Refi Possible FAQ

Freddie Mac Refi Possible℠ and Fannie Mae RefiNow™ are designed to address some of the barriers that prevent lower-income borrowers from refinancing and taking advantage of record low interest rates. Refi Possible and RefiNow help improve mortgage affordability by reducing the amount of the borrower’s monthly mortgage payments and continue to build their generational wealth through housing.

To be eligible for Refi Possible, the mortgage must currently be owned by Freddie Mac. Sellers may use any of the following three ways to validate that a mortgage is Freddie Mac-owned:

• Loan Look-Up Tool: Access the Freddie Mac Loan Look-Up Tool to find out if a loan is Freddie Mac-owned.
  • This resource can also be used by borrowers to find out if Freddie Mac owns their current loan.
• Loan Look-Up Tool API: Learn more about the application programming interface (API) on the Developer Portal and get access here.
• Loan Product Advisor^® (LPA^SM) Feedback Messages: For all no cash-out refinance mortgages submitted, LPA Feedback Messages indicate whether Freddie Mac owns the mortgage being refinanced.

Question: I am a Servicer of a loan being refinanced and our records indicate the loan is owned by Freddie Mac however, the LPA Feedback Message is returning an error message stating the loan being refinanced must match an active Freddie Mac-owned loan. What should I do?

Please follow these steps to troubleshoot:

• Verify the property street address and SSN of all of borrowers on the current loan being refinanced, entered is correct and resubmit.
• If upon resubmission the error message is still returned, please contact the Customer Support Contact Center (800-FREDDIE) for assistance.

For purposes of determining eligibility, the Seller must include the income from all borrowers who will sign the note to the extent that the income is considered in evaluating creditworthiness for the loan.

For example: If there are two borrowers on a loan application, the lender will use the combined total qualifying income amount to determine whether the at or below 100% of AMI limit has been met.

Lenders may contact their Freddie Mac representative or the Customer Support Contact Center (800-FREDDIE).

No

At a high level, a Refi Possible mortgage would be a better refinance option for borrowers who may not qualify for Home Possible; this could include borrowers with higher debt-to-income (DTI) ratios or who have limited funds to pay for upfront appraisal costs. However, both offerings provide benefits to serve lower-income borrowers.

Check out our Refi Possible and Home Possible Refinance Comparison grid to view a side-by-side comparison of product features. In addition, the complete requirements of each offering may be found in the Freddie Mac Single-Family Seller/Servicer Guide (Guide).

Refer to Guide Chapter 4501: Home Possible^® Mortgages.

Refer to Guide Chapter 4302: Freddie Mac Refi Possible^SM Mortgages.

Refi Possible mortgages are available for all eligible fixed-rate mortgage terms.

All property types eligible under the Guide, including manufactured homes.

The Seller may rely on the credit report to determine payment history through the date the mortgage tradeline was last reported. The Seller is responsible for establishing the payment history between the date the mortgage tradeline was last reported and the note date, for example, by updating the tradeline information on the credit report or checking their servicing records for same servicer transactions.

In addition, the Seller must comply with requirements set forth in Guide Bulletin 2020-17, including conducting the additional due diligence to ensure the that the mortgage being refinanced is current as of the note date of the new mortgage.

MI coverage for Refi Possible is not restricted to the current mortgage insurer on the existing loan. LPA will identify the mortgage insurer that is currently providing coverage including the certificate number and percentage of insurance. The Seller should contact the mortgage insurer to confirm if the existing MI will be transferred to the new loan.

The appropriate level of mortgage insurance must be obtained in accordance with Guide Section 4701.1. Standard coverage and custom coverage with corresponding credit fees in price set forth in Exhibit 19 are both permissible subject to the Guide requirements.

Sellers must comply with the age of documentation requirements in Guide Section 5102.4, Bulletin 2020-8.

For purposes of determining eligibility, the Seller must include the income from all borrowers who will sign the note to the extent that the income is considered in evaluating creditworthiness for the loan.

For example: If there are two borrowers on a loan application, the lender will use the combined total qualifying income amount to determine whether the at or below 80% AMI limit has been met.

No, these are two distinct Freddie Mac product offerings with each having benefits to serve lower-income borrowers. These offerings cannot be combined. The Seller should review complete requirements for Refi Possible and Home Possible to determine which of the two offering suits the borrower best.

Refer to Guide Chapter 4501: Home Possible Mortgages.

Refer to Guide Chapter 4302: Freddie Mac Refi Possible Mortgages.

No.

Refi Possible mortgages are available for all eligible fixed-rate mortgage terms.

All property types eligible under the Guide, including manufactured homes.

Yes. There is no minimum indicator score required for eligibility for Refi Possible mortgages. However, the seller must identify and deliver an indicator score for all Refi Possible mortgages in accordance with the requirements of Guide Section 5203.2(e). If the seller determines that there is no usable credit score due to insufficient information or inaccurate information, the mortgage is not eligible for sale to Freddie Mac.

No. If no borrower has a usable credit score, then the mortgage does not have an Indicator Score and is not eligible for delivery to Freddie Mac as Refi Possible.

A borrower on the mortgage being refinanced may be omitted:

• If the remaining borrower has been making the mortgage payments, including the payments for any secondary financing, for the most recent 12-month period, or;
• Due to the death of a borrower.

No.

If the borrower makes all payments while the loan is in forbearance, a mortgage can be refinanced as a Refi Possible mortgage. The mortgage must meet Refi Possible payment history requirements, which does not allow recent missed payments.

Missed payments due to COVID-19 forbearance that have been resolved according to the temporary eligibility requirements in Guide Bulletin 2020-17 are not considered delinquent for the purpose of meeting the payment history requirements.

You will be able to use the Freddie Mac Loan Look-up Tool to obtain this information. You may also use LPA to verify if the existing loan is a Relief Refinance or Enhance Relief Refinance^® mortgage.

Freddie Mac requires that the full $500 be provided to the borrower but does not specify how that must be operationalized. As always, the Seller must comply with applicable regulatory requirements.

Appraisals must meet standard Guide requirements.

The proceeds of the Refi Possible mortgage must be used only to:

• Pay down the principal balance on the first mortgage
• Pay related closing costs
• Disburse cash to the borrower; not to exceed $250

Note: Suppose there are remaining proceeds from the Refi Possible mortgage after the proceeds are applied as described above. In that case, the excess proceeds must be applied as a principal curtailment to the Refi Possible mortgage and must be clearly reflected on the Settlement Disclosure Statement.

The only alternative to a principal curtailment is to reduce the loan amount prior to closing.

When funds required for closing are more than $500, funds in a depository, securities or retirement account used for closing must be documented with a monthly account statement or a direct account verification.

Yes, the DTI ratio must not be greater than 65%.

Reserves are not required. If borrower funds are required to cover closing costs exceeding $500, those funds must be verified.

No. Sellers will only need to verify a borrower’s qualifying income, i.e., if the borrower can qualify for the mortgage with their base pay and not their overtime income, you may use only the base pay to determine Refi Possible eligibility.

Flood zone determination must be made for each mortgage sold to Freddie Mac, including Refi Possible.

Sellers have been able to submit loan for evaluation as of August 30, 2021

If the lender does not submit the loan as Refi Possible, but the loan meets Refi Possible income guidelines, LPA will return a message stating, “This loan meets Refi Possible income limits. To assess the loan as a Refi Possible mortgage, resubmit as Refi Possible."

Yes, a Refi Possible mortgage is eligible for an AIM assessment in LPA provided all applicable requirements in Guide Topic 5900: Automated Income and Asset Assessment with Loan Product Advisor are met.

If the mortgage receives an LPA evaluation status of “Invalid”, “Ineligible” or “Incomplete”, you must take all steps possible in accordance with Guide Section 5101.1 to correct the information and resubmit the mortgage to LPA.

Alternatively, the loan can be manually underwritten to determine eligibility, and it must meet the terms of Refi Possible.

Yes. If LPA determines that the loan being refinanced was a Relief Refinance mortgage or an Enhanced Relief Refinance mortgage, a feedback message will be returned.

A Refi Possible mortgage may obtain relief from certain selling representations and warranties under Version 2 of the framework based either on the borrower’s acceptable payment history or a satisfactory conclusion of a Freddie Mac quality control review.

For mortgages secured by properties in condominium projects, the Seller must represent and warrant that the project is not a hotel/resort project or houseboat project, a timeshare project or a project with fragment or segmented ownership. The project must have insurance that meets the applicable requirements.

You will see Refi Possible listed as a value under the data point Refinance Program Identifier. If Refi Possible is not listed, or does not appear on the list, contact your software partner to find out if they are ready to support Refi Possible.

For questions and more information, reach out to your Freddie Mac representative or contact the Customer Support Contact Center (800-FREDDIE).

Reach out to your software partner to learn about their planned implementation timeline(s).

You may notify your Freddie Mac representative or contact the Customer Support Contact Center (800-FREDDIE) to determine if there are additional ways to originate this loan.