Please remember, that the following are HUD’s guidelines for FHA Streamline Refinances. HUD sets the minimum standard. Lenders have the ability to, and often do, go above and beyond what HUD requires. I have made my notes based off my experiences in RED underneath the given guideline.
HUD’s Ohio FHA Streamline Refinance Guidelines (as published in the HUD 4155.1)
Description of a Streamline Refinance
- designed to lower the monthly principal and interest payments on a current FHA insured mortgage, and
- must involve no cash back to the borrower, except for minor adjustments at closing that are not to exceed $500.
Appraisals on Streamline Refinances
FHA does not require an appraisal on a streamline refinance. These transactions can be made with or without an appraisal.
FHA does not require repairs to be completed on streamline refinances with appraisals, with the exception of lead-based paint repairs. However, the lender may require completion of repairs as a condition of the loan. Lenders WILL require all repairs be completed before allowing your refinance to close.
Ignoring or Setting Aside an Appraisal on a Streamline Refinance
If an appraisal has been performed on a property, and the appraised value is such that the borrower would be better advised to proceed as if no appraisal had been made, then the
- appraisal may be ignored and not used
Maximum Insurable Mortgage Calculation for Streamline Refinances Without An Appraisal
The maximum insurable mortgage for streamline refinances without an appraisal cannot exceed the outstanding principal balance
- minus the applicable refund of the UFMIP,
- plus the new UFMIP that will be charged on the refinance
Note: The 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.
Maximum Insurable Mortgage Calculation for Streamline Refinances With an Appraisal
- closing costs
- discount points
- prepaid items, or
- other financing costs.
The maximum insurable amount may only be increased through a Credit Qualifying Streamline Refinance with an appraisal
Credit Report and Credit Score Requirements for Streamline Refinances
Except for CREDIT QUALIFYING STREAMLINE REFINANCES, FHA does not require a credit report. The lender, however, may require this as part of its credit policy.
If a credit score is available, the lender must enter it into FHA Connection (FHAC). If more than one credit score is available, the lender must enter all available credit scores into FHAC. Lenders require a tri-merge credit report, and will utilize your middle credit score for qualification of an FHA Streamline Refinance.
Borrower Cash to Close on a Streamline Refinance
If assets are needed to close, the lender must verify, document, and determine the acceptability of the assets to be utilized.
Borrower Additions or Deletions to the Title on a Streamline Refinance
Individuals may be added to the title on a streamline refinance without
- a creditworthiness review, and
- triggering the due-on-sale clause.
Individuals may be deleted from the title on a streamline refinance only
- under the circumstances described in Credit Qualifying Streamline section Required Usage of a Credit Qualifying Streamline Refinance
- an assumption of a mortgage not containing a due-on-sale clause occurred more than six months previously, and
- the assumptor can document that he/she has made the mortgage payments during the interim period, or
- following an assumption of a mortgage in which the
- transferability restriction (due-on-sale clause) was not triggered, such as in a property transfer resulting from a divorce decree or by devise or decent
- assumption or quit-claim of interest occurred more than six months previously, and
- remaining owner-occupant can demonstrate that he/she has made the mortgage payments during this time.
Seasoning Requirements for a Streamline Refinance
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.
Mortgage Payment History Requirement for a Streamline Refinance
|If the outstanding mortgage has…||Then the borrower must have…|
|fewer than 12 months payment history||made all mortgage payments within the month due|
|12 months payment history or more||• experienced no more than one 30 day late payment in the preceding 12 months, and
• made all mortgage payments within th emonth due for the three months prior to the date of the loan application.
No-cost refinance, in which the lender charges a premium interest rate to defray the borrower’s closing costs and/or prepaid items, are premitted.
The lender may also offer an interest-free advance of amounts equal to the present escrow balance on the existing mortgage, to establish a new escrow account.
Term Reduction Ineligible for Streamline Refinance
A transaction for the purpose of reducing the mortgage term must be underwritten and closed as a rate and term (no cash-out) refinance transaction.
ARM to ARM Refinancing
An Adjustable Rate Mortgage (ARM) may be refinance to another ARM, provided that there is a Net Tangible Benefit to the borrower.
ARM to ARM refinances may be transacted with or without an appraisal.
Important: An ARM may be used only to refinance a principal residence.
ARM to Fixed Rate Refinancing
For ARM to fixed rate refinances, the interest rate on the new fixed rate mortgage must conform to the requirements in Net Tangible Benefit section.