The Federal Housing Finance Agency has made a change in order for more people to qualify for the Home Affordable Refinance Program, or HARP. For borrowers with twenty percent equity, Freddie Mac has removed minimum credit score requirements. This may be a small segment of people, it is hopefully the first step in easing refinance requirements in general.
Freddie Mac eliminated the minimum credit score requirement for borrowers seeking a mortgage refinance from their existing servicer, as long as they have at least 20% equity in their home, according to guidance released Thursday.
The change goes into effect for any refinances with a settlement date on or after Jan. 5. Previously, Freddie required at least a 620 credit score before allowing such a high-equity refinance to take place.
In October, the Federal Housing Finance Agency instructed Fannie Mae and Freddie to remove barriers to allow more borrowers to take advantage of historically low interest rates through the Home Affordable Refinance Program.
Rates on most mortgage products began 2012 still below 4%. The government-sponsored enterprises removed upfront fees, limits on loan-to-value ratios and certain representation and warranty risk on the old loan file.