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Why is it such a pain to get a refi with the Gov't Making Home Affordable program if I have PMI?

  • May 07 2009 - Gilbert
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Answers (2)

Great post, Jennifer, that covers the "long" of it.  The "short" of it is that when government is involved, it will not be quick, it will not be easy, and there will be lots of paperwork. 
  • May 07 2009
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There are a few problems with this program. First is the issue of how much a home's value has declined in the current market that we are in. The rules state that you can only refinance 105% of the home's current value. A lot of people are finding that their house is not worth as much as they thought. If you have an interest only loan and paid on time you may have lost to much equity compared to what you owe to qualify.

Second it that each bank is able to decide if they are participating in this program or not. This is their prerogative. They can also adjust the requirements to qualify specifically for them. So some banks are not allowing a borrower to refinance up to the 105%. They are capping it off at 90-95%. This is closing even more borrowers out of this program.

Third is the issue of whether your loan is owned by Fannie Mae or Freddie Mac. Regardless of your situation if your loan is owned by Freddie Mac then you have to refinance with the bank that you are currently with for your mortgage. IF that bank is not participating the the Freddie Mac Make Homes Affordable then these people are stuck. Literally. There is no option for them.(With the exception of a loan modification)

All in all the Fannie Mae program is not aggressive enough the refinance amount should be closer to 110% in order to qualify more people. At the very least there should be some adjustments for states that have been hit harder than others by the decline in the market. The Freddie Mac programs needs to release their stipulation of having to go through the same lender if they own the loan. Even if you had to use a Freddi Mac lender you would still be able to go with a bank that is offering the Freddi Mac program.

The website for Fannie Mae to find out if your loan is owned by them is
www.fanniemae.com . Just click on the link to find out of Fannie Mae owns your loan. It requires you to put in you address and that is it. It will instantly let you know.
  • May 07 2009
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