Real Estate Insights

Q: I was reading an article and it stated…..

"the Obama Administration's Home Affordable Refinance Program, launched early this year, allowed refinances for those whose first mortgage was as high as 105 percent of a comparable market analysis (CMV). A July expansion now allows participation by borrowers current on payments, but up to 125 percent underwater."

I own a home in San Jose and I've been told that I will not qualify for a refinance because I do not have the equity that is required by lenders in today's market. Will I be able to take advantage of President Obama's program above?

A: Yes, it’s true, the Obama mortgage plan does allow homeowners the ability to refinance their current mortgages up to 125% of the current market value…but, you have to read between the lines because your current mortgage MUST be owned by either Fannie Mae or Freddie Mac in order to qualify for the program.

Unfortunately in the Bay Area the majority of homeowners that have mortgages that could benefit from the Obama program are not owned by Fannie or Freddie. Instead these loans tend to be “jumbo loan programs” that were originated during the housing boom and thus owned by institutional investors that purchased them from Wall Street. So the majority of Bay Area homeowners looking to refinance but are unable to due to declining property values will not be able to utilize this program.

Currently there isn’t anything available to help such homeowners unless their current mortgage is owned by Fannie or Freddie. To find out if your mortgage is owned by Fannie or Freddie you can use the loan look-up tools on their websites:

You can fill out an inquiry on the website by Fannie Mae (FNMA) by visiting them at http://loanlookup.fanniemae.com/loanlookup/. Or if you choose you may contact them at 1-800-7FANNIE (1-800-732-6643). If they own the note, they may provide the identity of the investor.

You can fill out an inquiry on the website by Freddie Mac (FHMLC) by visiting them at https://ww3.freddiemac.com/corporate/. If they own the note, they may provide the identity of the investor.