Freddie Mac Announces Use of House Finance Agency Funds Eligible for Certain Relief Refinance Mortgages Payments

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On May 24, Freddie Mac announced that, effective immediately, the use of “Hardest Hit Fund” (HFF) program funds by a state Housing Finance Agency may be applied to a Relief Refinance Mortgage if the funds do not result in a lien on the property and are used to (i) pay down or curtail the outstanding mortgage balance on a borrower’s existing loan at the time of refinancing, and/or (ii) pay closing costs, financing costs and prepaids/escrows. When HFF funds are used for these purposes, the mortgage file must contain documentation verifying the terms and conditions of the HHF funds, and the HHF funds must be reflected on the HUD-1. When repayment of funds is required, the verified payment generally must be included in the monthly debt payment-to-income ratio, unless the calculation of debt payment-to-income ratio is not required or repayment of funds is due only upon sale or default.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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