Fannie Mae and Freddie Mac have published the rules governing their upcoming mass refinancing campaigns, and they're more favorable -- especially for owners of second homes and small investment properties -- than indicated by the White House and Treasury last month.
Although initial reports suggested that the refis would be for owner-occupied primary residences, the information sent to lenders March 4 by Fannie and Freddie says second homes and small rental properties are eligible, provided their mortgages already are in the companies' portfolios or securitizations and have been paid on time. [Source]
This is great news for those who own "underwater" vacation homes or 2 -4 unit rental properties. In easing underwriting requirements, Freddie and Fannie will also:
- waive their minimum FICO scores for re-fis
- allow 2nd mortgages or credit lines of any amount as long as the 2nd is willing to subordinate to the new first loan
- suspend requirement for Private Mortgage Insurance (PMI) if there was no PMI on the financing at purchase or previous re-fi
- cap closing costs
The nation's financing gurus have approached this program with a sensible requirement -- it is only available to borrowers who haven't been late on their payments for 30 days during the most recent 12 months.