Additional information regarding Fannie Mae’s High Loan-to-Value (LTV) Refinance Option and Extension of HARP®
FHFA today announced additional details for the Refinance Offering for High LTV Borrowers initially announced in August 2016. In addition, FHFA has also directed Fannie Mae and Freddie Mac (the Enterprises) to further extend the Home Affordable Refinance Program® (HARP) through December 31, 2018.
Fannie Mae is sharing the following additional details about its high LTV refinance option, at the direction of FHFA and in coordination with Freddie Mac.
- The high LTV refinance option provides limited cash-out refinance opportunities to borrowers with existing Fannie Mae mortgages who are making their mortgage payments on time but whose LTV ratio for a new mortgage exceeds 95% for a one-unit principal residence or exceeds the maximum allowable LTV ratio for a limited cash-out refinance for other segments as listed in the Eligibility Matrix1.
- Once enacted, the option will apply to mortgage loans owned by Fannie Mae that are originated on or after October 1, 2017.
- At least 15 months have passed from the Note Date of the loan being refinanced to the Note Date of the new loan for the loan to be eligible for the option.
As previously announced, under the high LTV refinance option, as with HARP, the refinance must provide one or more of these borrower benefits:
- Reduced monthly payment
- Lower interest rate
- Shorter amortization term
- More stable mortgage product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage
Unlike HARP, borrowers may use the high LTV refinance option more than once as long as all other requirements, including seasoning and payment history, are met.
Loans refinanced under this new option will be eligible for securitization utilizing existing Fannie Mae pool prefixes.
The goal of this refinance option is for Fannie Mae to have in place a proactive approach to assist borrowers who are current on their mortgages during an economic environment in which such borrowers have experienced a decline in the value of their home and it will receive a benefit from refinancing under this option. Final details about the high LTV refinance option are expected to be released later this year. Pricing details, including whether or not standard risk-based loan level price adjustments apply, will be published at a future date.
The Enterprises have aligned on LTV eligibility of greater than 95% for one-unit principal residences for this new refinance option, which represents a significant portion of outstanding borrowers, minimizing any impact to the Single Security.
As a result of the HARP extension through December 31, 2018, Fannie Mae will also extend DU Refi Plus (and Refi Plus with manual underwriting), which will be retired in accordance with HARP. Whole loans must be purchased by Fannie Mae on or before September 30, 2019 or must be delivered into MBS pools with issue dates on or before September 1, 2019.
For any questions, please contact the Fannie Mae Investor Help Line at 1-800-232-6643, Option 2 or by e-mail.
1See Fannie Mae’s Eligibility Matrix
Home Affordable Refinance Program®, HARP® and the HARP logo are federally registered trademarks of the Federal Housing Finance Agency.