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More options for Home Affordable refis

Freddie to allow use of any affiliated lender

Homeowners seeking to refinance a mortgage owned or guaranteed by Freddie Mac under the Obama administration’s Making Home Affordable program will soon be able to use any lender affiliated with Freddie Mac, and roll up to $5,000 in closing costs into their new mortgage.

In announcing the planned changes to its Making Home Affordable refinancing program, Freddie Mac said borrowers who work with their current servicer to refinance will usually not need to be underwritten again. Whether borrowers choose to work with their existing servicer or another lender, Freddie Mac’s post settlement delivery fees of up to 2 percent will apply.

Announced in February, the Making Home Affordable initiative has two major components that are intended to help 7 million to 9 million families refinance their loans or obtain loan modifications.

The refinance component of the initiative is intended to help up to 5 million borrowers who might otherwise be unable to refinance because falling home prices have left them with little or no equity in their homes.

Only loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible for refinancing under the program, and loans can’t have loan-to-value ratios of more than 105 percent. But borrowers who weren’t required to purchase private mortgage insurance on their original loan don’t have to obtain it when refinancing, and borrowers who put down less than 20 percent when purchasing their home and who therefore have mortgage insurance aren’t required to purchase additional coverage.

The Making Home Affordable initiative also provides incentives for loan servicers to make 3 million to 4 million loan modifications. A mortgage does not have to be owned or guaranteed by Fannie or Freddie for borrowers to participate in the loan modification program.

The loan modification program has been expanded to provide incentives for borrowers and loan servicers to engage in short sales when loan modifications aren’t feasible (see story).

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