As part of the steps the FHA is taking to bolster its cash reserves, it appears that FHA streamlines are about to get harder to qualify for. Right now people with FHA loans can refinance to a better FHA loan without needing an appraisal no matter what their current income is or how upside down they are on the home as long as they have not been 30+ days late on a mortgage payment and have a credit score above 620. According to this report over at Housing Wire the requirements for FHA streamlines will be tightening in significant ways soon:
The new policies revise current procedures to streamline refinance transactions. FHA will establish new requirements for seasoning, payment history, income verification and demonstrate a net tangible benefit to the borrower. The new changes provide for a collection of credit score information when available and caps the maximum loan-to-value (LTV) ratio at 125%.
Also, new guidelines will be provided on ordering appraisals for FHA-insured mortgages and supports the agency’s policy requiring appraiser independence. While FHA’s current policies continue to comply with the Home Valuation Code of Conduct (HVCC), FHA will adopt language from the Code to align with GSE standards.
These changes potentially do away with some major benefits of the FHA streamline process. If you have an FHA loan with a rate of 5.75% or higher contact us today about streamlining to a lower rate while the procedure is still relatively inexpensive and easy. Tell your friends and neighbors with FHA loans as well. FHA streamlines are about to become significantly less streamlined and significantly more expensive and difficult to come by.