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Understanding the Freddie Mac Enhanced Relief Refinance Program (FMERR)

by | Mar 10, 2020

If you own your home but have little equity or even no equity whatsoever, you might think that refinancing is out of reach. Thankfully, there are programs available that can get you out from being underwater and back on track with lower payments.

The Freddie Mac Enhanced Relief Refinance, or FMERR, is a great option for homeowners who need to refinance their homes.

Read on to learn more about this important refinance program offered by Freddie Mac that will help you with lower mortgage payments and the chance to build equity in your home.

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What is the Freddie Mac Enhanced Relief Refinance Program (FMERR)?

The FMERR program is provided to homeowners who have little to no equity in their homes. Through this refinance program, you have the chance to achieve a lower mortgage payment and rebuild some equity that will encourage you to stay in your home.

Someone that owes more than the home is worth is considered to be an underwater homeowner.  The result is that many people walk away from their homes if they’re having trouble making the monthly payments, or they end up in foreclosure.

Under the Freddie Mac Enhanced Relief Refinance plan, eligible homeowners are able to refinance their current home at the market rates. This is a wonderful incentive to get homeowners to refinance their mortgages in order to make them more affordable and to begin building the equity they need.

Even if you are currently upside down on your mortgage, it may be possible to refinance your property through this program. The term upside down means that your current home value is lower than the amount of debt you still owe.

Let’s say your home is worth around $250,000 but you owe $275,000 on the loan. You could still refinance through the FMERR program as long as you meet the required guidelines.

Another perk to this refinance program is that Freddie Mac eliminates the LTV or loan-to-value maximums for this specific type of loan. That means you could get a new loan that will cover the full amount of what you owe, even with a very high LTV.

What are alternative programs to FMERR?

The HARP or the home affordable refinance program is no longer available to homeowners. However, there are other alternatives to help you refinance your home besides the one Freddie Mac offers.

Fannie Mae also has a high loan to value refinance options for certain borrowers. This program is called Fannie Mae High Loan-To-Value Refinance Option (HLRO) and was put in place to replace HARP for homeowners who need refinancing and are underwater on their loans.

Just like the Freddie Mac program, there are certain guidelines that borrowers must meet in order to qualify. Both programs give you flexibility and the chance for a new loan and a lower interest rate that will help you stay in your home.

Is FMERR Legit?

You might wonder if FMERR is a legitimate loan program, but it is entirely legal and legitimate for specific borrowers. In fact, all lenders who are currently Freddie Mac approved can offer this refinance option to their local and national loan holders.

When you consider this program, be aware of gimmicky advertisements that claim you could save thousands of dollars per year without giving specifics. Only certified lenders qualify to offer this loan, so talk to your mortgage holder to find out more.

It’s best to approach your current lender and ask them about the Freddie Mac refinancing program. They can help you determine if you meet the guidelines and can work with you on ways to lower your mortgage payments.

People with an adjustable-rate mortgage can definitely benefit from this plan. The new loan should convert to a fixed-rate mortgage so you won’t be hit with any surprises in the future.

How do you qualify for FMERR?

Choosing the FMERR can be a great way to save you money, give you a lower interest rate, and build new equity in your home. It’s important to note that only recent borrowers qualify and there are several guidelines that need to be met.

First, your current loan-to-value on the home must be at least 97.01% or higher. The home must be a one-unit residence, and you must live in the home. You can’t have the home as a rental property or use it for any source of income other than that it is your primary residence.

In addition to the LTV percentage requirements, Freddie Mac has to be the owner of your loan. You can use the online Freddie Mac Loan Lookup Tool to determine if your mortgage is currently owned by Fannie or Freddie.

If your loan is owned by Freddie Mac, it must be recent. The loan should be originated on or after October 1, 2017, in order to qualify for the Freddie Mac Enhanced Relief Refinance program (FMERR). Borrowers who have already used the Home Affordable Refinance Program or HARP to refinance will not be eligible for FMERR.

Another guideline for this program is that your current financing needs to be seasoned for a minimum of 15 months or more. That means that the day your current loan originated and the date of your new refinancing must be at least 15 months apart in order to qualify.

You will also need to be current with your mortgage payments, and you cannot have any 30-day late payments within the last six months before you apply. You can also have no more than one 30-day delinquency within the last year.

If you’re still not sure whether or not you meet the FMERR program guidelines, talk to your lender. They should be able to pull your file and help you determine if this program is right for you and your financial needs.

What is the FMERR approval process?

Once you know whether or not your mortgage is eligible for the Freddie Mac refinance program, you can start the application process. Gather all of your important financial information together including your basic loan information and personal financial paperwork.

You will need to have all of your mortgage statements including anything on a second mortgage, if applicable. You’ll also need to provide income details such as your most recent pay stub or annual income tax return.

Contact an approved lender and let them know you’re interested in the FMERR program. You can find a list of approved lenders who work with the Enhanced Relief Refinance Program online. Once you choose a lender, let them know you want to refinance and you’re interested in finding out what you qualify for.

If you do qualify for the program, you will complete an application and wait for the approval. Your home will not be subject to an appraisal before you can close on the new loan. Instead, lenders use Freddie Mac’s Home Value Explorer (HVE) tool to determine the current property value eligibility of your home.

It’s also important to note that there is no minimum credit score required for this program. This is a streamlined refinance which means that your approval does not hinge on your current score. That’s great news for borrowers who may be struggling to make their mortgage payments or who are dealing with other credit woes.

There are some closing costs involved with this refinance program, but they can be rolled into your new loan if they are $5,000 or less. You cannot use this program as a cash-out refinance, so don’t expect to receive any money after the refinance has closed. Your payments will include mortgage insurance since the equity of the home will be less than 20 percent.

What are the benefits of FMERR?

If you’re currently upside-down on your mortgage and have little to no equity in your home, there are a lot of great benefits to using the FMERR program. Perhaps the most important benefit is that you’ll be able to obtain a lower interest rate and stable mortgage payments, and you will be able to keep and stay in your home.

Home values are rising in some places, but that doesn’t mean that they’re going up in all areas of the country. Some places within the United States are seeing prices fall, which can make it even more difficult for homeowners to build equity. When home prices decrease, your LTV ratio can get worse over time, making it harder to get out from underneath your mortgage. 

Thanks to the FMERR program, you can regain control over your mortgage payments and your life. The plan allows you to refinance a property that’s considered “underwater” so you can start to build equity and feel like your home is an investment rather than a major financial burden.

As interest rates fall, this home loan refinancing program from Freddie Mac allows you to say goodbye to your current high loan interest rate and take advantage of the new, lower rates. That alone should give you a lower monthly mortgage payment! Pay attention to current rates and see if you can get your property refinanced when they’re at a great rate that will suit your budget.

Another advantage of the program is that if you currently have an adjustable-rate mortgage, this will convert it to a fixed-rate. You won’t need to worry and wonder what your payment will be each month since the rate and costs will now be fixed and stable.

If you’re concerned about your credit scores, FMERR doesn’t require them. This translates into a much faster and more streamlined approval process without worrying about a potentially “hard pull” that could damage your scores.

More Perks to Using FMERR

Appraisals are another source of stress for many borrowers, especially if they live in a slow or lower-priced market. With FMERR, you won’t need to worry about an appraisal report since qualified lenders have a special tool they use to determine your property value and eligibility.

You may also convert your current 30 year fixed rate mortgage into a 15 year mortgage if you desire when you apply under the Freddie Mac Enhanced Relief Refinance program. This option will allow you to build equity and pay off your home faster so you can get more from your investment. You should understand the pros and cons of a 15 year vs 30 year mortgage before deciding if this is option is for you.

As you start to create equity in your home, you’ll be able to sell it at a profit later if you choose to do so. This program makes buying a home feel like a smart investment rather than a stressful event.

With a streamlined application process and simple guidelines, most people who apply for the FMERR program are approved. Lower interest rates and smaller mortgage payments are just a few of the perks that make the Freddie Mac Enhanced Relief Refinance program (FMERR) a wise option for many homeowners.

Even if you have a high LTV ratio, it’s easy to get your home refinanced. Consider this program if you’re wondering how to get your mortgage rates and your payments under control for more stability and peace of mind.

Get Relief Today

Don’t allow your home to be a source of stress in your life. Consider the FMERR program if you’re worried about your equity and mortgage payments.

With a simple process and a qualified lender, you can enjoy lower mortgage payments, a lower interest rate, and more equity to help transform your house into the home of your dreams. You’ll no longer need to worry about whether or not you can make your payments, and you’ll enjoy the benefit of gaining equity so that your home is now a smart investment and not just a place to live. 

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