To help borrowers refinance their existing loans, Freddie Mac has increased the availability of loan-to-value (LTV) ratios up to 125% for Home Affordable Refinance mortgages. The previous maximum LTV ratio for Relief Refinance Mortgages had been 105%.
The higher LTV ratio is expected to give homeowners, especially those in markets that have experienced sharp declines in home values, more options to refinance into mortgages with terms that better position them for long-term homeownership.
Don Bisenius, Executive Vice President at Freddie Mac, said: “This is a change that will put affordable refinancing opportunities within reach of performing borrowers who have suffered the effects of local home price erosion. Today’s announcement also underscores Freddie Mac’s commitment to make the Obama Administration’s Making Home Affordable program a gateway to successful long-term homeownership for as many borrowers as possible.”
Freddie Mac’s Relief Refinance Mortgage allows borrowers to finance closing costs, financing costs and prepaids/escrows up to $5,000 or 4% of the current unpaid principal balance of the mortgage being refinanced, whichever is less. The expanded LTV ratios are available now when borrowers apply for Relief Refinance Mortgages through their current servicer, and will become available on October 1 when borrowers apply through any lender affiliated with Freddie Mac, said the company.
