Fannie Mae's and Freddie Mac's Home Affordable Refinance Program announced today they are raising the program's loan-to-value (LTV) maximum from 105% to 125% to allow more homeowners to hopefully take advantage of today's lower mortgage interest rates. Homeowners must be current on their payments and the loan must already be owned or guaranteed by Fannie or Freddie. In addition, the program will allow borrowers who made original down payments of 20% or more to refinance without having to obtain mortgage insurance. Borrowers who were required to have mortgage insurance won't be required to obtain any additional coverage either.

Fannie Mae and Freddie Mac will also offer pricing incentives (a 0.5 percent reduction in its loan-level pricing) to encourage borrowers with LTVs above 105% to consider refinancing into shorter term (20 or 25 year) loans to help pay down principal more quickly and reduce lifetime interest payments, the Federal Housing Finance Agency said.

The expanded LTV program is available now when borrowers apply for Home Affordable refinancing through their current mortgage servicer, Freddie Mac said. Borrowers will not need to be re-underwritten in most cases. The expanded LTV ratio will also become available October 1 for borrowers wishing to refinance with other lenders affiliated with Freddie Mac. Those lenders will be required to re-underwrite the borrower using Freddie Mac's automated underwriting service, Loan Prospector.

Fannie Mae said it will begin taking delivery of loans with the expanded LTVs on September 1. Borrowers with LTVs above 105% must refinance through their existing loan servicer and the new loans must be fully amortizing fixed-rate mortgages with terms of 15 years to 30 years.

Metro Mortgage Company is a federally regulated Mortgage Banker specializing in residential Florida home loans including Conventional, Jumbo and FHA/VA mortgages. Call us today at 888-617-3674.

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