Freddie Mac is a secondary market financing company that serves as a stabilizing force for the US housing finance system. The corporation is a publicly listed, government-sponsored enterprise to support house owners and renters. The global economic slowdown and the yearlong pandemic increased borrowers’ financial hardships, leading to several missed payments.
The Freddie Mac enhanced relief refinance (FMERR) is a golden opportunity for borrowers who want to refinance their existing loans into a sustainable mortgage that promotes long-term ownership success. This article will discuss the complete guidelines and the eligibility overview of the FMERR.
Who Can Opt for FMERR?
Refinancing refers to paying out an existing mortgage loan with a new one. The new mortgage loan will have reduced payments, netter rates, and conditions that will help improve your financial situation.
In the no cash-out refinance model, you are refinancing the unpaid balance of your mortgage. FMERR is a refinance opportunity for borrowers with existing Freddie Mac Mortgages. The refinance program is available to borrowers making timely payments towards their mortgages but has an LTR ratio for new mortgage loans.
The declining property value prevents borrowers from selling their old properties and buying new ones. Also, the existing mortgage has higher interest rates, while the new mortgage loans are available at lower interest rates.
The Freddie Mac enhanced relief refinance (FMERR) can be helpful to borrowers who want to refinance their existing mortgage. Now let’s look at the eligibility of FMERR.
- The FMERR scheme is only available for the existing Freddie Mac mortgage.
- The Note date of the mortgage loan that you wish to refinance should be on or after November 1, 2018.
- To refinance the existing Freddie Mac mortgage, at least 15 months should have passed from the Note date of the mortgage.
- The Loan-To-Value of the new mortgage should exceed the maximum LTV limit of a Freddie Mac standard “no cashout” refinance mortgage.
- Borrowers should be paying timely mortgage payments, and there should be no overdue or outstanding mortgage payments. The most recent six-month payment history should not have any 30-day delinquencies. Also, there should be no more than one 30-day delinquency in the past 12 month’s payments history.
- The refinance option is only available for each mortgage. Therefore, the existing mortgage you seek no cash-out refinance should not be previously delivered as Relief Refinance Mortgage.
Guidelines for FMERR
The FMERR scheme offers 15, 20, and 30-year fixed mortgages. In addition, the refinance option is available for adjustable-rate mortgages, and borrowers can opt for 5/1, 7/1, 10/1, 5/6-Month, 7/6-Month, or 10/6-Month ARM.
In a 5/1 ARM loan, the borrower has a fixed interest rate for the first years, and later the loan switches to an adjustable loan rate for the remaining loan term. Similarly, in a 7/1 ARM loan, the borrower pays a fixed interest rate for the first seven years and later pays as per the adjustable loan rate. The existing mortgage loan should be ARM type to opt for the ARM loan type.
All occupancy types are eligible for the FMERR scheme, and lenders are not required to wait for standard waiting periods to offer the scheme to borrowers. Also, the lenders do not have to comply with re-establishment times for derogatory events like foreclosure and bankruptcy.
The FMERR is a good opportunity for Americans burdened with large monthly mortgage payments and who need to reduce their monthly payments to improve their financial condition.