In this article we’ll discuss:
The Federal National Mortgage Association, known as Fannie Mae, is a government-sponsored enterprise (GSE) that buys up and securitizes mortgages. Securitization involves creating large pools of mortgages with similar characteristics and then selling bonds backed by the cash flowing into the pools. The cash flows consist of principal and interest payments from mortgage holders.
Mortgage originators, such as banks, frequently sell most or all of their mortgages to GSEs. This allows the bank to eliminate its risk if the borrower falls behind on payments and also provides fresh capital the bank can use to offer more mortgages.
Fannie Mae Loan Lookup Tool
You don’t necessarily know when your mortgage has been sold to Fannie Mae because the lending bank may continue to service the loan. You are supposed to get a letter when the mortgage is transferred, but if you mistake it for junk mail, you’ll be in the dark.
To shed light on the ownership question, you can go to the Fannie Mae Loan Lookup page to quickly find out if Fannie Mae owns your loan. You simply have to type in your name, address, and the last four digits of your Social Security number to get the information.
Why Do I Care if Fannie Mae Owns My Loan?
Homeowners will need to know this information if they want to make some change to their mortgage, including:
- Loan modification
- Loan refinancing
- Qualification for options to prevent foreclosure
- Financing qualified home energy improvements
- Qualification for the Home Affordable Refinance Program (HARP)
What is HARP?: Home Affordable Refinance Program
Fannie Mae loans can be refinanced at a low cost through HARP. It usually applies to homeowners who want to keep current on their payments but don’t want to sell their houses just yet because of fallen home prices.
HARP refinancing can result in lower monthly payments of principal and interest. It can also restructure risky loans, such as interest-only or ARM mortgages, into fixed-rate loans.
It is important to understand that Fannie Mae doesn’t act as the loan originator in refinancings — that task falls to the current or new loan-servicing bank.
2 Options for Refinancing a Fannie Mae Mortgage with HARP:
Refinancing Option 1: Refi Plus
Applies to loans within a lender’s servicing portfolio. It is a flexible program with no limits on the loan-to-value ratio (that is, the mortgage balance divided by the home’s current selling price). If the LTV ratio exceeds 80 percent, the borrower can qualify for mortgage insurance.
Refinancing Option 2: DU Refi Plus
Applies to the refinancing of Fannie Mae loans underwritten through the automated Desktop Underwriter program. The borrower can choose any lender to be the new servicer. The loans remain with Fannie Mae after they are refinanced. This option provides the same flexibility with regard to LTV ratios and mortgage insurance while expanding eligibility criteria and minimizing required documentation.
HARP Eligibility: Qualifying for Refinancing
The requirements for HARP qualification include:
- Borrowers can continue making mortgage payments
- Borrowers are up to date on all mortgage payments
- Borrowers haven’t been delinquent in:
- The most recent six months
- More than once in the last seven to 12 months
For assistance understanding HARP eligibility, contact us.
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