Fannie Freddie Refis May Extend Beyond 105 Percent LTV

February 25, 2009 No Comments »


The loan-to-value (LTV) limit on mortgages Fannie Mae and Freddie Mac will be able to refinance as part of Obama’s Homeowner Affordability and Stability Plan may go higher than the original 105 percent, according to National Mortgage News.

The info is based on remarks made by William Longbrake, a former FIDC and WaMu employee, and current member of the board at First Financial Northwest, at the National Association of Mortgage Brokers Legislative and Regulatory Conference in Washington.

He stressed he was speaking for himself and not the White House, but noted it was “entirely possible” the ceiling for GSE refis could rise above 105 percent once procedures were in place to refinance underwater loans.

Last week, FHFA director James B. Lockhart said the line was drawn at 105 percent so the loans could be securitized and also because of capacity issues.

About 75 percent of mortgages with a LTV greater than 80 percent of their current value would fit under the current plan, though many in harder-hit areas such as California, Nevada, and Florida would miss out.

In Palm Beach, Broward and Miami-Dade counties, 35 percent of homeowners have LTV ratios greater than 105 percent and would not qualify as the program currently stands.

In the San Francisco Bay Area, more than 90 percent of homeowners don’t qualify because they hold jumbo loans or have loan-to-value ratios in excess of the 105 percent limit.

First American CoreLogic estimates that nearly one in five borrowers are currently upside down on their mortgages, meaning they owe more on the loan than the current value of the property.

Related: Can I refinance with negative equity?

(photo: marcinwichary)

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