You can read the governmentâ€™s info on it at http://www.makinghomeaffordable.gov/pages/default.aspx but basically itâ€™s a loan program that allows someone to refinance up to 125% of their homeâ€™s appraised value â€“ but with the caveat that your current loan needs to be owned by Fannie Mae or Freddie Mac in order to be eligible. http://www.fanniemae.com/loanlookup/ is Fannie Mae's loan lookup page & http://www.freddiemac.com/mymortgage/ is Freddie Mac's. The other is that your loan must have been originated before June of 2009. You also cannot have any private mortgage insurance (PMI) on your loan, or else obtaining new mortgage insurance is very difficultâ€¦ if your loan-to-value started off at 80% or less when bought the home, then you should not have any PMI on your loan.
Even though the loan program goes to 125% of your homeâ€™s value, the only lenders seemingly going that high are your existing mortgage lender, because itâ€™s a pretty high risk. When you go to a new lender, most are just going to 105%. Further, not many lenders are offering this program on rental properties either, just primary residences or second homes. However we offer it on investment properties, but cap out at 105%.
The regular rental property refinance programs by Fannie Mae & Freddie Mac (when your mortgage isn't currently owned by them) cap out at 75% which is why you are getting the resistance. It's possible that there would be non-conforming programs (meaning programs that do not conform to Fannie & Freddie guidelines) that would permit 80% LTV on a rental property, but I am not aware of any as usually the non-conforming loan programs are more restrictive than conforming programs when it comes to investment property financing.
Shane Milne | Loan Officer in Orange County, CA | NMLS #81195
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If it gets to the point where its just too much still, you may have to consider a short sale.
Speak with a few smaller banks, not BOA, CHase etc and see if they might have more flexible terms.