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Fannie Will Buy Negative Equity Loans
Now find a lender who will do the same, not to mention a PMI company
GSE will purchase up to 120% LTV refinanced loans
May 13, 2008
By MortgageDaily.com staff
Fannie Mae has outlined a program for borrowers whose mortgage balance exceeds the value of their properties.
The Washington, D.C.-based company will purchase refinanced loans with negative equity if it already owns the loans, according to a Keys to Recovery fact sheet provided to MortgageDaily.com.
The refinanced loan cannot exceed, however, 120 percent of the current property value, the secondary lender said.
The borrower must be current on their mortgage payments for the loan to qualify for purchase, the statement indicated.
"With home prices declining in many areas of the country and lending standards tightening as a result of the ongoing turmoil in the housing finance system, many borrowers find themselves with mortgages that exceed the value of their homes and are locked out of refinancing into safer loans that would allow them to sustain their mortgage payments," the government-sponsored housing enterprise said. "Fannie Mae's Keys to Recovery initiatives are geared toward providing liquidity, stability, and affordability to the housing and mortgage markets for the long term, and include steps to keep struggling borrowers in their homes, assist prospective homebuyers with home purchases, and stabilize communities impacted by the mortgage market downturn."
Fannie also outlined a number of other initiatives it has undertaken, including providing $10 billion in financing for state Housing Finance Agencies to finance first-time homebuyers, an initiative that would enable non-profits to purchase and renovate foreclosed properties to lease to less qualified borrowers with an option to buy, and its HomeStay initiative.