May 11, 2009 by MSI
Recently, the Obama Administration introduced a comprehensive Financial Stability Plan, designed to stimulate the economy and turn around the financial crisis in the U.S. One of the critical components is Making Home Affordable, a plan to stabilize the housing market.
A subcomponent of the Making Home Affordable plan is the Home Affordable Refinance Program which is designed to provide homeowners with loans owned or guaranteed by Fannie Mae an opportunity to refinance into more affordable monthly payments.
Fannie Mae has loosened the rules for homeowners who are seeking to lower their monthly payments or move to a more stable mortgage product, such as refinancing an adjustable-rate mortgage into a fixed rate mortgage. The less stringent criteria include lower acceptable credit scores and reduced income documentation. And, in certain scenarios, Fannie Mae is waiving the requirement for an appraisal.
More importantly, the maximum loan-to-value-ratio for refinance mortgages under this program will be increased to 105 percent and mortgage insurance requirements will be significantly relaxed to assist borrowers who have experienced home price declines.
This is one element of a comprehensive plan and one which is very much needed in today’s economic environment. With more than 10% of Americans facing foreclosure, this is a critical program for our Country.