Freddie Mac Loan Prospector LP Open Access Relief Program

By: Michael A. Foote

A frequent occurrence today in the life of a loan originator involves telling your optimistic potential borrowers that they don’t have enough equity to refinance and lower their payments. A fact that rubs salt in the wound is that the clients have undoubtedly made all their mortgage payments of time for many years.

To aid in helping underwater or low equity borrowers refinance into a new lower fixed rate interest rates, Fannie Mae and Freddie Mac have developed and launched a very successful refinance program. Fannie Mae’s program has seen wider adoption as LP Open Access was not pushed to many third party providers. Most likely the lack of interest was due to the banks potential losses from the program.

In any event LP Open Access is now more widely available from brokers and banks alike.

The program offers up to 105% LTV and unlimited CLTV which basically means if your home was worth $100,000 and you owed $105,000 on your first mortgage and $100,000 you would potentially be able to refinance that $105,000 first mortgage and leave the 2nd mortgage where it is at.

Although the second lien holder needs to subordinate, that lender has an incentive to approve the subordination since the borrower is most likely saving money on the first leaving an even less likely chance the borrower would default on the second mortgage.

So, if a borrower is at 6% fixed he could easily get a new mortgage rate in the 4% range with NO Mortgage Insurance. A full appraisal is required for this product and the existing loan cannot currently contain MI and the loan also must have been originated/funded prior to May 31, 2009. Minimum required FICO scores are also near or as low as 620. This program follows the temporary and permanent high cost loan limits. 1-Unit to $729,750 for another couple weeks then it will drop to $625,500 in high cost areas. 1-4 Units are eligible up to $1,403,400 and will drop to $801, 950 as noted earlier.

The program is clearly worthwhile and to find out if you are qualified you only need your mortgage professional to look-up your property address. This requires the last four numbers of the borrower as well.

If you are preliminarily qualified for the LP Open Access Relief Refinance Program, the process is very similar to getting a regular mortgage, in fact, it is almost identical.

Rates and programs are 30 and 15 year fixed are the only options available and rates are in the range of regular 30 year fixed agency paper. In some cases even lower.

So if you’ve been turned down recently for a refinance make sure you’ve looked at all options. Don’t fret. Call your local mortgage broker professional and ask about the LP Open Access Relief Refinance Program and its sister product, Fannie Mae DU Refinance Plus.

Michael Foote is a twenty plus year real estate and mortgage professional with multiple state licensing and over $1 billion dollars in personal production.

HUD Eliminates 1% Cap on FHA Mortgages

In today's environment of help the customer and regulate the lender even more, HUD has decided to remove the 1% cap on FHA mortgages. Although state and federal guidelines will prevent usurious charges by any broker or lender, the rule change is designed to help FHA lenders to stay in compliance with the new RESPA rules starting this year. There is a chance that this will increase the cost of borrowing to borrowers in lower value states. If HUD puts a percentage limit on costs then we should see no discernible increase in overall borrower costs and this may even allow some lenders to lower their minimum loan amount thus making credit available for more lower income borrowers. We'll see. One thing is for sure, lenders, technology vendors and the like will no doubt experience pain putting these new rules in place. The sad reality is if they just enforced the existing rules, these changes would not be necessary. Get ready for even more regulation and licensing hurdles in 2010.

Happy New Year All!