East Lansing Bank's New Refinance Program Enhancements for Home Lending

Last year the Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac, announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers seeking home lending who can benefit from refinancing their home mortgage.

HARP is unique in that it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other home mortgage refinancing benefits. This program will continue to be available to borrowers with loans sold to the Fannie Mae and Freddie Mac on or before May 31, 2009 with current loan-to-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:

Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;

Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;

Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;

Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and

Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Fannie Mae and Freddie Mac on or before May 31, 2009.

Borrowers who owe more on their home loans than their homes are worth may be locked into their homes for years and have fewer financial options until they pay down the loan balance. A shorter-term mortgage enables such borrowers to pay down the amount they owe much faster than a traditional 30-year mortgage.

Furthermore, interest rates on shorter term mortgages usually are less than on thirty-year mortgages. The lower interest rate may provide borrowers the opportunity to shorten the term of their mortgages without much change in their monthly payments, and perhaps even a reduction in that payment. Such an outcome may strengthen the borrower's financial condition and put them in the position to purchase another home sooner.

Summit Community Bank is a full service financial institution with banking offices in East Lansing and Okemos and a Home Loan Center in Lansing. The Bank was formed in 2002 by local business leaders with an emphasis on the customer and the community. For more information, please visit mysummitbank.com or call the bank at 877.684.3348.