Blog of the Mortgage

Correction/Clarification posted below:

 I am scheduling Streamline Refinance Refresher's for individual offices. E-mail me to schedule your Streamline Refresher so that your group is ready for the next refinance boom.

Many of us were looking at gearing up for a BOOM in the low yielding but fantastically borrower benefiting Streamline Refinance loan.

For those of you new to HUD/FHA loans this is the "Original" No-Doc loan.
No income/assets/job information
Only Mortgage rating required
No appraisal required
No increase in loan balance (over original note) permitted
No appraisal required

This is a GREAT loan with falling rates AND falling values.
You don't make much BUT a great shop set up correctly can crank out literally hundreds of these deals a month and make it up in Volume. Those of you that remember getting into the business and first learning Streamlines know what I'm talking about.

Well, yesterday with little to no fanfare (as usual) HUD released ML 08-40 to provide clarification for refinances.
First the good news.
For all rate and term refinances in 2009 the Max LTV will be 97.75 (BEFORE THE UFMIP of 1.75%). THIS IS HUGE when using an appraisal or doing a conventional debt consolidation loan (taking out existing conventional 1st/2nd's for folks with some equity).

Cash Out LTV's will be limited to 95% up to $417k loan, for loans over $417k the LTV will be limited to 85% (as with "Jumbo's in 2008).

Now, perusing this letter all is well until you get to page 4 of 5 and you find this statement under additional underwriting and eligibility criteria:

This only applies to refinances of Conventional loans into FHA loans. NOT Streamlines.

• 
  The subject property must have been owned by the borrower as his or her principal residence for at least 12 months preceding the date of the loan application.
• If said property is encumbered by a mortgage, the borrower must have made all of his/her mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late and is current for the month due.
• The property that is security for the refinanced mortgage must be a 1- or 2-unit dwelling.
• Any co-borrower or co-signer being added to the note must be an occupant of the property.  Non-occupant owners may not be added in order to meet FHA's credit underwriting guidelines for the mortgage.