Fannie Mae, online lender partner to offer refi product to pay down student loans

by Ryan Smith02 Nov 2016

Fannie Mae has partnered with an online lender to offer a new refinance product to help homeowners pay down student debt, it was announced today.

The new offering, the Student Loan Payoff ReFi, is the result of a partnership between Fannie Mae and SoFi. It allows homeowners to refinance their mortgages at a lower rate to pay down the balance of an existing student loan, with SoFi disbursing the refi payment directly to the servicer of the borrower’s student debt.

Student debt is a crippling problem for many. According to Experian data, a homeowner with outstanding cosigned student loans has a balance of $36,000 on those loans. And many student loans carry a higher rate than the borrowing costs of most mortgages. An estimated 8.5 million US households could potentially pay down — or completely pay off — student debt obligations through the new refi product, according to a news release.

“People can pay off student loan debt and are left with one loan at the low rates that mortgage borrowers are enjoying in today’s market,” said Michael Tannenbaum, SoFi’s senior vice president of mortgage.

“The nation is seeing record-low mortgage rates, and our partnership with SoFi is just one way that Fannie Mae is able to support current and future homeowners that have student debt,” said Jonathan Lawless, vice president for product development and affordable housing at Fannie Mae.

The offering is available to both SoFi members and the general public in states where SoFi has mortgage licenses starting today.

COMMENTS

  • by DB | 11/2/2016 2:23:39 PM

    How is this different than a normal cash out refi? I saw it's max LTV of 80%.... Seems a little misleading to represent it as a special partnership deal when they are just branding a cash out refi.

  • by Caroline Gerardo | 11/2/2016 2:27:41 PM

    Nothing new about this product. Borrowers could always refinance and payoff student mortgages directly. The real seed inside the peach pit of student mortgages is they never go away. Bankruptcy doesn't wipe them out. Putting student mortgages inside mortgage debt while rates are close to 3 seems tempting but paying for 30 years may be no better solution to paying the existing notes which are also at low interest rates (as long as they are not in default) As long as our government allows interest deductions including in a mortgage may give small benefit, but what America needs is reform in student mortgages at the start. Billions are made on pushing student mortgages to young Americans without disclosing that twenty grand+ or more for an education type that has zero job opportunities is not a wise path.

  • by CM | 11/7/2016 1:02:55 PM

    So in other words, this means nothing...?? Why does MPA even publish such a story, very misleading.

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