Texas Obama Refinance To 125% Announced

Today, it was announced by HUD Secretary Shaun Donovan that people who owed more than 105% of what their home was worth could now refinance up to 125% of the home’s value. This is great news for people all over Texas who may have been told they couldn’t refinance prior to today because the previous limit was 105%. This guideline expansion to the Making Home Affordable plan is a another sign that the Obama administration is doing everything they can to help prevent foreclosures.

Both right here in Texas as well as all over the US, there will now be thousands of people who currently owe more than 105% of their home’s value take advantage of lower rates while they are available. Now, people all across Texas will be rushing to refinance while rates are low.

According to a story at Bloomberg:

A drop in values has left about 20.4 million of the U.S.’s 93 million houses, condos and co-ops with mortgages higher than the properties are worth as of March 31, Seattle-based real estate data service Zillow.com said in a report May 6.

According to CNN:

The move acknowledges that home prices in many areas have fallen so far that many people were shut out of the program. Some 67% of homeowners in Las Vegas — one of the hardest hit areas where Housing Secretary Shaun Donovan announced the expansion Wednesday — owe more than their homes are worth.

More than one in five borrowers are now underwater, with homes in parts of California and Florida losing more than 50% of their value, according to Zillow.com, a real estate Web site. Some 20 million people own homes worth less than their mortgages.

“The president’s Making Home Affordable plan is already helping far more than any previous foreclosure initiative and with today’s announcement we will extend its reach still further,” said Donovan.

What This Announcement Means For People In Texas

It is somewhat unclear exactly how much of an impact this expansion will have across the nation – but here in Texas and in many other states — many, many people owe more than 105% of their home’s value, and this expansion will help. For the most up to date information on the new Obama refinance expansion announcement, be sure to contact a Texas mortgage expert today!

In Texas, many people have been trying to take advantage of the new Making Home Affordable refinance plan and have been frustrated because they have been “forced” to use their current lender because their loan is owned by Freddie Mac.

When the Making Home Affordable refinance plan details were announced in April, anyone who wanted to refinance their home in Texas had to first discover who owned their loan first — Fannie Mae or Freddie Mac. If Fannie Mae owned their loan, they were free to use any Fannie Mae approved lender to refinance their home and take advantage of lower rates. If Freddie Mac owned their loan, they were required by Freddie Mac to use their current lender to refinance.

As a result of being required to use their current servicer, many people have experienced sub-par levels of customer service.

Not any more.

The recent announcement from Freddie Mac opened it up so that if you live in Texas and have a loan that is owned by Freddie Mac, you are free to use any Freddie Mac approved lender that you would like. Although it will be a little more difficult to actually get your loan done if you go outside of your current servicer, it is at least possible.

According to Freddie Mac Executive Vice President Don Bisenius:

“We are responding to consumers’ desires to have more refinancing options. As an added benefit, we are expanding the program and providing greater flexibility in financing closing costs. Freddie Mac is committed to doing everything we can to bring the benefits of the Administration’s Making Home Affordable program to as many borrowers as possible.”

There are some key elements to the Freddie Mac statement — where it outlines the “conditions” that need to be present in order to go with someone other than your current lender:

1. Borrowers can continue to work with their existing servicer to refinance their mortgage. In the vast majority of these cases, the current servicer will not have to re-underwrite the borrower.
2. If the borrower chooses to work with another Freddie Mac-affiliated lender, the mortgage will need to be re-underwritten.
3. Freddie Mac will allow the lesser of 4 percent of the new refinance mortgage amount or $5,000 of closing costs, financing costs and prepaids/escrows to be rolled into the new refinance mortgage.
4. Freddie Mac’s standard post settlement delivery fees, up to a maximum of 2 percent, will apply to the Relief Refinance Program.

No matter where you live in Texas, if you have a loan that is owned by Freddie Mac, you can now participate in the Obama refinance program with any Freddie Mac approved lender.