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Robert Nusgart: New refinancing programs finally have begun

A couple of programs designed to help borrowers and those seeking to refinance have finally gotten underway.

Lenders started rolling out Fannie Mae and Freddie Mac’s Home Affordable Refinance Program (Part 2) on Dec. 1, while the FHA officially returned the high-balance loan limits to pre-Oct. 1 levels.

The impact of these two moves is that the HARP program will now allow homeowners who owe more on their mortgage than the value of home to refinance, regardless of how much equity they have lost.

Previously, the HARP program would only allow homeowners to refinance up to 125 percent of the value of the home. Even then, many lenders, uneasy with allowing homeowners to go that high because they were fearful that Fannie Mae would not buy the loan back, would only go so high as 105 percent.

Understanding that concern, when the government revamped the program and took off the cap, it also “relieved [lenders] of underwriting representations and warranties” if it documented the loan properly. In other words, just follow the guidelines and Fannie and Freddie will guarantee the loan.

Lenders began locking in new borrowers under the new and improved HARP beginning Dec. 1.

A borrower can find out if Fannie Mae or Freddie Mac owns or guarantees their loan by going on each company’s website — or .

Also remember that the loan had be originated and purchased by Fannie or Freddie prior to June 1, 2009. If not, then the loan is not eligible for the program — something that the government should take another look at to open up the pool of borrowers who still lost equity in their home.

Meanwhile, FHA sent out its mortgagee letter to lenders instructing them that loans can now be originated for the higher loan levels that previously ended Oct. 1. The conforming loan limit — meaning the most you could borrow — in the Baltimore metro area is $417,000. Anything above $417,000 to a limit of $560,000 was considered a Fannie, Freddie or FHA jumbo loan and carried a slightly higher interest rate.

In the Baltimore metro area, Fannie Mae, Freddie Mac and FHA, by law, had to lower their jumbo limit to $494,500 beginning Oct. 1. However, a new spending bill signed last month by the Obama administration carried an amendment that permitted FHA to return to the $560,000 level and keep it there until Dec. 31, 2013.

This now gives an outlet to those borrowers who need a larger loan amount. For example, if a buyer is purchasing a home for $580,000, by using FHA he would only have to put down 3.5 percent (the FHA minimum), and his base loan amount would be $559,700. The interest rate on that would be approximately 3.875 percent.

Low down payment and low interest rate.

Otherwise, the borrower would have to have a minimum of 15 percent down to qualify for a Fannie or Freddie jumbo loan with a rate of approximately 4.375 percent for a 30-year fixed.

It makes a big difference not only to the borrower, who maybe doesn’t have 10 or 15 or a 20 percent down payment, but also to the seller, who now has a bigger pool of borrowers who might be able to purchase their home.

Robert Nusgart is a loan officer with Mortgage Master Inc., which is associated with The Strata Group in Baltimore. He can be reached at 443-632-0858 or by email at Visit his website at for the latest mortgage and financial news.