SACRAMENTO, CA - Northern California lenders are waiting for full details on Freddie Mac's rule relaxation on participation in the agency's Relief Refinance Mortgage program. The new regulations were emailed to lenders last week, but how they will be implemented remains vague.
What is clear so far is that borrowers whose loans are owned by Freddie Mac will no longer be limited to refinancing with their current loan servicer. Freddie Mac had until now maintained that borrowers could not switch lenders. If a consumer's loan was through Wells Fargo, the relief refinance process had to be completed through that bank.
While Wells Fargo, Tri-Counties Bank and Bank of America quickly got their relief refinance processing up and running, other local lenders like Provident funding have yet to participate.
Reluctance to participate has left many borrowers frustrated as they watched interest rates dip to historic lows and they were unable to jump in. The savings for refinancing while at the low interest rates could have saved those borrowers hundreds of dollars a month.
Now interest rates have risen to the point where for many borrowers refinancing no longer is practical, even though they qualify for the Relief Refinance Program. The original rules of the program were straightforward and simple, intended to give quick relief to borrowers who were current on their mortgages.
"We are responding to consumers' desires to have more refinancing options," said Freddie Mac Executive Vice President Don Bisenius said of the option to refinance with any particpating lender.
Freddie Mac also increased the amount of closing costs, financing costs and escrows that borrowers can roll into refinanced mortgages to the lesser of 4 percent of the refinanced amount or $5,000.
News10/KXTV