- DSNews - https://dsnews.com -

Freddie Mac: Unaffordability Everywhere

Freddie MacFreddie Mac [1] announced [2] a new enhanced relief refinancing offering intended to aid borrowers who are making their mortgage payments on time, but are unable to participate in the GSE’s “no cast-out” refinance program due to having a loan-to-value (LTV) ratio above maximum requirements. The new program will be effective for mortgages with applications on or after November 1, 2018.

In order to be eligible for the Enhanced Relief Refinance Program, mortgages must be owned or securitized by Freddie Mac, possess a note date on or after October 1, 2017, and not currently hold the status of being a Freddie Mac Relief Refinance Mortgage. In addition, mortgages must not have been 30 days delinquent more than once in the last 12 months, and not been 30 days delinquent in the past 6 months. It must also be a conventional fixed-rate mortgage, a conventional 5-year, 5/1, 7/1 or 10/1 ARM.

The Enhanced Relief Refinance Mortgage also must be originated for the purpose of either reducing the interest rate of the First Lien Mortgage, replacing an ARM to a fixed-rate mortgage, reducing the amortization term, or reducing the monthly principal and interest payment.

In separate statement [3], the GSE also said that affordability is down for potential home renters, much as it is for potential homeowners. Nationally, rents are rising at an annual rate of 3 percent. Freddie Mac contributes this to the fact that baby boomers are looking to downsize and millennials are entering the housing rental market. In fact, new rental households have increased by nine million in the last 10 years, which is the largest increase on record for that time span.

According to the Joint Center for Housing Studies, 27 percent of renters are “rent-burdened” meaning they spend more than half of their income on housing costs. For reference, that number sat at 12 percent in the 60s.

You can see the full findings here. [3]