FHA Streamline Refinance Programs

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1 Description Credit Qualifying Streamline Refinance of an existing FHA-insured mortgage requiring limited borrower credit documentation and underwriting. Credit & Capacity analysis of the Borrower is required. Not to exceed $500 cash back Non-Credit Qualifying Streamline Refinance of an existing FHA-insured mortgage requiring limited borrower credit documentation and underwriting. Credit & Capacity analysis of the Borrower is NOT required. Not to exceed $500 cash back Max LTV/CLTV Not Applicable Product FHA Streamline 30 Year Fixed CQ FHA Streamline 15 Year Fixed CQ FHA Streamline 3/1Treasury ARM CQ FHA Streamline 5/1 Treasury ARM CQ FHA Streamline High Balance 30 Year Fixed CQ FHA Streamline 30 Year Fixed NCQ FHA Streamline 15 Year Fixed NCQ FHA Streamline 3/1Treasury ARM NCQ FHA Streamline 5/1 Treasury ARM NCQ FHA Streamline High Balance 30 Year Fixed NCQ Property Eligibility Appraisal Single Family, 2-4 Units, Condo, PUD, Site Condo FHA Condo project approval is not required No appraisal required. Use the previous value from the Refinance Authorization. Borrower Eligibility At least one borrower from the existing mortgage must remain as a Borrower on the new mortgage. An occupant coborrower may be added. A nonoccupant co-borrower may NOT be added. Must meet all requirements of Manual Underwriting, except for any requirements for appraisals or LTV calculations. All borrowers on the existing mortgage must remain as borrowers on the new mortgage. An occupant co-borrower may be added. A non-occupant co-borrower may NOT be added. s that have been assumed are eligible provided the previous borrower was released from liability. Exception: A borrower on the mortgage to be paid may be removed from title and new mortgage in cases of divorce, legal separation or death when: the divorce decree or legal separation agreement awarded the Subject Property and Page 1 of 5

2 responsibility for payment to the remaining Borrower, if applicable; and the remaining Borrower can demonstrate that they have made the mortgage payments for a minimum of six months prior to case number assignment. Underwriting Manual Do not run through AUS Credit Full Tri-Merge. Min 620 FICO Non-traditional credit is NOT allowed. Only Tri-Merge. Min 620 FICO Non-traditional credit is NOT allowed. 4506T Required Not Required Occupancy Owner Occupied Investment Properties are allowed on a case by case basis. NOO requires AVM. Payment History mortgage payments within the month due for the 6 months prior to case number assignment and have no more than one 30-Day Late payment for the previous 6 months for all mortgages. payments for all mortgages secured by the Subject Property within the month due for the months prior to mortgage disbursement. If the mortgage on the Subject Property is not reported in the Borrower s credit report, the e must obtain a Verification of to evidence payment history for the previous 12 mos mortgage payments within the month due for the 6 months prior to case number assignment and have no more than one 30-Day Late payment for the previous 6 months for all mortgages. payments for all mortgages secured by the Subject Property within the month due for the months prior to mortgage disbursement. Page 2 of 5

3 Seasoning Requirements Net Tangible Benefits Maximum Amortization Subordinate Financing Calculating Max Reserves LDP/SAM For the existing FHA loan on the subject property, the Borrowers(s) must have made a minimum of six months of mortgage payments on the loan being refinanced, o Beginning with the first payment due date, AND o The first payment due date of the refinance loan occurs no earlier than 210 days after the first payment due date of the mortgage being refinanced. Credit qualifying refinances transactions for mortgages with less than six months mortgage payment history are not permitted. HUD seasoning requirements for streamline refinances continue to be required in accordance with HUD Handbook : o On the date of FHA case number assignment, The Borrower must have made at least six payments on the FHA-insured mortgage being refinanced, At least six full months must have passed since the first payment due date of the refinanced mortgage, and At least 210 days must have passed from the closing date of the mortgage being refinanced. Complete a Net Tangible Benefit Worksheet The maximum amortization period is limited to the lesser of: The remaining amortization period of existing mortgage plus 12 years OR 30 years Existing subordinate financing, in place at the time of case number assignment, must be resubordinated to the Streamline Refinance. No CLTV limit. New subordinate financing is permitted only where the proceeds of the subordinate financing are used to: Reduce the principal amount of the existing FHA-insured mortgage, or Finance the origination fees, other closing costs, or discount points associated with the financing Complete a FHA Max Worksheet for Streamline Refinance Not required Required Page 3 of 5

4 CAIVRS FHA Case Assignment and Refinance Authorization/Qu ery Not Required Prior FHA case number is necessary to obtain FHA Case number and Refinance Authorization/Query. 3.2 file to be uploaded into the TPO WebCenter. with loan number and prior FHA Case number to request. ASSETS Funds required for closing must be verified from an acceptable source. Because Streamline Refinance transactions are underwritten manually, full asset documentation is required. (2 month s bank statements). CASH AT CLOSING IS LIMITED TO $500 Principal reductions are required when the borrower is receiving more than $500 cash at closing on Streamline Refinance loan. The principal reduction must include all cash back and not just the portion of cash back that exceeds $500. For example, if the Closing Disclosure indicates the borrower is receiving $626 cash back a principal reduction in the amount of $126 is insufficient. A principal reduction in the amount of $626 is required. EMPLOYMENT DOCUMENTATION FOR NON-CREDIT QUALIFYING While ratios are not calculated, at least one borrower must receive income. The 1003 must include the current employer s name, address, phone number, borrower s job title and length of time on job. The following documentation requirements apply: Salary hourly or commission income - HVF performs a verbal verification of employment Active-duty military income - HVF performs a verbal verification of employment Borrower works in a seasonal profession but is currently receiving unemployment income - proof the borrower is currently receiving unemployment income and HVF performs a verbal verification of employment evidencing the borrower has been employed in a seasonal position at least two years. If the climate in which the borrower works indicates the borrower should be currently employed in his or her seasonal position, but the borrower is currently receiving unemployment, the loan will be denied Self-employed or partnership income - provide a copy of current valid business license Rental income as borrower s only source of income - copy of current lease(s) required Social security income and borrower is 62 years of age - no verification is required Pension income - provide a bank statement documenting direct deposit of the borrower s pension income or a copy of the borrower s pension award letter IRA or 401k distribution income - provide a copy of the borrower s written distribution plan from the investment company or three months bank statements identifying the consistent monthly deposit Child support or alimony income - provide a current friend of the court letter or copy of the borrower s divorce decree or support order and the most recent three months bank statements showing consistent deposits in the amount of the support or alimony Page 4 of 5

5 Disability income or social security income and borrower is 62 years of age provide a bank statement documenting direct deposit of income or a copy of the borrower s social security award letter or a copy of the borrower s disability award letter If two borrowers were both employed on the original application for the loan being refinanced but one is no longer employed - obtaining income verification for the income-receiving borrower only is acceptable. Loans having no borrowers that receive income are Ineligible. INITIAL DISCLOSURE Obtain the endorsement date of the prior loan in order to disclose the correct MIP to the borrower. (See section on Insurance) If the prior loan endorsement date is not verified, manually calculate the LTV so that it s above 95% and quote the higher monthly MIP until the case number is pulled and a refinance query is generated by processing. UFMIP refunds are only available for 3 years. MAXIMUM MORTGAGE CALCULATION Complete a FHA Max Worksheet for Streamline Refinance prior to submission to underwriting to confirm max loan amount. MORTGAGE INSURANCE For the refinance of mortgages endorsed on or before May 31, 2009, UFMIP is 1.0 and Annual MIP is.55 with a duration of 11 years for LTV =< 90.00% and a duration of the mortgage term for LTV >90.00%. For all loans endorsed after May 31, 2009, refer to FHA MIP chart. NET TANGIBLE BENEFIT A Net Tangible Benefit (NTB) is a reduced combined rate*, a reduced term, and/or a change from an ARM to a FRM that results in a financial benefit to the Borrower. A Net Tangible Benefit form must be completed to determine if the NTB test is met. * Combined rate refers to the mortgage interest rate plus the mortgage insurance premium (MIP) rate. Page 5 of 5