FHA Streamline Refinance: Rules Effective January 1, 2009

Hey Carl,

Thanks for the detailed info. I'm currently processing my first of two streamlines w/o appraisal. One thing you mention that I want to check on, is that the UFMIP on a streamlined refi is still 1.5% instead of the new 1.75%. Is that correct, or is your post using the older UFMIP premium?

Thanks!

Hey Wes,

I've currently got three FHA streamlined refis that I'm working on, all of which were originated in 2008. The most recent one was originated August 29, and the client has only made three payments on it. What you might be thinking about is the HUD rule that a 12-month mortgage or rent payment history must be documented with the streamlined refi. Your mortgage broker can pull a mortgage only credit report to verify your repayment history on the current mortgage, plus have you bring in cancelled checks to show timely payment for rent if the mortgage history doesn't quite hit 12 months.

What Carl says is also true, in that you have to consider your UFMIP refund amount in calculating your closing costs. In all but one of the streamlines I'm working on right now, the client will be bringing in money to close because the new loan amount cannot exceed the previous loan amount (for streamlines w/o appraisal). On the 3rd streamline, I'm going to order an appraisal because the house has actually appreciated (Crazy in this market, eh?) so we'll use some of that equity to cover the client's new mortgage costs.

If you're interested in pursuing this, I'd look up a knowledgable broker in your area and have him/her run the #'s for you. Start with a recommendation from someone you know who had a good experience, or research folks around you involved in the Active Rain community. I've found that generally speaking, people who take time to contribute in an open forum like this are more trustworthy and upright.

Good luck!

Greg

Let's say your current FHA loan amount is $15,000 less that what you started.  If your current interest rate was 6.0% and you can now get 4.875%, this would seem like probably a good streamline to do if the customer really wanted a lower payment.  I know underwriters often look to see if there is substantial benefit to the borrower in the overall numbers, but this is usually easily overcome simply by explaining the clients need and want "payment relief". 

However, what if the borrower took out a 9% interest rate 2nd mortgage two years ago, and is now $52,000 upside down on their home because of the 2nd.  Can a streamline on their FHA 1st still be done?