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FHA Streamline Refinance .......... Change

The second up coming change that Kim Neilson our Senior Vice President at McCue Mortgage recently made us aware of, are changes to FHA Streamline Refinancing. Unlike the up coming change that I wrote about yesterday, this change will only affect existing FHA Borrowers, but given the number of FHA Loans that have been done over the last few years, this change will still an impact on a significant number of homeowners.

The up coming changes to the FHA Streamline refinance guidelines will become effective with FHA case numbers assigned on or after 11/18/09, and are as follows:

Borrower must be receiving a net tangible benefit as the result of the streamline refinance in one of the following ways:
- 5% reduction in total mortgage payment.
- Adjustable Rate (ARM) to Fixed Rate.
- Reducing the term of the mortgage
Evidence borrower is employed and has income at time of application. A current paystub and verbal Verification of Employment (VOE) will be required. If self employed, YTD Profit & Loss (P&L) statement from an accountant will be required.
If assets are needed to close, borrower must provide evidence of sufficient assets to close.
If subordinated financing is remaining in place, the max Cumulative Loan To Value (CLTV) is 125%. For streamline refinance WITHOUT appraisal, the LTV/CLTV calculation is based on the original appraised value for the property. For streamline refinances WITH appraisal, the CLTV is based on the new appraised value.
The Maximum Mortgage Amount calculation is as follows:
- Streamline WITHOUT appraisal - the outstanding principal balance minus the applicable refund Upfront Mortgage Insurance Premium (UFMIP) PLUS the new UFMIP. Closing costs CANNOT be added to the mortgage.
- Streamline WITH appraisal - the lower of outstanding principal balance minus the applicable refund UFMIP, plus closing costs, Prepaids and the new UFMIP OR 97.75% of the appraised value plus the new UFMIP. Discount Points* MAY NOT be included in the new mortgage. If the borrower agrees to pay discount points, documentation of sufficient assets must be verified.

*Discount points are defined as total borrower points greater than 1.00.

I will cover the third change tomorrow, which is also an FHA change, and that change will affect all FHA Borrowers.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 10/27/2009 07:51 PM

Comments (15)

FHA Streamline Refinance in the Mortgage / Finance Channel

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Originally posted at: George's Blog: FHA Streamline Refinance .......... Change

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15 Comments on FHA Streamline Refinance .......... Change

OCT

George, As always the first to break the news. I t looks like all the rules are tightening up.. I know it's for the better but I hope it doesn't hurt our market more. I re-blogged your last blog, I think it really helps people since Im not a lender. Have a great evenig friend. :)

Debbie I saw that, thank you. I wish I could do loans out there :) :) :)

George.. Thanks for the update. You are one I can count on for reliable information.

valerie osterhoudt

George -- this updates are so critical and it is difficult for us to keep up with all of them. This post is very informative and I appreciate the time it took to get this out to the AR family.

OCT

George, I just read the first, then this. Here is the thing, this is EXACTLY why I will always ship my clients to someone who knows what is going on. Certainly makes my head feel like it is going to explode keeping up with all the changes that are going on. Thank you for letting us know!

It is amazing George that everyday there is something new in the mortgage markets. There is a lot to keep up with!

George, it's going to get harder and harder to get a loan, almost as if the banks feel there's less loss probability if they just sit on the money. You are highly informative, however.

Valerie and I hope to keep on providing you with it.

Joan, trying to remember all the changes is not easy that is why it is good to try to put them down in writing.

Andrea, keeping up with everything is not easy, but we have to be if we want to provide our clients with the best service we can.

Bill, you are right and when you throw in the Investor Changes, it start becoming a full time job to stay on top of everything.

Ed, we want to make the loans, that is why it is so important to not only keep up with the rule changes, but to also understand them in order to be able get loans approved.

George,

The CLTV up to 125% with sub financing could help some borrowers in hard-hit areas like here in Vegas.

Esko I had not thought about that, but you are right.

OCT

We must stick close to your blog George.... every time we tune in, we run to read, for we know you are faithful with informing us on the current changes. Thank you!

George, I suggested Dan Tabit contact you in case you could answer his question on his post.

OCT

George,

Can you take a conventional first and second and make it an FHA without an appraisal???

Ann

Ann, if you run a refinance loan through Automated Underwriting and you get an Approved/Eligible and the findings also gave you an appraisal waiver, then the answer would be yes. But these days Investors are imposing their own layer of rules, so in my case if I was to run that through Automated Underwriting and I got an Approved/Eligible and the findings also gave me an appraisal waiver, I would not be able to waive the appraisal, because my Investors would not purchase that refinance without an appraisal.

So the answer on this one is both yes and no depending on the Lender and their Investors.

Diane thank you for the kind words.

And Dan has not contacted me, I will read the blog in the mean time.

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