Freddie Mac Open Access Relief Refinance

Who Should Apply?

• Previously Denied - Recent program changes have made more loans eligible for this program. So, if you've applied before and been denied, you may want to try again. Also, not all lenders adhere to the basic Freddie Mac Open Access Relief Refinance underwriting guidelines. Many banks and mortgage lenders will add their own additional restrictions. So, for example, although Freddie Mac places no limit on the LTV, many lenders will not allow loans that are greater than 105% of the current value of the property. We at HB Community Mortgage have access to lending entities who do follow Freddie Mac's guidelines to the letter. So, we may be able to get you approved where your current lender could not.

• Insufficient Income - The Freddie Mac Open Access Relief Refinance program places no limit on DTIR. $1 of income is enough to be approved. However, as with the previous paragraph, many lenders have their own minimum income requirements for this program, which override Freddie Mac's.

• Rental Underwater - Freddie Mac allows all residential property consisting of 4-units or less (i.e., single family home, condo/townhouse, duplex, triplex, 4-unit or 2-4 separate homes on a single lot). If you own a rental property that you have not been able to refinance because you owe more than it is worth, the Freddie Mac Open Access Relief Refinance program may make it possible for you to refinance and improve your cash flow.

• Credit Problems - Many people lost lost rental properties to foreclosure or were forced to do a short sale due to the sharp downturn in our economy a few years ago. If such an occurrence has prevented you from refinancing a property you currently own, and the loan is owned by Freddie Mac, the Open Access program may work for you. Your refinance request cannot be denied due to a bankruptcy, short sale or foreclosure. It does not matter when such problems occurred. There are no seasoning requirements. Late mortgage payments are also acceptable, as long as the payments are current at the time of application and have been current for at least six months.

• Combined Amount of 1st and 2nd or Equity Line is too high - Conventional lending guidelines do not permit new loans that exceed the current value of the property being refinanced. They also count the total amount owed against the property, even if the 2nd loan or equity line will not be included in the new loan amount. So, if you have a 1st mortgage of $250,000 and an equity line with a balance of $100,000 and your property is worth $300,000 conventional guidelines would not permit you to refinance, even if you only want to refinance the 1st mortgage, because the combined amounts of all loans on the property exceed its current value. Under the Freddie Mac Open Access Relief Refinance program you are permitted to refinance a 1st mortgage owned by Freddie Mac without regard to the value of the home. No cash out is allowed under this program, nor may a 2nd loan be combined with a 1st. However, if a there is a 2nd mortgage or equity line of credit on the property, it may be subordinated to the new Freddie Mac Open Access Relief refinance of the 1st mortgage. The refinance will be approved even if the combined amounts of the new mortgage and the existing 2nd or equity line exceed the current value of the property.

• Mortgage Insurance - If the current balance of your mortgage exceeds 80% of the value of the property, mortgage insurance would be required for a standard refinance. Mortgage insurance does not benefit you, the homeowner. It protects the lender in the proceeds of a foreclosure sale are not enough to pay off the balance of the loan. Nevertheless, it is you, the homeowner, who must pay for the mortgage insurance policy. Generally, this will mean an additional monthly payment, which does not go toward paying down the loan principle or paying mortgage interest, nor does it qualify as an income tax deduction. For you, the borrower, it is just an additional monthly expense. If you have equity in your property, but not quite enough to do a conventional refinance without mortgage insurance, Freddie Mac's Open Access Relief Refinance may be an option. Under the program, if your current loan does not have mortgage insurance, then you will not be required to have it on the new loan, even if the balance will be greater than 80% of the value of the property.

• No Savings - Most conventional loans will require that you have savings (reserves) equal to at least 2 months mortgage payments at the time the loan closes. Under the Freddie Mac Open Access Relief Refinance program, no reserves are required.

• Borrowers may be removed or added - It is very common for divorce settlements to require one spouse to take over an existing mortgage. However, if the loan amount is greater than the current value of the property, or any of the other problems stated above apply, it may not be possible to refinance in order to release a person's liability for a loan. Under the Freddie Mac Open Access Relief Refinance program, any borrower may be removed or added, as long as at least one of the original borrowers remains on the loan and on title.

• No Maximum Number of Financed Properties - Many investors who purchased multiple properties between 2000 and 2006 used Stated Income or similar types of loans. After the economic downturn, these types of programs disappeared, and conventional qualifying guidelines became much more strict. One such restriction is on the number of financed properties owned by a borrower. In general, if you have more than five mortgage loans you will not be able to refinance any of them except the one on you primary residence. However, if any of your loans are owned by Freddie Mac, you can use the Open Access Relief Refinance program without restriction. Your refinance request will not be denied due to having multiple properties with existing mortgages.

It is important to remember that very few lender will follow the Freddie Mac guidelines as written. Most will add their own restrictions (called "overlays") to the program. Nevertheless, we at HB  Community Mortgage have access to lenders who do follow the guidelines as written. So, if you've been denied for any of the reasons above before, you may wish to try again with us. We may be able to get you approved where others could not.

Call 714-603-9791 to get started today!