GRAND RAPIDS, Mich. — WHAT WAS THIS PROGRAM?

  • A Freddie Mac Enhanced Relief RefinanceSM (FMERR) mortgage offered relief for borrowers with existing Freddie Mac mortgages.
  • It may have allowed refinancing opportunities to borrowers who might not have qualified because they exceed maximum loan-to-value (LTV) limits.
  • It was an enhancement of Freddie Mac’s implementation of the Home Affordable Refinance Program® (HARP®) that expired at the end of 2018.

WHY SHOULD I CARE ABOUT A PROGRAM THAT RECENTLY EXPIRED?

  • History tends to repeat itself.

    Should you believe advertisements that catch your attention by suggesting you could save $3,000 per year?

    Will you be ready when you see claims and promises for the next program that arises?

  • Although this specific program expired on September 30, 2019, it is worth exploring its provisions so you may keep abreast of developments.
  • Awareness of FMERR requirements can help you prepare for eligibility as future programs become available.
  • You can also benefit from general knowledge about refinancing considerations and best practices.

HOW COULD A PROGRAM LIKE THIS HELP ME?

  • Programs such as FMERR may provide options for you to refinance your primary mortgage when traditional circumstances prevent eligibility.
  • A lower rate could reduce monthly payments.
  • You may be able to reduce the term of your mortgage.
  • Perhaps you might even move from an adjustable-rate to a fixed-rate loan.

WHAT WERE THE MOST SIGNIFICANT REQUIREMENTS?

  • Must have been an existing Freddie Mac mortgage that originated on or after October 1, 2017.
  • The existing mortgage must not have been a Relief Refinance Mortgage.
  • At least 15 months must have elapsed between the date of the original mortgage and the date of the FMERR mortgage.
  • LTV ratio for the new mortgage must not have exceeded the maximum for a standard no-cash-out Freddie Mac refinance.
  • Borrowers must have been current with payments on their existing mortgage.

     No 30-day delinquencies in the past six months.

     No more than one 30-day delinquency in the past 12 months.

  • Minimum LTV ratios existed.

     Primary residence: 80.01% - 97.01% depending upon the number of residence units

    Second home:  90.01% 

    Investment property:  85.01% for one-unit and 75.01% for two- to four-unit properties

  • The new mortgage amount was limited.

    Payoff of the existing principal balance.

    Plus a maximum of $5,000 for closing costs.

    Cash disbursed to the borrower was capped at $250.

WHAT STEPS SHOULD I TAKE?

  • Ensure that you can actually afford the home that secures this mortgage!
  • Beware of attention-grabbing advertisements that suggest you can save $3,000 per year!
  • Actual savings will depend on your current interest rate and current loan balance in combination with today’s mortgage interest rates.
  • Analyze the one-time closing costs in comparison with your expected reduction of interest expense to ensure that refinancing will produce an economic benefit.
  • Contact your existing lender to discuss programs for which you may be eligible.

Courtesy: 

Christopher Harper, CPA, MBA

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