Freddie Mac

Relief Refinance Mortgage - No PMI

Fannie Mae

DU Refi Plus™ - No PMI

Eligible Borrowers

To determine if FNMA or Freddie Mac owns your loan first click these sites below:

www.fanniemae.com/loanlookup

www.freddiemac.com/mymortgage

Currently serviced customers only with an existing Freddie Mac owned loan who meet all the program requirements. Must fund by June 30th, 2011. 

Customers with an existing Fannie Mae owned loan and who meet all of the program requirements no matter who services the loan. Must fund by June 30th, 2011.

Description

Streamline refinance program for Freddie to Freddie loans where borrower needs expanded LTV or potential relief from standard mortgage insurance requirements.

The program should:

· Reduce the interest rate of the first mortgage or

· Replace an ARM, Interest-Only, or a balloon/reset mortgage with a fixed rate, fully amortized mortgage or

· Reduce the amortization term of the first mortgage; the new Freddie Mac Relief Refinance Mortgage must not have a longer amortization term than the existing mortgage being refinanced

Refinance program for Fannie to Fannie loans where borrower needs expanded LTV or potential relief from standard mortgage insurance requirements.

The program should:

· Reduce payment or

· Provide a more stable loan product

Available Product Types

15, 20, and 30-year fixed rate 5/1, 7/1 and 10/1 LIBOR ARM

Cannot refinance from fixed-rate to an ARM product. Can go from ARM to ARM loan.

15, 20. 30 and 40-year fixed rate 5/1, 7/1 and 10/1 LIBOR ARM

Cannot refinance from a fixed-rate to an ARM product. Can go from ARM to ARM loan.

Amortization Type

Fully amortized

Fully amortized

Loan Score and Other Credit Requirements

No minimum score except:

620 minimum score when new principal and interest (P&I) payment is more than 20% greater than the existing P&I payment made most frequently in the last 12 months.

The borrower cannot currently be involved in a bankruptcy or foreclosure. Refer to guidelines for details.

· Borrower must meet DU underwriting requirements, including mortgage delinquency, bankruptcy and foreclosure policies

· Lender adverse credit policy will apply on loans not currently serviced by them or their affiliates.

Minimum 620 for primary or 680 for second home or investment.

Please Note: DU applies requirements and checks eligibility.

Loan Eligibility

Freddie Mac must own it. Call for further detail

Fannie Mae must own it and loan must receive Approve/Eligible response from DU system

Loan Purpose

Rate/Term Refinance only

Rate/Term Refinance only

Occupancy

Primary & investment (1-4) unit

Second Home (1-unit)

Limit on number financed properties does apply at 4.

Must be same property type as when lender sold the loan to Freddie Mac, except that change in occupancy from second home or investment to primary is allowed

Primary & Investment (1-4) unit

Second Home (1-unit)

No limit on number of financed properties. Our lenders limit the number to 4 properties with the same borrower.

LTV/CLTV Limits

105% LTV,

Unlimited TLTV/CLTV

The borrower may pay down their mortgage with their own funds in order to qualify for the mortgage in the event the LTV exceeds 105%

105% LTV, 110% TLTV/CLTV

The borrower may pay down their mortgage with their own funds in order to qualify for the mortgage in the event the LTV exceeds 105%

Property Type

Single family residence

Multi-famil residence  1-4

Condominium

PUD

Two-unit second home

Resort condos and condotels not allowed

Single family residence

Muilti-family residence 1-4 Units

Condominium

PUD

Resort condos and condotels not allowed

Qualifying Income-to-Debt Ratios

No requirement except:

45% maximum when new principal and interest (P&I) payment is more than 20% greater than the existing P&I payment made most frequently in the last 12 months

If P&I is not increasing more than 20% or is decreasing and DTI > 50%, we will need to determine job/income stability for underwriter

· Determine whether the borrower has had a job loss or reduction in income in the last 6 months;

· If no job loss or income reduction, ensure all program guidelines are met for DTI over 50%

Determined by DU response (FNMA’s automated underwriting sustem)

DU will determine maximum allowable payment increase

Stated Income/Asset

When new principal and interest (P&I) payment is more than 20% greater than the existing P&I payment made most frequently in the last 12 months, income documentation is required.

Asset documentation is required if funds needed to pay down first mortgage, pay off/down subordinate financing or pay off other debts, including judgements.

Salaried: One paystub and verbal VOE required

Self-employed / or Commissioned: One year federal tax return

Assets must be verified if either of the following exist:

• Pay off debts, including judgements
• Borrowers are paying only the closing costs or prepaids

Any documentation required on DU feedback certificate must be obtained.

Loan Amounts

The new conforming loan amount is limited to:

· The unpaid principal balance plus accrued interest, but excluding other payoff fees and costs

· Actual closing costs, financing costs, pre-paids, escrows and payoff fees other than accrued interest limited to $5,000 maximum financed or 4% of the loan amount whichever is less; borrower(s) to pay any overage out-of-pocket

· The borrower may receive up to $250 cash at closing

Examples:

1. Payoff amount: $229,545

Actual closing costs etc: $2,496 (Max $5,000)

Maximum loan: $232,041

2. Payoff amount: $352,006

Actual closing costs etc: $3,672 (Max $5,000)

Maximum loan: $355,678

Excess funds MAY NOT be applied as a principal curtailment.

The new conforming loan amount limited to:

· The unpaid principal of the first mortgage balance, including accrued interest

· Actual closing costs, financing costs, pre-paids, payoff fees and escrows

· The borrower may receive up to $250 cash at closing

Note: No limit on actual closing costs, financing costs, pre-paids and escrows.

Examples:

Payoff amount: $352,006

Actual closing costs, etc.: $3,672

Maximum loan: $355,678

Excess funds (above $250 cash to borrower) due to the actual payoff being lower than the estimated payoff or actual closing costs being lower than estimated closing costs MUST BE applied as a principal curtailment, not to exceed $2,000

Cash Reserves

No reserve requirement EXCEPT FOR dti > 50% if subject property is the primary residence.

• 2 months reserves on the subject property if it is a second home or
• 6 months reserves if it is the subject property if it is an investment property, and
• 2 months reserves on each other financed second home or investment property.

No reserve requirement

Secondary Financing

· Re-subordinate or payoff with own funds

· No new subordinate financing allowed

· No replacement financing

· Secondary financing may not have any increase in unpaid balance

· Secondary financing must meet standard guidelines

· Down payment assistance programs (DAPs) are eligible to be re-subordinated

· Re-subordinate or pay-off with own funds

· No new subordinate financing allowed

· No replacement financing

· Down payment assistance programs (DAPs) are eligible to be re-subordinated

Mortgage Insurance Option

If original loan does not have MI coverage, then no MI required for the new loan

Note: If original loan currently has MI or LPMI, loan is not eligible for this program at this time

Loan must receive the following DU message:

"Mortgage insurance is not required for this DU Refi Plus loan case file".

3 Months

The note date of the original mortgage must be at least 3 months prior to the note date of the new mortgage.

There is no seasoning requirement.

Mortgage History

0X30 days late in the last 12 months

When the mortgage history is more than 30 days old at the time of closing, an updated history is required to ensure the loan is current and there has not been a 30-day late payment since the time of application

0X60 days late in the last 12 months

Ineligible Mortgages

Existing Loan:

· Nonprime

· Alt-A

· FHA, VA, RD loans

New Loan :

· <5/1 ARMs

· Interest-Only payment feature

· Cash-Out Refinance

· Special purpose Cash Out (Spousal Buy-Outs)

· Construction to Perm

· Temporary buydowns

· Home Possible

· Home Opportunities

· Renovation

· Texas 50(a)(6)

Existing Loan (DU checks for eligibility):

· Loans subject to lender paid mortgage insurance

· Reverse mortgages

· Second mortgages

· Government mortgages

New Loan :

· <5/1 ARMs

· Interest-Only payment feature

· My Community mortgage

· Renovation

· Texas 50(a)(6)

HARP Transactions

A borrower may refinance only one time per property under the program; a homeowner may not refinance the same property more than once under the program

A borrower may refinance only one time per property under the program; a homeowner may not refinance the same property more than once under the program

Other Features/Restrictions

Can not add a new borrower(s)

Change in borrowers are permitted due to death or divorce:

· Documentation of the death or divorce must be obtained

· Evidence that the remaining borrower has been making the mortgage payments, including the payments for any secondary financing, for the most recent 12-months period;

Policy of multiple financed properties does apply (4)

Policy for loans seasoned less than 12-months or less than 6-months does not apply

Rent loss insurance is required on investment properties per standard guidelines

· Borrower(s) cannot be removed from the original loan

· Borrowers may be added as long as the original borrowers are on the loan

· Policy for multiple financed properties does apply (4 max)

· Policy for loans seasoned less than 12-months or less than 6-months does not apply

Rent loss insurance is not required on investment properties

Also:

• Non-occupant co-borrowers are allowed on primary residences if the existing loan has non-occupant co-borrowers.
• Title in Trust is allowed on (intervivos)Living Trusts