Mortgage giants Fannie Mae and Freddie Mac announced that mortgage lenders will be able to offer up to $2,000 to home owners with little or no equity in their homes who are seeking to refinance their mortgage under the government’s Home Affordable Refinance Program.
The lender incentives may be offered to pay down mortgage balances, closing costs, or other expenses usually required of borrowers who are refinancing using the HARP program.
The changes may encourage more underwater home owners to refinance — particularly those who had been reluctant to pay loan-origination fees or closing costs, which could total thousands of dollars.
The latest guidance “simply provides a clarification to lenders on benefits that can be passed back to borrowers on a HARP refinance,” says Meg Burns, a senior policy director for the Federal Housing Finance Agency, Fannie and Freddie’s regulator.
To date, nearly 1.8 million home owners have refinanced under the HARP program.
Source: “New Rules Help Borrowers Cover Refi Costs,” The Wall Street Journal (Feb. 4, 2013)