What to Expect & How to Succeed
Borrowers whose mortgage loans are owned by GSE's (Fannie Mae & Freddie Mac) will be able to refinance their mortgages through the new Making Homes Affordable Mortgage Program, in some cases, you might be able to start next month. Freddie Mac and Fannie Mae are handling the making homes affordable refinance mortgage plan in completely different ways, even though they report to the same governmental agencies.
Freddie Mac and Fannie Mae are in government conservatorship, because it was either that or bankruptcy and they now report to the Federal Home Financing Agency. Those employed with both Freddie Mac and Fannie Mae have nicknamed the FHFA of the agency "Fuhfa".
Under the Making Home Affordable refinance program, homeowners will be able to refinance their Fannie or Freddie owned home mortgage loans through the making homes affordable mortgage program even if the primary mortgage balance is five percent more than the home is worth.
How many homeowners will qualify for help under the Making Home Affordable Mortgage Program? It will help a few, are guess is somewhere around 750k out of the 9 million said to need immediate help, so many homeowners who are hoping the making homes affordable program will help them are simply too far underwater (high LTV) to get help from the Making Homes Affordable Mortgage Program.
Even though the GSE's are controlled by the same federal agency and have the same goals, they are pursuing the Making Home Affordable Mortgage Program in their own ways. Many homeowners looking to use the making homes affordable program are not going to be happy as Fannie Mae offers tons of choices, but charges ridiculously high fees and Freddie Mac offers almost no choices but does have low fees.
Fannie Mae will allow homeowners to refinance through the making home affordable mortgage program with a large choice of making homes affordable approved mortgage lenders. Let's say you send your monthly mortgage payments to Wells Fargo and the mortgage loan is owned by Fannie Mae. You will be able to refinance under the Making Homes Affordable mortgage plan with Wells Fargo if you want, or any another making homes affordable approved mortgage lender that has a relationship with Fannie Mae. But you'll be blind sided with high fees. Many future making homes affordable homeowners will find themselves paying one percent or more of their new loan balance in what Fannie Mae calls "loan level price adjustments". That is on top of the customary closing costs fees that the making home affordable approved mortgage lender will charge.
Freddie Mac will require homeowners to refinance with their current mortgage lender. Say you send your monthly mortgage payments to Chase, and the mortgage loan is owned by Freddie Mac. Under the Making Homes Affordable Mortgage Program, you will have to refinance with your current loan servicer. In this hypothetical case, you will not be allowed to refinance with someone else, but Freddie Mac will charge a quarter-point fee and nothing more. In addition, the mortgage lender will assess its customary fees.
The GSE's are telling homeowners to call their making homes affordable approved mortgage loan servicers to ask if their mortgage loans are owned by either GSE. Apparently, the servicers are pushing back, asking why Freddie Mac and Fannie Mae won't answer those questions themselves. Fannie announced it will have a system in place a week from now, in which you will be able to access a Fannie Web page, enter your address, and find out if you have a Fannie Mae mortgage loan.
Fannie and Freddie prohibit your lender from proactively reaching out to you with an offer of a refinance under the Making Home Affordable Program. In other words, your making homes affordable mortgage lender can not search through its database, identify yours as a Fannie Mae loan with a loan-to-value of 100 percent, and send you a letter offering to refinance the mortgage loan at a lower rate under the Making Home Affordable Mortgage Program.
So if you're wondering why your lender doesn't just get out in front of the problem, and offer you a refinance, that's why. Making such an offer is against Fannie's and Freddie's rules unless you contact the making homes affordable lender first. This is just another example of your government protecting investors at the expense of homeowners, taxpayers and consumers.
