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Introducing Relief Refinance Mortgages in Support of the Federal Making Home Affordable ProgramMarch 4, 2009 Single Family Advisory

Freddie Mac is pleased to play a key role in sustaining homeownership and supporting the federal Making Home Affordable Program by introducing the Freddie Mac Relief RefinanceSM Mortgage.

This simplified refinance mortgage will help borrowers who are making timely mortgage payments but have been unable to refinance due to declining property values and tightening credit terms by offering:

  • Expanded LTV/TLTV/HTLTV ratios.
  • No postsettlement delivery fees, except for the Market Condition delivery fee.
  • Relief from standard mortgage insurance requirements.
  • Simplified appraisal and borrower eligibility requirements.

By reaching out to borrowers through this initiative, we can work together to be a critical and stabilizing force for the nation's families and their communities.

Requirements for Relief Refinance Mortgages

With today's Guide Bulletin 2009-5, we are providing detailed requirements for our Relief Refinance Mortgages. This offering's simplified refinance requirements for first-lien conventional mortgages currently owned or securitized by Freddie Mac will make it easier for borrowers to refinance into mortgages that better position them for long-term homeownership success.

The only postsettlement delivery fee that applies to Relief Refinance Mortgages is the Market Condition delivery fee. We are waiving all other postsettlement delivery fees to make this opportunity as affordable as possible for borrowers.

Borrowers eligible for this offering must be current on their monthly mortgage payments with no 30 day or more late payments in the most recent 12 months. You may start accepting applications from borrowers who meet this and all other requirements for the offering tomorrow, March 5. Relief Refinance Mortgages are only eligible for sale through the selling system, effective for Freddie Mac settlements on or after April 1, 2009.

In all cases, in order to originate a Relief Refinance Mortgage, you must be the Servicer of record for the existing mortgage and you must be able to demonstrate that Freddie Mac currently owns the mortgage being refinanced. Additionally, the Relief Refinance Mortgage must improve the borrower's position in at least one of the following ways:

  • Reduces the interest rate of the first mortgage.
  • Reduces the amortization term of the first mortgage.
  • Replaces an ARM, Initial Interest® Mortgage or balloon/reset mortgage with a fully amortizing fixed-rate mortgage.

Relief Refinance Mortgages offer expanded eligibility by permitting LTV ratios up to 105 percent and there are no limits on TLTV/HTLTV ratios.  Existing secondary financing must be subordinate to the Relief Refinance Mortgage and new or increased secondary financing is not permitted. Additionally, if the existing mortgage does not have mortgage insurance, then mortgage insurance is not required on the Relief Refinance Mortgage. Otherwise, mortgage insurance on the existing mortgage must be transferred with the existing certificate and percentage of coverage to the new refinance mortgage.  Please note that you must comply with all requirements of the mortgage insurer when transferring mortgage insurance to the new refinance mortgage, and you must retain all representations and warranties on the existing mortgage being refinanced.

As long as the Relief Refinance Mortgage does not increase the borrower's principal and interest payment by more than 20 percent, you do not have to re-qualify the borrower. If the new principal and interest payment increases by more than 20 percent, we require Streamlined Accept documentation for employment and income. A minimum Indicator Score of 620 and a maximum debt-to-income ratio of 45 percent are also required when the new principal and interest payment increases by more than 20 percent.

We are permitting the use of Home Value Explorer® (HVE) to estimate property values for 1-unit properties. HVE is a statistically-based automated valuation model that provides point value estimates and Confidence Scores on value estimates for properties located in all 50 states and the District of Columbia. Freddie Mac-owned mortgages with a forecast standard deviation of no greater than .20, which corresponds to a high or medium HVE Confidence Score, and that meet all other requirements for this offering are eligible for sale to Freddie Mac. For these eligible mortgages, we are providing representation and warranty relief for the value, condition and marketability of the Relief Refinance Mortgage as long as the Seller is not aware of any circumstances or conditions that would adversely affect the value, condition and marketability of the property.

To help you implement this offering, later this month we will make Freddie Mac loan numbers available for the active mortgages you service. Additionally, as a one-time service, in April we will provide you with available HVE point value estimates for properties secured by active Freddie Mac-owned mortgages that may be eligible for this offering.

Get More Information

It is important that you review today's Guide Bulletin and the other information listed below to prepare for these changes to our requirements.

© 2010 Freddie Mac

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