Relief Refinance Mortgages – Open Access
Freddie Mac and Fannie Mae were directed by the Federal Housing Finance Agency to extend their implementation of the Home Affordable Refinance Program® (HARP) through September 30, 2017.
The Freddie Mac Relief Refinance MortgageSM – Open Access helps borrowers refinance even if you are not currently servicing their mortgage. This offering is designed to assist borrowers who are making timely mortgage payments, but have been unable to refinance due to declining property values. A portion of this offering, mortgages with loan-to-value (LTV) ratios greater than 80 percent, represents our business implementation of the Home Affordable Refinance Program® (HARP).
With no maximum LTV ratios, relief from standard mortgage insurance, simplified appraisal requirements, and the ability to submit through Loan Prospector®, you can refinance more borrowers into mortgages that better position them for long-term homeownership success.
|Mortgage Being Refinanced Eligibility Requirements|
- The mortgage being refinanced must:
- Be a first-lien, conventional mortgage currently owned or securitized by Freddie Mac.
- Have a note date on or before May 31, 2009.
- Be seasoned for at least three months.
- The Servicer of the mortgage being refinanced may be any Freddie Mac-approved Servicer.
- Restructured mortgages are eligible to be refinanced as Relief Refinance Mortgages. Such Relief Refinance Mortgages are eligible to be delivered to Freddie Mac through a flow purchase contract.
- If the mortgage being refinanced was considered for and/or received a Freddie Mac modification, it is eligible to be refinanced as a Relief Refinance Mortgage. See Single-Family Seller/Servicer Guide (Guide) Section 4303.2(a) for detailed requirements.
- If the mortgage being refinanced has mortgage insurance or mortgage pool insurance, it is eligible for refinancing. See Guide Chapter 4303.3(h) for requirements.
- If the mortgage being refinanced has recourse, indemnification, or other credit enhancements defined in Guide Chapter 4303, it is ineligible to be refinanced as a Relief Refinance Mortgage – Open Access and will receive an ELV 64 message code in Loan Prospector indicating that the loan is ineligible.
|Relief Refinance Mortgage Eligibility Requirements|
The Relief Refinance Mortgage must result in at least one of the following:
- Reduction in the interest rate of the first lien mortgage,
- Replacement of an ARM, Initial Interest® Mortgage (or any mortgage with an interest-only period) or a balloon/reset mortgage with a fixed-rate, fully amortizing mortgage, or
- Reduction in the amortization term of the first lien mortgage.
- Reduction in the monthly principal and interest payment of the first lien.
|Eligible Mortgage Products
Relief Refinance Mortgages – Open Access must be:
- Conventional 15-, 20- or 30-year fixed-rate, fully amortizing mortgages.
- Conventional nonconvertible 5/1, 7/1 or 10/1 fully amortizing adjustable-rate mortgages (ARMs)
- The Relief Refinance Mortgages – Open Access may be super conforming mortgages.
- A fixed-rate mortgage may be refinanced into an ARM provided the refinance transaction results in a reduction in the monthly P&I payment.
A Relief Refinance Mortgages – Open Access must have:
- Application Received Dates on or after December 31, 2011, and on or before December 31, 2016.
- Freddie Mac settlement dates no more than 12 months after the note date and on or before September 30, 2017.
|Eligible Property Types
- 1- to 4-unit primary residences.
- 1-unit second homes.
- 1- to 4-unit investment properties.
- Flexibility in the use of refinance proceeds.
- In the event there are remaining proceeds from the Relief Refinance Mortgage – Open Access after the proceeds are applied as described in Guide Section 4303.3(b):
- The mortgage amount must be reduced, or
- The excess amount must be applied as a principal curtailment to the new refinance mortgage at closing and must be clearly reflected on the HUD-1 form or other equivalent closing statement.
- The proceeds may not be used to pay off or pay down any junior liens.
- Under no circumstances may cash disbursed to the borrower (or any other payee) exceed the maximum permitted amount.
|Maximum LTV/TLTV/ HTLTV
- There is no maximum LTV ratio for fixed-rate mortgages.
- The maximum LTV ratio for ARMs is 105 percent.
- There are no maximum TLTV/HTLTV ratios.
For an LTV ratio greater than 80 percent:
- If the mortgage being refinanced has mortgage insurance coverage, then the same mortgage insurance coverage percentage must be maintained for the Relief Refinance Mortgage – Open Access.
- If the mortgage being refinanced does not have mortgage insurance, then no mortgage insurance coverage is required for the Relief Refinance Mortgage – Open Access.
- Refer to Guide Chapter 4303.4 for special delivery requirements related to mortgage insurance for Relief Refinance Mortgages – Open Access.
- The lender may provide the borrower with a cash or a cash-like (e.g., a gift card) contribution or a contribution towards the payoff of the mortgage being refinanced according to the guidance outlined in Guide Section 4303.3(j).
- Must be fully underwritten and submitted to Loan Prospector.
- Relief Refinance Mortgages – Open Access with a risk class of Caution and no A-minus eligible purchase eligibility message must be manually underwritten in accordance with Guide Chapters 5100 through 5500 and 4303.
- Relief Refinance Mortgages – Open Access must, at a minimum, meet the income and asset documentation requirements of Guide Section 4303.3(f) regardless of the documentation level returned by Loan Prospector.
- For Relief Refinance Mortgages – Open Access that are Higher-Priced Covered Transactions (HPCT) or Higher-Priced Mortgage Loan (HPML) with an Application Received Date on or after January 10, 2014, see Guide Section 4303.3(d) and (e) for additional requirements.
- Noncredit payment references are prohibited and may not be used to establish an acceptable credit reputation.
- The borrower(s) obligated on the note on the Relief Refinance Mortgage – Open Access must be the same as the borrower(s) obligated on the note on the mortgage being refinanced, except that:
- A borrower on the mortgage being refinanced may be omitted from the Relief Refinance Mortgage for any reason.
- A borrower who is not on the mortgage being refinanced may be added to the Relief Refinance Mortgage, except that a non-occupying borrower may not be added to a mortgage secured by a primary residence. In all cases, at least one borrower(s) from the mortgage being refinanced must be retained.
- In all cases, at least one borrower(s) from the mortgage being refinanced must be retained.
- Mortgages secured by investment properties and second homes are not subject to the requirements related to the number of financed properties in Guide Sections 4201.16 and 4201.15.
- The Seller may use Home Value Explorer® (HVE) or a new appraisal to determine property value
- HVE may be used for certain 1- to 2-unit properties for Loan Prospector submissions. See Guide Section 4303.3(g) for detailed requirements on the use of HVE. In connection with the use of HVE:
- The Seller is relieved of representations and warranties for the value, condition and marketability of the mortgaged premises provided that, as of the settlement date, the Seller is not aware of any circumstances or conditions that would adversely affect the value, condition or marketability of the mortgaged premises.
- The date of the HVE estimate (HVE Value Date) must be no more than 120 days prior to the note date.
- Sellers are not required to obtain a new appraisal or a new HVE point value estimate if the Relief Refinance Mortgage is delivered more than 120 days from the note date.
- If a new appraisal is obtained, the Seller must obtain a full interior/exterior appraisal that meets the requirements of Guide Chapter 5601.
- Sellers are not responsible for the representations and warranties regarding the value, condition and marketability of the property for the refinance mortgage.
- Freddie Mac will accept appraisal reports with a UAD property condition rating of C5 or C6 and/or a UAD quality rating of Q6 completed on an “as-is” basis; the appraisal does not have to be completed “subject to” substantial or significant needed repairs being completed.
- The Seller is not responsible for the completeness and accuracy of the appraiser’s description of the mortgaged premises and the accuracy of, and support for, the appraiser’s opinion of market value of the mortgaged premises.
- For super conforming Relief Refinance Mortgages – Open Access, the special appraisal and collateral documentation requirements in Guide Chapter 4603.5 do not apply.
- For mortgages secured by the properties in condominium projects, the Seller must represent and warrant that the project is not a hotel/resort project or houseboat project, a timeshare project or a project with fragment or segmented ownership. The project must have insurance that meets the applicable requirements.
- Existing junior liens may be refinanced simultaneously with the first mortgage provided the junior lien is being refinanced for one of the following purposes:
- A reduction in the interest rate of the junior lien.
- To replace an ARM, an interest-only junior lien, or a junior lien with a balloon or call option with a fixed-rate, fully amortizing junior lien.
- A reduction in the amortization term of the junior lien.
- A reduction in the monthly payment of the junior lien.
- The unpaid principal balance of the new junior lien cannot be more than the unpaid principal balance, at the time of payoff, of the junior lien being refinanced.
- If the junior lien being refinanced is a fixed-rate junior lien, the new junior lien cannot be an ARM.
- An existing junior lien must be subordinate to the Relief Refinance Mortgage – Open Access, regardless of whether the junior lien is refinanced simultaneously with the first mortgage.
- An increase in the current unpaid principal amount of any junior lien is permitted for any reason not related to the Relief Refinance Mortgage transaction.
- No new secondary financing is permitted.
- See Guide Section 4303.4(d) for special delivery instructions for Relief Refinance Mortgages – Open Access.
- Applicable postsettlement delivery fees from Guide Exhibit 19 apply.
- For mortgages with LTV ratios less than or equal to 80 percent, the total of all delivery fees is capped at 200 basis points.
- For mortgages with LTV ratios greater than 80 percent, the following delivery fee caps must be applied:
- Zero basis points for non-investment property fixed-rate mortgages with amortization terms of less than or equal to 20 years.
- 75 basis points for non-investment property fixed-rate mortgages with amortization terms of greater than 20 years.
- 75 basis points for non-investment property mortgages that are ARMs.
- 200 basis points for investment properties.
- All Relief Refinance Mortgages may be sold to Freddie Mac through the following executions:
- Fixed-rate Cash
- Servicing retained
- Concurrent transfer of servicing
- Servicing released sales process for mortgages with LTV ratios less than or equal to 105 percent LTV
- Fixed-rate Guarantor
- Relief Refinance Mortgages with LTV ratios less than or equal to 105 percent may also be sold to Freddie Mac through the following executions:
- WAC ARM Cash
- WAC ARM Guarantor
- MultiLender Swap
- Sellers must take out separate fixed-rate contracts based on the specific LTV range for the contract.
- To identify these fixed-rate cash contracts, choose the appropriate range using the "LTV Range for the Contract" field located on the "Take Out Cash Contract" screen in the selling system. Select:
- ">105% - <=115%" for LTV ratios greater than 105 percent and less than or equal to 115 percent.
- ">115%" for LTV ratios greater than 115 percent.
- A cash adjustor applies to all fixed-rate Relief Refinance Mortgages with LTV ratios greater than 105 percent that are sold to Freddie Mac for cash. The cash adjustor will be reflected in the cash pricing shown in the selling system once the Seller allocates mortgages to the contract.
- To obtain the cash adjustor value for a mortgage prior to taking out a commitment in the selling system, review the matrix, Cash Adjustor for Relief Refinance Mortgages, available on the selling system welcome page.
|Securities and Pooling Requirements
- All current pooling requirements apply including the specific requirements for super conforming mortgages.
- Fixed-rate and adjustable-rate Relief Refinance Mortgages with LTV ratios less than or equal to 105 percent may be pooled with other mortgages without additional pooling requirements.
- Fixed-rate Relief Refinance Mortgages with LTV ratios greater than 105 percent must be pooled separately in PC pools comprised entirely of Relief Refinance Mortgages with LTV ratios greater than 105 percent. These PC pools are not eligible for sale in the TBA market.
- Fixed-rate Relief Refinance Mortgages with LTV ratios greater than 125 percent must not be pooled together with mortgages having LTV ratios less than 125 percent. Instead, the mortgages must be pooled in PC pools with a prefix designation specifically for Relief Refinance Mortgages having LTV ratios greater than 125 percent. The PC pool may include both Relief Refinance Mortgages – Same Servicer and Relief Refinance Mortgages – Open Access.
- See Guide Section 4303.4(g) for additional pooling requirements.
- For complete Relief Refinance Mortgage – Open Access requirements see Guide Chapter 4303.
Relief Refinance Mortgage – Open Access helps you:
- Meet the needs of borrowers who are making timely mortgage payments but have been unable to refinance due to declining property values.
- Take advantage of expanded refinancing opportunities.
- Determine property values with the use of HVE, Freddie Mac’s automated valuation model.
- Leverage a full-suite of cash and securities sale options.
Benefits for Your Borrowers
Relief Refinance Mortgage – Open Access helps your borrowers:
- Refinance into mortgages that improve their financial position and provide better opportunities for long-term homeownership success.
- Take advantage of the expanded LTV ratios for mortgages.
- With relief from standard mortgage insurance requirements.
For More Information
Training & Education
Learn more about Relief Refinance mortgages and the Making Home Affordable Program.
The information in this document is not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide and/or the terms of your Master Agreement and/or Master Commitment.
Home Affordable Refinance Program® is a registered trademark of the U.S. Department of Treasury.