This won't be as important to Realtors as much as it will for customers who need to refinance for whatever reason.
Effective November 1, 2009 HUD will enforce some new rules for FHA Streamline refinance loans. We're going to have a BIG meeting next Wednesday and I'll post more information afterwards but here are some of the highlights so far.
If subordinate financing is remaining in place, the maximum combined loan-to-value ratio is 125 percent.
For streamline refinance transactions WITHOUT an appraisal, the CLTV is based on the original appraised value of the property.
For streamline refinance transactions WITH an appraisal, the CLTV is based on the new appraised value.
Currently customers who have suffered a significant decrease in value can refi the 1st using and FHA loan and keep the second mortgage or HELOC in place with no consideration to the combined loan to value.
STREAMLINES WITHOUT AN APPRAISAL, WILL NOT BE ABLE TO ADD IN CLOSING COSTS; & EVEN WITH AN APPRAISAL, CANNOT ADD IN DISC PTS
Currently there is no need to obtain and appraisal for a streamline rate/term refinance. Some other factors must be met such as no late payment in the past 12 months, etc.
Keep in mind that should you need an appraisal and the value is not within the guidelines of maximum loan to value, you may have just wasted $425-$500 for an appraisal plus any other additional fees incurred in the process.
I'll post more details in about a week. I can't wait to see what else the "powers that be" can do to put us all in the poorhouse!
Have a great weekend! Lora
Lora, the changes you outline in your post plus yesterday's proposed changes plus the new Condo approval guidelines in place on Nov. 2 are going to make FHA into a whole new playground.
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