January 20, 2011 (Jeff Alan)
Government mortgage giant Freddie Mac has announced that is will eliminate its streamlined mortgage refinancing option this spring, but borrowers will still have a simplified option for refinancing mortgages held or backed by the government-supported enterprise. The streamline refinance option will be discontinued as of April 30, however, another option, the newer Relief Refinance– Same Servicer, will continue to offer borrowers most of the same benefits.
Both the streamline refinance and Relief Refinance– Same Servicer options allow homeowners with a Freddie Mac mortgage to refinance without providing proof of income or employment. A big plus for homeowners who have seen their incomes decline and want to refinance at a lower interest rate.
Homeowners may still need to need to obtain an appraisal, although that is not specifically required under the Relief Finance– Same Servicer and the streamline refinance, but both programs require the seller of the new loan to verify that the property has maintained its value since the original appraisal which would eliminate homeowners whose property values are less than what they owe.
FHA and VA streamline-type mortgages do not require a new appraisal, allowing homeowners to refinance their mortgages despite declines in property values that have left them owing more than the property is worth.
Besides the advantage of not having to prove income or employment, the Relief Refinance– Same Servicer option does allow refinancing of mortgages at up to 125 percent of a home’s current value, providing a refinance option for underwater homeowners, although an appraisal is still required.
Freddie Mac also offers a Relief Refinance – Open Access option that allows a homeowner to refinance through any lender, although that route does require fully qualifying the new loan and after May 1, all other Freddie Mac mortgage programs except the Relief Refinance – Same Servicer option will require verification of funds.
Tags: freddie mac, mortgage refinancing, streamline finance, relief finance, homeowners, lower interest rate, underwater homes, mortgage servicers