Does Fannie Mae or Freddie Mac Own Your Mortgage? Are You Underwater and Looking to Refinance?
Key details have begun surfacing about the extraordinary refinancing deals that President Obama’s foreclosure-prevention plan will offer an estimated 4 million to 5 million U.S. homeowners.
Obama’s plan aims to help borrowers who are current on their loans, but can’t refinance into today’s low rates because these homeowners have little or no equity in their properties.
Homeowners generally need 20 percent equity to refinance into cheaper loans. However, many people bought homes with less than 20 percent down during the housing boom.
Worse, declining property values mean that even those who did make 20 percent down payments often find they no longer meet the 20 percent rule.
Now, you can still refinance in such cases if you pay for private mortgage insurance (PMI). But it’s tough to get PMI these days in some parts of the country. PMI firms are reluctant to write policies in “declining” markets.
As a result, tens of thousands of Americans are finding that they can’t refinance. Even though mortgage rates are currently running around 5 percent, these homeowners are stuck with 6.5 percent mortgage rates or worse.
Under Obama’s plan, government-backed mortgage giants Fannie Mae and Freddie Mac will essentially waive the 20 percent rule on any mortgages they back.
In fact, they’ll even allow homeowners to be slightly “under water,” owing more on a home that its current market value.
Does Fannie Mae Own Your Mortgage?
Does Freddie Mac Own Your Mortgage?
You can also contact Fannie Mae at 1-800-7FANNIE and Freddie Mac at 1-800-FREDDIE from 8 a.m. to 8 p.m. EST. Or, go to http://www.fanniemae.com/homeaffordable and http://www.freddiemac.com/avoidforeclosureand fill out the online request forms.
To stay updated on what is going on in the mortgage world in this crazy environment - especially in California and ESPECIALLY in THE BAY AREA watch www.the-buzzz.com
