Fannie Mae and Freddie Mac Expanding "Upside Down" or "Underwater" Refinance to 125%
I almost Forgot to mention that Fannie Mae and Freddie Mac have been pleased with the success of their 105% refinance program. It's keeping them from losing money, and converting adjustable loans into fixed rate loans so the consumers can refinance and keep their property when otherwise they would be forced into foreclosure because they couldn't refinance.
Therefore, they have announced that within the next month or so, they will be expanding the programs to include loans up to 125% of current property (appraised) value. Everything else I wrote about the 105% refinance program is still valid, except the permissible loan to value ratio has changed.
Note: The loan to value ratio refers to the first mortgage only! Fannie and Freddie are not consolidating second mortgages, which would have to agree to subordinate. But if you own a property where you can only get a $400,000 appraisal right now but owe Fannie or Freddie (up to) $500,000, it is possible we may be able to move you into a fixed rate loan at a better rate of interest.
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