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2/26/2016

Refinance No worry about Continuity of Obligation


Continuity of obligation is being eliminated for Fannie Mae.
I assume Freddie will follow in the months to come.
This policy was set up by Fannie Mae and Freddie Mac after the financial crisis or as I call it - The Third Great Depression
to ensure borrowers who recently bought a property
or whose name was recently added/ transferred title
were limited to refinancing, or not allowed in some cases.

Example:
Harriet and Arnold own a home and lost their jobs
They get behind on payments. They transfer title to son who has good credit and income.
Son refinances getting cash back to pay the arrears.
Rather than allowing this to roll and continue
Son was required to demonstrate "Seasoning"
- own the house six months or 12 months and
show taxes, paychecks and bank statements with
subject address. Sometimes this occurred multiple
cash out refinances to avoid the inevitable.

Eliminating this type of requirement will make
refinancing properties easier. DU or Desktop
Underwriter is not updated with this enhancement
yet but will loosen mortgage process.

Today there are tools that can check the
"owner occupancy" - appraisal and online
snoop tools determine who actually occupies
the home.

Good news for Borrowers who want to
refinance NOW with the huge dip down
in interest rates.

Call and see what we can do to get your
low rate mortgage into the 3's
Caroline Gerardo Eagle Home Mortgage
Committed to Getting You Home
NMLS 324982
(949) 784-9699

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