Foreclosure Assistance: Can You Refinance with Fannie Mae or Freddie Mac?

Fannie Mae and Freddie Mac have published the rules governing their upcoming mass refinancing campaigns, and they’re more favorable for borrowers than indicated at first by the White House and Treasury, especially for owners of second homes and small investment properties.

The above is according to More Mortgages Eligible for Refinancing. While Fannie Mae and Freddie Mac are taking applications now, no loans will actually start to be refinanced until next month. Nationwide, some 5 million homeowners have mortgages held by these agencies. However, many homeowners will not qualify because your mortgage balance cannot exceed your property value by more than 5 percent. Many homeowners are undewater by much more than 5% — many are 20, 30 or 40% under water.

What does being “under water” on your home mean?

It means that you owe more on your home than it’s worth. Say for example you bought your house 4 years ago and paid $105,ooo for it. You’ve paid off $5,000 of the principal, leaving you owing $100,000. In today’s market, let’s say it’s only worth $80,000. So this means you’re $20,000 under water.