Jeffrey Wade
The DU Refi Plus program was created to help stimulate the housing economy by making it easier for lenders to refinance loans already in their portfolio. The program allows homeowners to refinance even if the value of their home is less than the amount owed on their existing mortgage. The DU Refi Plus program offers mortgage insurance flexibilities for LTVs over 80%. However, it's important to note that the program has certain requirements and limitations, such as the need for a satisfactory payment history and specific loan-to-value ratios.
| Characteristics | Values |
|---|---|
| Purpose | To stimulate the housing economy by making it easier for lenders to refinance loans already in their portfolio |
| Who is it for? | Borrowers who demonstrate a satisfactory payment history on their current mortgage but have not been able to refinance due to the decline in home prices |
| Benefits | Reduced monthly mortgage payments, lower interest rates, reduced amortization period, stable product (e.g. fixed-rate mortgage), no maximum LTV, mortgage insurance flexibilities for LTVs over 80%, no need for a perfect credit score, no need for a home appraisal |
| Requirements | Existing mortgage must be in the Fannie Mae portfolio, must be receiving a tangible benefit from the refinance, at least one person from the previous loan must remain on the new loan, must be owned by Fannie Mae as of 5/31/2009 |
| Drawbacks | Limited cash-out refinances only, obtaining mortgage insurance may be difficult with an LTV upwards of 95% |
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What You'll Learn
DU Refi Plus requirements
The DU Refi Plus program was created for borrowers who have a satisfactory payment history on their current mortgage but have been unable to refinance due to a decline in home prices. The program is also known as the Fannie Mae Refinance Plus or FNMA DU Refi Plus and is offered through the Federal National Mortgage Association or Fannie Mae.
- The existing mortgage must be owned by Fannie Mae as of 5/31/2009.
- At least one person from the previous loan must remain on the new loan.
- The borrower must be receiving a tangible benefit from the refinance, such as a reduced monthly mortgage payment or a switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
- The borrower must provide proof of their income, such as one current pay stub for salaried employees or one year of federal tax returns for self-employed individuals.
- The borrower must have a satisfactory payment history on their current mortgage, demonstrated by a minimum credit score of 580 (although some lenders may accept lower scores).
- The loan must have a loan-to-value (LTV) ratio of up to 125%, meaning the loan amount can be up to 125% of the current appraised value of the home.
- The property must be owner-occupied, and the occupancy status may have changed from the previous status (e.g., from a rental to a primary residence).
- The borrower must not have any recent bankruptcies or foreclosures.
It's important to note that not all lenders participate in the DU Refi Plus program, and specific requirements may vary. Borrowers should check with their lender to understand the exact terms and requirements for qualification.
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Benefits of DU Refi Plus
The DU Refi Plus Program was a Federal National Mortgage Association (FNMA) or Fannie Mae program aimed at helping borrowers who were unable to refinance due to declining home prices. The program was designed for borrowers who had a satisfactory payment history on their current mortgage.
One of the primary benefits of the DU Refi Plus Program was that it allowed for reduced verification and documentation for eligible borrowers with a Fannie Mae mortgage with a note date prior to June 1, 2009. This meant less paperwork and hassle for borrowers. Additionally, applicants did not need perfect credit scores to qualify, which made it more accessible to a wider range of individuals.
The program also offered reduced monthly interest and principal payments compared to existing mortgages. It provided an opportunity for homeowners to move from a riskier, subprime mortgage to a more stable, fixed-rate refinance option. This not only benefited the homeowners but also the lenders, as it reduced the risk of default on the loan.
Furthermore, the DU Refi Plus Program did not always require a home appraisal to qualify. With a Property Inspection Waiver (PIW), borrowers could streamline the refinancing process even further.
It is important to note, however, that the DU Refi Plus Program has been retired by Fannie Mae in accordance with the Home Affordable Refinance Program (HARP). The program is now replaced by the High Loan-to-Value Refinance option, which may have different eligibility requirements and benefits.
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DU Refi Plus vs. Refi Plus
The DU Refi Plus program was a Federal National Mortgage Association (FNMA) or Fannie Mae initiative to stimulate the housing economy. It allowed lenders to refinance loans already in their portfolio. DU Refi Plus was a refinance of an existing Fannie Mae loan by any lender using Desktop Underwriter (DU) for underwriting. The lender did not have to be the current servicer of the mortgage loan.
DU Refi Plus was aimed at borrowers who had a satisfactory payment history on their current mortgage but had not been able to refinance due to the decline in home prices. The program allowed homeowners to refinance even if the value of their home was less than the amount they owed on their existing mortgage. Through the program, lenders with Fannie Mae-backed mortgages could consider making refinance loans for homes with a loan-to-value ratio (LTV) of up to 125%.
DU Refi Plus offered several benefits to eligible applicants. These included lower monthly interest and principal payments, the possibility of moving from a riskier mortgage to a more stable, fixed-rate refinance mortgage, and no requirement for perfect credit or a home appraisal.
Refi Plus is a similar program offered by Fannie Mae. It is not entirely clear from the sources what the differences are between DU Refi Plus and Refi Plus. However, it appears that Refi Plus may be the broader program, with DU Refi Plus being a specific type of Refi Plus loan that uses Desktop Underwriter for loan application processing.
Fannie Mae retired the DU Refi Plus program in accordance with the Home Affordable Refinance Program (HARP) in 2018. The High Loan-to-Value Refinance option replaced it.
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DU Refi Plus and mortgage insurance
The DU Refi Plus program was created to stimulate the housing economy by making it easier for lenders to refinance loans already in their portfolio. It is also known as the Home Affordable Refinance Program (HARP) and was first unveiled in 2009. The program allows homeowners to refinance even if the value of their home is less than the amount owed on their existing mortgage.
DU Refi Plus is a Fannie Mae refinance rate option. Fannie Mae funds about 40% of the mortgages currently in existence in the United States. The program allows individuals with bad or no credit history a better chance to refinance their existing mortgages. It also allows homeowners to refinance their current mortgage and relieve their financial difficulties.
The program has no maximum LTV (loan-to-value) restriction, and mortgage insurance flexibilities are available for LTVs over 80%. However, with an LTV upwards of 95%, obtaining mortgage insurance will be difficult. The program also allows for limited cash-out refinances.
DU Refi Plus has been replaced by the High Loan-to-Value Refinance option. All of the mortgage insurance flexibilities available for DU Refi Plus apply only to mortgage loans with application dates on or before December 31, 2018, and loans must have been delivered into the program by no later than September 1, 2019.
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DU Refi Plus and LTV
The DU Refi Plus program is a Home Affordable Refinance Program (HARP) offered by the Federal National Mortgage Association, or Fannie Mae. It was created to stimulate the housing economy by making it easier for lenders to refinance loans already in their portfolio. The program allows homeowners to refinance even if the value of their home is less than the amount they owe on their existing mortgage.
DU Refi Plus allows lenders with Fannie Mae-backed mortgages to consider making refinance loans for homes with a loan-to-value ratio (LTV) of up to 125%. This means that the loan amount can exceed the value of the home by up to 25%. For example, if a homeowner owes $125,000 on their mortgage but the home's value has dropped to $100,000, they may still be eligible for a refinance loan through the DU Refi Plus program.
The program has both manual and automated processing systems. The manual Refi Plus can only be done by the original lender, while the automated DU Refi Plus can be processed by any participating DU lender. The DU system, known as Desktop Underwriter, has simplified the refinance process by accepting lower credit scores, reducing income documentation requirements, and waiving appraisals in certain situations.
To qualify for DU Refi Plus, borrowers must demonstrate a satisfactory payment history on their current mortgage but have been unable to refinance due to declining home prices. The loan must also be owned by Fannie Mae as of May 31, 2009. Additionally, at least one person from the previous loan must remain on the new loan, and the borrower must receive a tangible benefit from the refinance, such as a reduced monthly mortgage payment or a switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
In summary, the DU Refi Plus program offers a valuable opportunity for homeowners who are current on their mortgage payments but have been unable to refinance due to declining home values. By allowing refinance loans with LTVs up to 125%, the program helps borrowers access more favourable loan terms and avoid foreclosure, ultimately contributing to the stability of the housing market.
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Frequently asked questions
DU Refi Plus is a loan program created for borrowers who have a satisfactory payment history on their current mortgage but have not been able to refinance due to declining home prices.
DU Refi Plus does not require mortgage insurance if the existing loan does not have it and the system determines it is not required. However, obtaining mortgage insurance will be difficult if the LTV is upwards of 95%.
Benefits of DU Refi Plus include lower monthly interest and principal payments, and the ability to refinance a mortgage higher than the current value of the home.
