Freddie Mac allows financing of 125% of home value - Washington Business Journal:

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Fannie Mae also announced a similarf change. The moves come as the Obama administration raised themaximum loan-to-value (LTV) ratio from 105 As a result of this change, qualified borrowers will be able to obtaijn McLean-based Freddie Mac’s (NYSE:FRE) Relief Refinancr Mortgages with loan amounts up to 125 percenrt of the current value of theird property. The higher LTV ratio is expectec to givehomeowners – especially those in marketds that have experienced sharpo declines in home values -- more options to refinance into mortgages with terms that better positioh them for long-term homeownership, the company said.
“This is a change that will put affordables refinancing opportunities within reach of performing borrowers who have sufferec the effects of local homepricew erosion,” said Don Bisenius, executive vice president in a “Today’s announcement also underscores Freddie Mac’s commitmenf to make the Obama administration’s Makingy Home Affordable program a gateway to successful long-term homeownershiop for as many borrowers as To encourage borrowers with 30-year fixed rate mortgages to consider a shorter 25-year term, Freddie Mac is providin a special price incentive to The incentive only applies to Reliegf Refinance Mortgages with LTV ratios between 105 percentf and 125 percent.
The 25-year term will resulg in borrowers paying less interest over the life of theirt loan and over time improving their overal lequity position. Freddie Mac’s Relief Refinance Mortgage is availabl e to borrowers who are current on mortgages that are ownes or guaranteed byFreddie Mac. Freddie Mac’s Relief Refinanc Mortgage allows borrowers to financeclosing costs, financinh costs and escrows up to $5,000 or 4 percentg of the current unpaid principal balance of the mortgagew being refinanced, whichever is less. Mortgagwe insurance is not required if the existing mortgage does notrequirr it.
Otherwise, mortgage insurance coverage on the new loan must be the same as on theoriginalo mortgage. Borrowers who apply for Relief Refinancr Mortgages through their current servicer will not need tobe re-underwritten in most When borrowers apply for Reliefv Refinance Mortgages through lenders other than their current the lender must re-underwrite the borrower through Loan Freddie Mac’s automated underwriting the company said. The expande LTV ratios are available now when borrowers apply for Reliefr Refinance Mortgages through their current servicere and will becomeavailable Oct. 1 when borrowers applhy through any lender affiliatexd withFreddie Mac.
Freddise Mac also said the resulting impacty on prepayments for certain Freddide Mac mortgage participation may vary, depending on borrower respons and other factors.