Mortgage financier Freddie Mac loosened guidelines for its so-called “Relief Refinance Mortgage,” which is what they seem to be calling loans refinanced under the Making Home Affordable program.
Going forward, borrowers will be able to refinance a Freddie Mac-owned or guaranteed mortgage with any affiliated mortgage lender, instead of having to work with the current loan servicer.
However, Freddie Mac warned that those who choose to take the loan to another lender will be subject to fresh underwriting, whereas those who stick with the original loan servicer can probably avoid the loan being re-underwritten.
Additionally, Freddie Mac is increasing the amount of closing costs borrowers can roll into the new refinance loan.
Borrowers will now be allowed to roll over four percent of the new refinance mortgage amount or $5,000, whichever is lower, in closing costs, financing costs and prepaid escrows to the new mortgage.
“We are responding to consumers’ desires to have more refinancing options,” said Freddie Mac Executive Vice President Don Bisenius, in a statement.
“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.”
Unfortunately, the changes come as mortgage rates on home loans have surged, with rates on popular 30-year fixed mortgages back up to levels not seen since December, which may discourage widespread refinancing.