FHA Adjusts Neighborhood Watch For Obama’s Refinance Plan
The Federal Housing Administration (FHA) announced that it will no longer rank mortgage lenders based on performance of “streamlined” loans in its Neighborhood Watch system, in an effort to open up the program for more families.
Currently, FHA borrowers are allowed to refinance under the existing streamline program without a new appraisal, credit report or documentation, which is customary for standard refinances. However, as Guaranteed Rate reported earlier, due to FHA’s Neighborhood Watch, lenders have been denying some of these borrowers because it could compromise their status as FHA-lenders. By removing these streamlined refinance loans from lenders’ “compare ratio”, FHA has removed this problem for both borrowers and lenders.
“This will open the program up to many more families with FHA-insured loans” the White House stated. This is all a part of the president’s plan to increase refinances and help struggling borrowers.