You can get help paying your mortgage from a few different sources. While the government programs associated with the subprime mortgage crisis have gone away. There are government programs that can help. This article focuses on two programs that come from Fannie Mae and Freddie Mac
- High Loan-to-Value (LTV) Refinance Option
- Enhanced Relief Refinance
These programs are limited in scope and only available under certain conditions to Fannie Mae or Freddie Mac clients. If you don’t have one of these types of mortgages you should contact your lender to find out what programs that they off.
Fannie Mae’s High LTV Refinance Option
Fannie Mae’s High LTV Refinance Option is designed to help borrowers with their home loan problems. It provides an opportunity to restructure an existing Fannie Mae loan under certain conditions.
There are four benefits that this program is designed to address. Borrowers applying for this option must show that they benefit in one of the following ways:
- Reduced monthly principal and interest payment
- Lower interest rate
- Shorter Amortization term
- More stable loan product
In order to apply you must provide documentation that the refinance will improve your loan in one of these areas.
What is a High LTV Refinance?
A high LTV refinance helps homeowners who don’t have enough equity in their home to refinance with a traditional mortgage. It may seem strange to a lot of people that with rising home prices people are “underwater” on their home loans. However, in some areas, prices haven’t risen as much as in other areas. Also, if you recently purchased a house and want to take advantage of lower interest rates you may not have enough equity built up to restructure with a traditional mortgage.
Fannie Mae LTV Matrix
Fannie Mae’s LTV Matrix sets the ration requirements for LTV refinance loans. It includes:
- Credit score
- Minimum reserve requirements
- Maximum debt-to-income ratio requirements
This matrix will help you understand whether you will be eligible to use this program.1
There are several requirements for the program. The most basic requirement is that you may only refinance an existing Fannie Mae loan. Other requirements include:
- The note date for the loan must be 10/1/2017 or later
- At least 15 months must pass between the original mortgage date and the date of the refinance loan
- Borrowers must be current with their payments
- The mortgage must not be a refinance loan
In addition to these eligibility requirements mortgage insurance will be transferred to your new loan. Fannie Mae will accept simplified documentation for employment, income and assets. If you have a loan owned by Fannie Mae, you may have an opportunity to restructure and improve your financial condition if you qualify for this program.
Freddie Mac Enhanced Relief Refinance (FMERR)
FMERR helps homeowners refinance for better loan terms. This program is for people who:
- Have a mortgage with a LTV ratio too high for a standard restructure
- Are current on their mortgage payments
It is a similar program to Fannie Mae’s Refinance Option, but it is only for homeowners with Freddie Mac mortgages.2
What is the Freddie Mac Enhanced Relief Program (FMERR)?
The FMERR program offers help paying your mortgage if you have a Freddie Mac mortgage and are underwater. If you owe more on your mortgage than your house is worth or you don’t have enough equity to qualify for a standard restructure then you should call your mortgage representative for information about this program.
Only homeowners with Freddie Mac mortgages meet the program qualifications. Other requirements include:
- Loan date must be on or after October 1, 2017
- Borrower must be current on payments
- Mortgage being financed must not have been previously refinanced through HARP
The goal is to help homeowners lower their expenses by reducing the interest rate or the monthly payments, replace an adjustable rate with a fixed rate, or reduce the term of the loan.
Fannie Mae’s High LTV Refinance Option and FMERR are great programs that will help paying your mortgage if one of these lenders owns your loan. However, not everyone has loans with these companies. Private banks and mortgage companies are also willing to work with homeowners having trouble making monthly payments. The key is staying current on your payments. As long as you haven’t fallen behind yet you should go to your bank and talk to them about restructuring your loan.
If you have fallen behind then your options are limited and complicated, but doing nothing is not a good options. Take action and call a charity, like Catholic Charities or the United Way. You can even call HUD, and they will put you in touch with a counselor that they approve.