What Happened to This Guideline
You likely found references to Fannie Mae guideline 4303.5 in older documents or outdated resources. This section dealt with credit fees and pricing adjustments specifically for Freddie Mac Relief Refinance Mortgages under Fannie Mae's "Open Access" initiative. The guideline was deleted in October 2019.
The Relief Refinance Mortgage program was designed to help borrowers refinance underwater mortgages during the housing recovery period following the 2008 financial crisis. As market conditions stabilized and home values recovered, Fannie Mae discontinued this specialized program and consolidated its guidelines.
Current Refinance Options and Pricing
If you're researching refinance options today, you'll work with current Fannie Mae programs that have their own pricing structures. The most common refinance programs include conventional rate-and-term refinances and cash-out refinances.
Rate-and-term refinances allow you to change your interest rate, loan term, or both without taking cash out. These typically have the most favorable pricing because they represent lower risk to the lender. You can refinance up to 97% of your home's current value in most cases.
Cash-out refinances let you borrow against your home's equity and receive cash at closing. These loans carry higher fees and interest rates because you're increasing your loan balance. Most cash-out refinances are limited to 80% of your home's value, though some programs allow higher ratios.
Understanding Current Credit Fees and Pricing
Today's Fannie Mae loans use a risk-based pricing system called Loan-Level Price Adjustments (LLPAs). These adjustments increase or decrease your interest rate based on factors like your credit score, down payment, loan purpose, and property type.
Your credit score has the biggest impact on pricing. A borrower with a 760 credit score might pay 0.25% less in interest than someone with a 680 score on the same loan. The difference compounds over the life of your mortgage.
Loan-to-value ratio also affects pricing. If you're refinancing and your new loan amount represents 80% or more of your home's value, you'll pay higher fees than someone refinancing at 70% loan-to-value.
Documents You'll Need for Today's Refinances
Current refinance applications require standard documentation regardless of which specific program you choose. You'll need recent pay stubs covering the most recent 30-day period, typically your last two pay periods.
Your lender will order tax returns directly from the IRS using Form 4506-C. This eliminates the need for you to provide copies, though some lenders still request them for initial review. The IRS transcript serves as the official verification.
Bank statements covering the most recent two months show your assets and verify any large deposits. If you've received gift funds or have other non-payroll deposits, you'll need to document their source.
Your current mortgage statement and homeowners insurance declaration page help the lender understand your existing loan and property details. If you're in an HOA, you'll need a statement showing current dues and any outstanding balances.
Why Fannie Mae Eliminated Specialized Programs
The deletion of guideline 4303.5 reflects Fannie Mae's broader strategy to simplify its program offerings. During the housing crisis, multiple specialized programs addressed specific market conditions and borrower situations.
As the housing market recovered and lending standards stabilized, maintaining separate guidelines for each niche program became unnecessary. Fannie Mae consolidated similar programs and eliminated others that were no longer needed.
This consolidation benefits both lenders and borrowers. Lenders work with fewer, more standardized programs. Borrowers face less confusion about which program might apply to their situation.
Common Issues with Outdated Information
Many borrowers encounter problems when they rely on outdated information about Fannie Mae programs. Real estate websites, mortgage calculators, and even some lender materials may reference discontinued programs or deleted guidelines.
If a lender or broker mentions Relief Refinance Mortgages or references guideline 4303.5, they're working with outdated information. This could indicate they're not current on Fannie Mae requirements, which might cause problems during your loan process.
Always verify that your lender is discussing current programs and guidelines. Ask specifically which Fannie Mae program they're recommending and request current rate sheets that show today's pricing adjustments.
Impact on Your Refinance Decision
The elimination of specialized programs like Relief Refinance Mortgages doesn't mean fewer options exist today. Current Fannie Mae programs often provide better terms than the older specialized programs offered.
Interest rates today may be different from when you first researched refinancing. Even if rates have increased since you started your research, you might still benefit from refinancing if you're moving from an adjustable-rate mortgage to a fixed rate, or if you're eliminating mortgage insurance.
Your home's value has likely changed since older programs were available. A new appraisal might show enough equity to qualify for better pricing tiers or eliminate the need for mortgage insurance.
References
For the official guidelines, see 4303.5: Credit Fees in Price and other assessments and credits for Freddie Mac Relief Refinance Mortgages℠ — Open Access in the Fannie Mae Selling Guide.
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Original Freddie Mac Guideline Text
Effective October 2, 2019, Section 4303.5 is deleted.
