Top 10 Streamline FHA Refinance Program Updates Coming in November 2009

A recently released HUD Mortgagee Letter has some pertinent changes in it pertaining to the Streamline FHA refinance program which will become effective November 17th, 2009:

Here are the Top 10 Streamline FHA Refinance Updates You Need To Be Aware Of:

1. The current loan must have a minimum of 6 months seasoning (at least 6 mortgage payments must have been made to date).
2. On current loans with 6 to 12 months of seasoning, there must be NO 30-day late payments.
3. Current loans with 12 months or greater of seasoning can have a maximum of only ONE 30-day late payment within the past 12 months.
4. The Streamline FHA refinance MUST reduce the PITI (Principal, Interest, Taxes and Insurance payment) by 5% OR be going from an ARM to a Fixed Rate program (fixed rate cannot be more than 2% higher) OR be going from a Fixed Rate to an ARM (new ARM program MUST be 2% less than the original Fixed Rate).
5. If the borrower is reducing the term of the loan, it MUST be processed as a regular rate and term refinance.
6. Investment properties and 2^nd homes are NO LONGER ELIGIBLE for the Streamline FHA refinance program.
7. The lender providing the Streamline FHA refinance must include a signed and dated letter on their letterhead which states that the borrower is employed and has current income.
8. The maximum CLTV (Combined Loan To Value) is 125% of the new value OR the original value is the loan is being processed WITHOUT and appraisal.
9. The lender should NOT utilize the FHA TOTAL Scorecard system on Streamline FHA refinances UNLESS they want to process the loan as a regular rate and term FHA refinance.
10. The mortgage payoff statement on the current mortgage CANNOT include any delinquent interest, late charges or escrow shortages.  The loan must be current.

These are just a few of the changes coming down the pipeline from HUD on changes within the FHA guidelines – for regular FHA refinances, Streamline FHA refinance and also FHA purchase.  More info on additional changes coming in my upcoming blog posts so make sure and to follow the The CA Mortgage Guy by looking to the right for: Follow Me On The Web – and submit your email address today!

Look forward to my next posting!