4303.2: Freddie Mac Relief Refinance MortgagesSM – Open Access: Eligibility requirements, eligible Mortgages and ineligible Mortgages (11/05/18)
- Marsha Freeman
© Freddie Mac Single-Family Seller Servicer Guide
(a) Eligibility of the Mortgage being refinanced
The Mortgage being refinanced must:
- Have a Note Date on or before May 31, 2009
- Be a First Lien, conventional Mortgage currently owned by Freddie Mac, in whole or in part, or securitized by Freddie Mac
- Be seasoned for at least three months (that is, the Note Date of the Mortgage being refinanced must be at least three months prior to the Note Date of the Relief Refinance Mortgage – Open Access)
If the Mortgage being refinanced was considered for and/or received a Freddie Mac modification (Home Affordable Modification Program (HAMP®) or non-HAMP), the Mortgage is eligible to be refinanced as a Relief Refinance Mortgage – Open Access, provided the requirements of this chapter are met. The current contractually-obligated payment terms under the Note, including the most recent modification of the Note, if any, must be used for the purpose of determining whether the Relief Refinance Mortgage – Open Access meets the Borrower benefit requirements below.
If the Mortgage being refinanced has mortgage insurance or pool insurance, it is eligible for refinancing under the provisions of this chapter. Refer to Section 4303.3(h) for additional requirements regarding delivery of Relief Refinance Mortgage – Open Access with mortgage insurance.
If the Mortgage being refinanced has recourse, indemnification or another negotiated credit enhancement, it is ineligible for refinancing as a Relief Refinance Mortgage – Open Access.
- A conventional 15-, 20- or 30-year fixed-rate, fully amortizing Mortgage
- A conventional 5/5, 5/1, 7/1 or 10/1 fully amortizing ARM
The Relief Refinance Mortgage – Open Access may be a super conforming Mortgage. See Section 4603.2, for the maximum original loan amounts for super conforming Mortgages.
(ii) Occupancy and the Mortgaged Premises
Each Relief Refinance Mortgage – Open Access must be secured by Mortgaged Premises that are:
- 1- to 4-unit Primary Residences
- Second homes
- 1- to 4-unit Investment Properties
The Mortgaged Premises must be an attached or detached dwelling, a Manufactured Home, unit in a Condominium Project or Planned Unit Development (PUD), or, if permitted by the Seller's Purchase Documents, a Cooperative Unit.
Except as modified by this chapter, the Relief Refinance Mortgage – Open Access must meet all of the eligibility, underwriting and documentation requirements and provisions of the Guide as of the Note Date.
For Mortgages secured by second homes and Investment Properties, the requirements related to the number of financed properties in Sections 4201.15(b)(2), 4201.16(a)(iv) and 4201.16(b)(ii), respectively, do not apply.
Cooperative Share Loans must meet the requirements of the Seller's Purchase Documents and this chapter.
For Mortgages secured by Condominium Units, the Seller is not required to evaluate if the Condominium Project meets the project eligibility requirements set forth in Chapter 5701, provided that:
- The Seller represents and warrants that the project is not located in a Condominium Hotel, houseboat project, timeshare project, or a project with segmented ownership; and
- The project has insurance that meets the applicable insurance requirements of Chapter 8202
- A Borrower obligated on the Note of the Mortgage being refinanced may be omitted from the Note of the Relief Refinance Mortgage – Open Access
- A Borrower(s) may be added to the Note of the Relief Refinance Mortgage – Open Access, except that a nonoccupying Borrower may not be added to a Mortgage secured by a Primary Residence
In all cases, at least one Borrower(s) from the Mortgage being refinanced must be retained.
Living Trusts
A Living Trust may be made irrevocable by a Settlor's death. To be an eligible Borrower at the time of the refinance transaction, the Borrower must continue to be a Living Trust that meets Freddie Mac's revocability and, as applicable, other eligibility requirements.
- A reduction in the interest rate of the First Lien Mortgage
- To replace an ARM, Initial InterestSM Mortgage or any Mortgage with an interest-only period, or a Balloon/Reset Mortgage with a fixed-rate, fully amortizing Mortgage
- A reduction in the amortization term of the First Lien Mortgage
- A reduction in the monthly principal and interest payment of the First Lien Mortgage
A fixed-rate Mortgage may be refinanced into an ARM only when it results in a reduction in the monthly principal and interest payment of the First Lien Mortgage. However, because an ARM is a riskier product than a fixed-rate Mortgage, Sellers should urge Borrowers to refinance into fixed-rate Mortgages whenever possible.
There is no limitation on the amount of the increase in the Borrower's principal and interest payment.
- ARMs having loan-to-value (LTV) ratios exceeding 105%
- Cash-out refinance Mortgages
- Special purpose cash-out refinance Mortgages
- Mortgages with a potential for negative amortization or an Option ARM
- Mortgages originated under Chapter 4602 and any other Mortgage that converts interim construction financing to permanent financing
- Mortgages subject to a temporary subsidy buydown
- FHA Mortgages
- VA Mortgages
- Section 502 GRH Mortgages
- Section 184 Native American Mortgages
- Freddie Mac Relief Refinance Mortgages – Same Servicer
- Home Possible® Mortgages, and any affordable Mortgage, including Mortgages originated under the Seller's proprietary affordable program
- Affordable Merit Rate® Mortgages
- Mortgages submitted to any other automated underwriting system excluding Loan Product Advisor®
- Mortgages with original loans amounts greater than $1,000,000
- Mortgages using an Automated Valuation Model (AVM) other than HVE® to determine property value
- Seasoned Mortgages
- Mortgages that exceed the thresholds under the Home Ownership and Equity Protection Act of 1994 and its implementing regulations
- Freddie Mac HomeOneSM Mortgages
- Mortgages secured by properties subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure, where the property value must be determined in accordance with Section 4406.1(g)(ii)