Freddie Mac announced that it is changing its program for relief refinancing mortgages
by making some adjustments effective for mortgages settling Sept 1.
These changes are: allowing borrowers to refinance across any servicer, and not just their original lender; allowing for the rolling-in of closing costs or the lesser of 4% or $5,000; and
the re-introduction of a loan-level pricing adjustment (LLPA) matrix, which charges borrowers up to 2.75 points upfront depending on the borrower's LTV and FICO of the borrower.
These changes generally realign the Freddie Mac program with that of Fannie Mae. The GSE's previous program had no LLPA fees, but required borrowers to refinance with the same lender.
The refinance response has so far been disappointing, according to JPMorgan Securities analysts, and refinance volumes have dropped below the markets expectations.
The introduction of fees might be surprising when public policy argues for less hindrances to refinancings, and not more. But, allowing borrowers to refinance with any lender should mostly offset this, according to analysts.
The overall effect of this change, JPMorgan analysts said, should be muted. This is considering that the speed differential between Golds and FNMAs has been narrow over the past few months.