What's more, the refinancings only work for mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Still, about 40% of all U.S. home loans are Fannie or Freddie loans, Faith said, so millions will be covered.
Borrowers who owe less than 80% of their homes' values are not eligible. They have the opportunity to turn to standard refinancings, a currently white-hot market that, as Kathy M. Kristof reports in an accompanying story, can require jumping through a host of financial hoops these days.
There are financial limits to the largesse, though. The maximum Fannie or Freddie loan is $729,750 in Los Angeles, Orange, Ventura and Santa Barbara counties, $697,500 in San Diego County, and $500,000 in Riverside and San Bernardino counties. Larger "jumbo" mortgages carry a heavy premium.
The erosion of home prices in former boom regions such as California is also a factor because a lot of people owe more than 105% of what their home is worth.
Finally, although the government-sponsored Fannie and Freddie refinancings are designed to encourage lenders to make new loans, the program is entirely voluntary. On its informational website, the government tells borrowers to exercise patience because lenders and servicers are just starting to implement the program, "and there may be a slight delay before they are prepared to process all applications."
If you think you're eligible and want to check, an initial screening test is available at the government website, including directions on how borrowers can determine if their loan is owned or guaranteed by Fannie or Freddie.
For Fannie Mae, call (800) 7FANNIE, or use an automated query system at www.fannie mae.com/loanlookup. For Freddie Mac, the number is (800) FREDDIE and the website is www.freddiemac.com/mymortgage.
Additional tips:
Start the process
Borrowers should first talk to their mortgage servicer, which is the loan company that sends the bills and collects the payments. The phone number should appear on the bill.
Freddie Mac requires borrowers to refinance through their current servicer, while Fannie Mae allows borrowers to shop at other Fannie-approved servicers to try to get a better rate. However, a servicer that already is handling a loan may have the best shot at providing the cheapest and fastest refinancing, since the borrower's loan files are on hand.
Getting ready
