Relief Refinance Mortgages – Same Servicer
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 – Same Servicer helps 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 LTV ratios greater than 80 percent, represents our business implementation of the Home Affordable Refinance Program® (HARP).
In addition to simplified appraisal and borrower eligibility requirements, Relief Refinance Mortgages – Same Servicer have additional flexibilities, including no maximum LTV for fixed rate mortgages and relief from certain representation and warranties. With these flexibilities you can assist even more of your borrowers to refinance into mortgages that better position them for long-term homeownership success.
|Mortgage Being Refinanced Eligibility Requirements|
- Detailed requirements for Relief Refinance Mortgages – Same Servicer can be found in Single-Family Seller/Servicer Guide (Guide) Chapter 4302 – Relief Refinance Mortgages – Same Servicer
- 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 serviced by the Seller or an Affiliate of the Seller.
- The originator of the new refinance mortgage must have the mortgage file for the mortgage being refinanced and must deliver the 9-digit Freddie Mac loan number for the mortgage being refinanced.
- 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 Guide Section 4302.2(a) for detailed requirements.
- Mortgages being refinanced that have mortgage insurance, recourse, indemnification or other negotiated credit enhancement are eligible for refinancing as a Relief Refinance Mortgage – Same Servicer. Refer to Guide Section 4302.2(j) for additional requirements for refinancing mortgages that have recourse or indemnification.
|Mortgage Payment History
- No delinquency in the most recent six months
- No more than one 30-day delinquency in the past 12 months
|Representation and Warranties on the Mortgage Being Refinanced
- The Seller is not required to represent and warrant that the mortgage met the eligibility requirements in its Purchase Documents related to:
- Borrower creditworthiness (credit reputation and capacity) and any other underwriting requirements
- The value, condition and marketability of the mortgaged premises.
- See Guide Section 4302.2(a) for representations and warranties requirements related to fraud.
- The Seller is required to represent and warrant that the mortgage being refinanced met all other Freddie Mac eligibility requirements in its Purchase Documents, including, but not limited to, requirements related to anti-predatory lending and project eligibility for mortgages secured by condominium units, or if permitted by the Seller's Purchase Documents, Cooperative Share Mortgages.
|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 (P&I) payment of the first-lien mortgage
|Eligible Mortgage Products
The Relief Refinance Mortgages – Same Servicer must be:
- Originated by the Seller or an Affiliate of the Seller.
- 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).
- Relief Refinance Mortgages – Same Servicer 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 Mortgage – Same Servicer must have:
- Application Received Dates on or after December 1, 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.
- Second homes
- 1- to 4-unit investment properties, mortgage.
- The mortgage being refinanced and the Relief Refinance Mortgage do not have to represent the same occupancy
- Flexibility in the use of the refinance proceeds.
- In the event there are remaining proceeds from the Relief Refinance Mortgage – Same Servicer after the proceeds are applied as described in Guide Section 4302.2(a):
- The mortgage amount may 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.
- Under no circumstances may cash disbursed to the borrower (or any other payee) exceed the maximum permitted amount.
- No increase in the unpaid principal balance (if increase is related to the Relief Refinance Mortgage transaction) of any junior lien, or new secondary financing is permitted.
- The proceeds may not be used to pay off or pay down any secondary financing.
|Maximum LTV/TLTV/ HTLTV
- For adjustable-rate mortgages, the maximum LTV ratio is 105 percent
- For fixed-rate mortgages, there is no maximum LTV ratio
- There are no maximum TLTV and 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 Freddie Mac Relief Refinance Mortgage on the entire unpaid principal balance.
- If the mortgage being refinanced did not have mortgage insurance, then no mortgage insurance coverage is required for the Relief Refinance Mortgage – Same Servicer.
- 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 4302.2(l).
- The Seller must manually underwrite the Relief Refinance Mortgage – Same Servicer.
- Re-qualifying the borrower is not required unless the borrower's P&I payment on the new refinance mortgage increases by more than 20 percent, the refinance mortgage is a Higher-Priced Covered Transaction (HPCT), a Higher-Priced Mortgage Loan (HPML), or one of the borrowers is removed from the loan and the Seller chooses the option of qualifying the remaining borrower for the new mortgage. See Guide Chapter 4302.2(g) for underwriting requirements when the P&I payment increases by more than 20 percent of the current contractually obligated payment under the note or for HPCTs and HPMLs, and 4302.2(a) for the change in borrowers requirements.
- At least one borrower must have a verifiable source of income or have reserves equal to at least 12 monthly payments of PITI.
- The borrower(s) obligated on the note on the Relief Refinance Mortgage – Same Servicer must be the same as the borrower(s) obligated on the note on the mortgage being refinanced. A borrower on the mortgage being refinanced may be omitted from the Relief Refinance Mortgage for any reason provided certain requirements are met.
- The Seller may use Home Value Explorer® (HVE®) or a new appraisal to determine property value. Refer to Guide Chapter 4302.2(d) for complete requirements as applicable.
- If an appraisal is obtained, the Seller is not responsible for the representation and warranties regarding the value, condition, and marketability of the mortgaged premises.
- 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.
- The date of the HVE estimate (HVE Value Date) must be no more than 120 days old as of 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.
- 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 – Same Servicer, 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 reasons not related to the Relief Refinance Mortgage transaction.
- No new secondary financing is permitted.
For Relief Refinance Mortgages – Same Servicer with LTV ratios greater than 80 percent
- Sellers may contact eligible borrowers with mortgages owned or securitized by Freddie Mac to inform them of the enhancements to HARP.
- Solicitations must be applied equally across the servicing portfolios of Freddie Mac and Fannie Mae.
- Detailed borrower solicitation rules are outlined in Guide Sections 4301.3 and 4302.1(b).
For all other Relief Refinance Mortgages
- Sellers must comply with the broad-based refinance practices described in Guide Section 4301.3 and may not intentionally target Freddie Mac-owned mortgages in advertising or implementing refinance terms.
- See Guide Sections 4302.3(d) for special delivery instructions for Relief Refinance Mortgages – Same Servicer.
- Applicable post settlement 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 – Same Servicer 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 – Same Servicer 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
- Fixed-rate cash contracts for Relief Refinance Mortgages with LTV ratios greater than 105 percent may only include Relief Refinance Mortgages at these higher LTV ratios. Sellers must take out separate fixed-rate contracts based on the specific LTV range for the contract.
- To identify these fixed-rate cash contracts, select 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 4302.3(h) for additional pooling requirements.
Relief Refinance Mortgage – Same Servicer 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.
- With additional flexibilities for mortgages with LTV ratios over 80 percent, including acceptable borrower solicitation practices.
- Leverage a full-suite of cash and securities sale options.
Benefits for Your Borrowers
Relief Refinance Mortgage – Same Servicer helps your borrowers:
- Refinance into mortgages that improve their financial position and provide better opportunities for long-term homeownership success.
- Take advantage of expanded LTV ratios.
- 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.