Mortgage Video & Blogging Community

California FHA Streamline loans will have dramatic new rules.  Effective with case numbers assigned on and after November 17, 2009, several revisions to the FHA Streamline Refinance Program will go into effect.  For those that may think doing FHA home loans in Los Angeles, Orange and Ventura Counties is easy, read below!

Seasoning 

-At the time of loan application, the borrower must have made at least 6 consecutive payments on the loan being refinanced. 

Payment History 

-For mortgages with less than a 12-month payment history, all payments must have been made within the month due.

-For mortgages with a 12 month or greater payment history, the borrower must have:

                -No more than one 30-day late payment in the preceding 12 months, AND

              -Made all payments within the month due for the 3 months prior to the date of the loan application. 

Tangible Net Benefit 

-Reduction in the total mortgage payment (PITI and HOA) of at least 5% for fixed to fixed.  Fixed to 1-year ARM allowed, provided rate is at least 2% below rate on existing loan.

-Refinancing from an ARM to a fixed rate:

                -Rate may be no more than 2% above rate on existing 1 year ARM

                -For hybrid ARM’s the total payment on the new loan may not increase  by more than 20% over the payment on the existing loan 

-Reducing the term of the mortgage: must be closed as a rate and term (no cash-out) refinance. Not eligible for streamline.

-Investment Properties/Second homes must meet the requirement for a reduction in total mortgage payment; not eligible for streamline refinancing to an ARM. 

Certifications and Verifications 

-In addition to verifying income and employment, a signed and dated letter on company letterhead certifying that the borrower is employed and have income must be included in the case binder. A DTI does not need to be calculated.

-If assets are needed to close, they must be verified and documented with the most recent bank statement(s). 

-The pay-off statement must be included in the case binder.  

Credit Scores 

-Credit scores for all borrowers (who have one) must be entered into FHA Connection. 

Maximum Combined LTV 

-If subordinate financing is remaining in place the max CLTV is 125%.  

                 -Streamline without an appraisal: based on original value

                 -Streamline with an appraisal: based on new appraised value 

TOTAL Scorecard 

-TOTAL Scorecard should not be used on streamline refinance loans.  If TOTAL is run, the loan must be underwritten as a rate/term refinance. 

Uniform Residential Loan Application 

-The full URLA must be used (abbreviated versions no longer allowed).  Information on income and employment must be disclosed.  The URLA and 92900A addendum must be signed by the borrowers before the loan may be underwritten. 

Revised Streamline Refinance Transactions WITHOUT an Appraisal 

-The maximum mortgage may not exceed the outstanding principal balance minus the UFMIP refund plus the new UFMIP.  No additional financed fees are allowed. 

Revised Streamline Refinance 

-Maximum mortgage is the lower of:

                -Outstanding principal balance minus the UFMIP refund, plus closing costs, prepaid items, and the new UFMIP; OR

                 -97.75% of the appraised value plus the new UFMIP 

[1] There may be additional restrictions on CLTV limits announced by investors.

[2] Outstanding principal balance may include interest charged by the servicing lender when the payoff is not received on the first day of the month, but may not include delinquent interest, late charges, or escrow shortages.

——————–

Top Articles / Links / Questions:

1. FHA Loan Limits – Upland, CA
2. FHA Seller Paid Closing Costs – Upland, CA
3. California Investment Property With an FHA Loan
4. What Is FHA Gift Money?
5. The Trouble With FHA Loans in California

——————–

Brian Wiesner California FHA Mortgage Expert Monaco Mortgage Corporation Toll Free: 866-343-1579 Direct: 909-581-4075