Fannie Works to Streamline Refis
by Tim Manni
Last week Fannie Mae introduced a new program that’s designed to streamline the refinance process, allowing more Americans to take advantage of historically low mortgage rates. Fannie’s new “Desktop Underwriter (DU) Refi Plus” program will expand the criteria for refi eligibility (i.e. reduced FICO requirement) by reducing the amount of documentation (such as employment information) required by lenders, even waiving an appraisal in some cases.
While the details on Fannie’s latest initiative are thin, we can already predict that the program will be largely limited to borrowers who can already qualify for open-market refi opportunities. For example, to take full advantage of the “DU Refi Plus,” borrowers must have a loan-to-value (LTV) of less than or equal to 80%.
Although the availability of the program may not generate another refi boom — or even benefit millions as stated by a Fannie spokesman — for those eligible, it should shave some time off the process, allowing lenders and servicers to fill more requests.
From Bloomberg:
“This is not yet the no-appraisal refi wave that many have feared,” Matt Jozoff and Brian Ye, mortgage-bond analysts at New York-based JPMorgan Chase & Co., wrote in note to clients yesterday.
Fannie Mae’s appraisal change doesn’t mean borrowers with less than 20 percent home equity can forgo mortgage insurance, the analysts said. That’s because Fannie Mae will likely use automated models to check home values listed on applications before offering to waive appraisals, the analysts said.
Fannie Mae’s Desktop Underwriter Refi Plus” program is set to begin April 4.
