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BORROWER CRITERIA
Income limits: This program has no income limits.
Credit: There are two types of Streamline Renances: credit qualifying,
where the borrower provides income and credit documentation and
the lender performs a credit check; and non-credit qualifying, where no
credit check is performed. Credit qualifying procedures must be fol-
lowed in cases where the renance removes a borrower. In both cases,
the lender must verify that the mortgage payment history meets FHA
guidelines. Lenders may also impose overlays and require some form of
credit and/or income review beyond those required by FHA.
Occupancy and ownership of other properties: Owners of one- to
four-unit primary residences, HUD-approved secondary residences, and
non-owner occupied properties (i.e., investment properties) with existing
FHA-insured mortgages can all use the program.
Payment history/mortgage seasoning requirement: Borrowers must
have made at least six payments on the FHA-insured mortgage that is
being renanced, at least six months must have passed since the rst
payment due date of the FHA-insured mortgage that is being re-
nanced, and at least 210 days must have passed from the closing date
of the FHA-insured mortgage that is being renanced. If the borrower
assumed the mortgage that is being renanced, they must have made
six payments since the time of assumption. The borrower must have
made all mortgage payments for all mortgages on the property within
the month due for the six months prior to case number assignment and
have no more than one 30-day late payment for the previous six months
for all mortgages on the property.
LOAN CRITERIA
Loan limits: Streamline renances are not subject to the FHA mortgage
limits but are subject to maximum mortgage amounts that are based
upon the outstanding balance of the existing mortgage.
Loan-to-value limits: Property appraisals are not required. There are
no LTV or combined LTV limits. The maximum allowable mortgage
amount is based on the principal balance of the FHA-insured loan
being renanced.
Adjustable-rate mortgages: An ARM may be renanced to another ARM
only if the property is a primary residence and the requirements of the
net tangible benet test have been met. A xed-rate mortgage may
be renanced to a one-year ARM as long as the new interest rate is at
least 2 percentage points below the current interest rate of the xed-
rate mortgage.
Homeownership counseling: Not required.
Mortgage insurance: The mortgage insurance premiums follow the
same requirements as Section 203(b) mortgages except Streamline
POTENTIAL BENEFITS
FHA Streamline Refinance trans
actions are exempt from a bank’s
compare ratios. This means that
a bank can make loans without
regard to typical risk factors
such as credit score because
the performance of the loans
will not influence the bank’s
performance record. Streamline
Refinance can also remove
at-risk loans from the bank’s
regular FHA performance record.
The reduced underwriting
requirements and waiver of
appraisal cuts down significantly
on the amount of time it takes to
refinance the loan.
POTENTIAL CHALLENGES
Lenders must be FHA-approved
and must be approved for
direct endorsement.
A limited pool of borrowers is
eligible for this program because
only existing FHA mortgage
holders who are current on their
mortgage are eligible, and those
who are not struggling to make
payments may have more com
petitive refinancing options.
Findings under FHA’s Technology
Open to Approved Lenders
(TOTAL) mortgage scoring
system are invalid. Any under
writing that may be necessary
under a credit-qualifying trans
action must be done manually.
FDIC | Affordable Mortgage Lending Guide | 28