On May 26th, Fannie Mae sent out an announcement informing that the High LTV refinance program will temporarily be halted beginning Thursday, July 1st, 2021.
Background on this refinance program
Back in November 2018, Fannie Mae High LTV and Freddie Mac Enhanced Relief Refinance programs were an alternative to the HARP program (Home Affordable Refinance Program). These programs were designed to help borrowers who were looking to refinance their mortgage but didn’t have enough equity in their home due to a decrease in home value since it was purchased (owing more than the home is worth). To qualify for a High LTV program, a borrower with a Fannie Mae-backed mortgage would need to have less than 3% equity in their home, (or their loan-to-value will need to be over 97%).
What this suspension entails
Due to an extremely low volume of High LTV loans and the impact of the Revised QM Rule, Fannie Mae has decided to temporarily suspend this program beginning July 1st. Freddie Mac has not officially announced pausing their Enhanced Relief Refinance program quite yet. Fannie Mae will work with Freddie Mac through FHFA in determining if and when the programs will resume. If you have any additional questions on these program changes don’t hesitate to reach out to your Customer Success Manager for additional information and if and how this impacts your business.