The FHA released the details on its policy changes regarding FHA streamlines (see mortgagee letter 09-32). The new policies go into effect November 18, 2009. Here are what we consider the most significant changes:
A. Seasoning
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
This means there is a minimum 7-9 month waiting period one must wait between FHA streamlines. It used to be that one could get an FHA streamline and if rates improved thereafter get another streamline immediately.
II. Revised Streamline Refinance Transactions WITHOUT an Appraisal
The maximum insurable mortgage cannot exceed:
– The outstanding principal balance minus the applicable refund of the UFMIP,
PLUS
– The new UFMIP that will be charged on the refinance.
This is the most major change. Right now, most FHA streamlines allow a borrower to roll closing costs into the new loan (thus bring no money to closing), skip one month of mortgage payments, and reduce interest rates. With this new rule closing costs will not be able to be rolled into the new loan so as a result it will be much more difficult to get a streamline with no money at closing. The requirement for money at closing will mean many families will not be able to streamline their FHA loan soon.
If you have an FHA loan at 5.75% or higher contact us in the sidebar today. Getting a streamline will be more expensive and difficult starting in November 2009.