BIG FHA Streamline Refi news (for FHA loans prior to June 1, 2009).

Quote from wiumike : Had to sign up to SD just to thank you. I had bought a townhouse 8 years ago and upgraded a house and resorted to renting out the townhouse that is substantially under water. Tried numerous times to refi but everything lead back to it being FHA and either needing an appraisel or paying down to 75% of the LTV. I'm well on my way to a streamline refi and shaving almost 1.75 off of my loan. Thank you much hippy internet stranger.

I appreciate your kind words and you are very welcome!

HUD guidelines do allow a FHA Streamline on an investment property as long as it can be documented that the borrower previously occupied the property. (Not all of my lenders will do them but I do have wholesale conduits who will,)
The new loan amount will be the current principal balance (and any interest due cannot be included in the new loan).

The FHA Streamlines that qualify for the reduced MI are some of the best refinances I have seen in almost 20 years. I just hope it lasts and they do not make changes to what is turning out to be a really good thing for many.

-Adam
Old Hippy & Mortgage Pro

They need to make one change - relax that endorsed by date.

Quote from RammsteinNicCag : They need to make one change - relax that endorsed by date.

No kidding RNC. You are not alone.

The FHA Endorsement Date for reduced MI (on or before May 31, 2009) is the same date for Fannie and Freddie's HARP eligibility date (prior to June 1, 2009) for when Fannie or Freddie were sold their loans too.

Since I posted in mid-May alerting borrowers that the Endorsement Date was different than the loan Funding Date, many have contacted me to confirm their Endorsement dates. Unlike the HARP loans I process, in the past month I have seen >20 FHA loans that funded in May 2009 (and >5 that funded in April 2009) which did not get Endorsed by HUD until June or even July; so the higher MI premiums apply. (Each scenario is unique, but depending on your current rate, in many of those cases the higher MI negates the benefit of a lower rate).

I am a Full Eagle HUD lender and have direct access to the FHA Connection to confirm anyones Endorsement Date if you are not sure.

-Adam
Old Hippy & Mortgage Pro

What do you mean by loans that qualify for the decreased MI's? Are they decreasing the annual % owed or recalculating off of the new principal price?

My current loan at 5.5% with a balance of 137K has a monthly PMI of 68 dollars of month. Would these see a reduction?

Quote from wiumike : What do you mean by loans that qualify for the decreased MI's? Are they decreasing the annual % owed or recalculating off of the new principal price? My current loan at 5.5% with a balance of 137K has a monthly PMI of 68 dollars of month. Would these see a reduction?

Hi wiumike;
I am referring to the reduced Mortgage Insurance premiums for new FHA Streamline Refinances for current FHA loans that were Endorsed by HUD on or before May 31, 2009. Those loans qualify for reduced MI premiums when doing a Streamline Refinance.

For example, for a new FHA loan the standard Up Front Mortgage Insurance Premium (UFMIP) is 1.75% of the loan amount (and added to the base loan amount) and then there is Annual MI moving forward (paid monthly), which is calculated at either 1.20 or 1.25% depending on the LTV.

With FHA Streamline Refis that qualify (i.e. Endorsed prior to June 1, 2009) the UFMIP is reduced to .01% and the Annual (paid monthly) is calculated at .55%.

-Adam

I received a PM from someone and just wanted to reiterate that to do a FHA Streamline Refi you do NOT need to stick with your current lender. If you don’t want to use your current lender, you can go with ANY lender that is FHA approved by HUD.

I still cannot get over that someones lender told them that they can only use them for a FHA Streamline Refinance. That is the furthest thing from the truth!

-Adam
Old Hippy & Mortgage Pro

Have you missed the big announcements lately? Wells, PHH, Stearns, and a handful of other lenders are not going to take them if they aren't currently serviced by them already. So there may be some truth to what they are saying.

*add BB&T to that list.

Quote from Boomancini : Have you missed the big announcements lately? Wells, PHH, Stearns, and a handful of other lenders are not going to take them if they aren't currently serviced by them already. So there may be some truth to what they are saying. *add BB&T to that list.

Hi Boomancini; I am well aware of the lenders who will only do the loans they are currently servicing. In this case, specifically Chase, told the borrower he could not go anywhere else to do a FHA Streamline Refinance on his existing loan. Maybe the person at Chase believes that every lender has the same policy and will not do loans currently serviced elsewhere?

My point was that there are plenty (dozens) of lenders that will be happy to expedite his FHA Streamline and he does not need to stick with his current loan servicer. (Not one of my FHA Streamline refis are closing with the same servicer.)

-Adam

June and July are turning out to be big months for borrowers taking advantage of the new FHA Streamline guidelines; but once again lenders are tighting their own guidelines with some recently raising credit score requirements for FHA Streamlines. Some are requiring full income verification and some simply employment verification (with no income ratios calculated).

With each lender making up their own rules aside from HUD's FHA guidelines I do suggest that borrowers consult an experienced Mortgage Broker who has a variety of lenders available as not all lenders are alike.

-Adam
Old Hippy & Mortgage Pro

Quote from tiedyed1 : Hi Boomancini; I am well aware of the lenders who will only do the loans they are currently servicing. In this case, specifically Chase, told the borrower he could not go anywhere else to do a FHA Streamline Refinance on his existing loan. Maybe the person at Chase believes that every lender has the same policy and will not do loans currently serviced elsewhere? My point was that there are plenty (dozens) of lenders that will be happy to expedite his FHA Streamline and he does not need to stick with his current loan servicer. (Not one of my FHA Streamline refis are closing with the same servicer.) -Adam

UPDATE: The latest changes I am seeing are lenders raising their minimum credit scores to qualify for this product. While HUD's guidelines do not dictate it, most lenders now are looking for at least a 650 credit score (with just a few who will go lower).

Rates are down (again) and the FHA Streamline is truly an outstanding loan product for those who qualify for the reduced MI premiums (where their current loan was Endorsed by HUD prior to June 2009).

-Adam
Old Hippy & Mortgage Pro

Hi all; I felt it appropriate to update this older post as rates have dipped to the point where 3.50% is now providing a rate credit to cover most scenarios closing costs (and in some cases a portion of prepaid expenses/escrows). Rates/pricing changes daily (and sometimes intraday) but this dip started Friday afternoon and is still there.

-Adam
Old Hippy & Mortgage Pro

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Do not assume your current lender will be the best conduit to do your FHA Streamline. SD members have been sharing quotes of what their bank is offering them (most are 3.75%) and I would like to provide this update:

Two weeks have passed and 3.50% is holding strong providing a Lender Credit to cover most scenarios closing costs (and in some cases a portion of prepaid expenses/escrows).

As the Lender Credit is based on a percentage of the loan amount, for larger loan amounts the rate of 3.25% may even cover the costs (depending on what State you are in, as costs vary from State to State).

Rates/pricing changes daily (and sometimes intraday) but this dip started two weeks ago and is still there.

Plus, with each lender making up their own rules aside from HUD's FHA guidelines I do suggest that borrowers consult an experienced Mortgage Broker who has a variety of lenders available as not all lenders are alike.

-Adam
Old Hippy & Mortgage Pro

I am currently doing a streamline refi and have 3.25% locked with the lender credit covering all closing costs and all but $70 of the prepaid/escrows.

The changes to the MIP upfront costs have really made this a no brainer.