JUST THE RIGHT CHOICE JUST MORTGAGE, INC.
FHA – STREAMLINE REFINANCES
FHA has announced the following significant changes to streamline refinances with and without
appraisals. All changes are effective for case numbers assigned on or after November 17, 2009.
SEASONING
Borrowers must have made six (6) consecutive payments on the FHA loan being refinanced.
If the payment history for the loan being refinanced is less than 12 months, all payments must
have been made within the month due.
If the payment history for the loan being refinanced is greater than 12 months, the borrower
cannot have more than one 30-day late payment in the most recent 12 months and the
borrower must have made the most recent three payments within the month due.
NET TANGIBLE BENEFIT
JMI must determine that there is a net tangible benefit as a result of the streamline refinance
transaction, with or without an appraisal. Net tangible benefit is defined as:
For any of the transactions listed below, the new total mortgage payment must be at least 5%
lower than the existing total mortgage payment. The following items are included in the total
mortgage payment: Principal and interest, taxes, insurance, homeowner’s association fees,
special assessments, ground rents, monthly mortgage insurance premium and payments on
subordinate liens.
1. Fixed rate to Fixed rate
2. ARM to ARM
3. Graduated payment mortgage (GPM) to fixed rate
4. GPM to ARM
5. 203(k) to 203(b) – Rehab construction must be complete and funds must be fully
disbursed.
Fixed Rate to ARM: Fixed rate mortgages may be financed to a one-year ARM provided that
the interest rate on the new mortgage is at least two (2) percentage points below the current
interest rate.
ARM to Fixed Rate: Borrowers can refinance from an existing ARM loan to a fixed rate loan,
subject to the following requirements:
1. One-year ARM to fixed rate – New interest rate may not be more than two
percentage points above the current rate of the one-year ARM being paid off
2. Hybrid ARM (3/1, 5/1, etc.) to fixed rate – Total mortgage payment may not increase
more than 20%.
Reduction in loan term: A reduction in loan term is no longer eligible for Streamline
refinancing. Reductions in loan terms must be underwritten and closed as rate and term
refinances.
Investment/secondary Residences: Are not eligible for streamline refinancing.
JMI FHA Streamline Refinance Net Tangible Benefit Worksheet must be submitted with the
loan file. This form is available in JTrac Forms.
EMPLOYMENT VERIFICATION
Verbal verification of employment required. The verbal must be on JMI letterhead and must
be signed by JMI employee.
ASSET VERIFICATION
All assets required for closing must be verified and properly documented.
CREDIT SCORE
Lenders must enter credit scores in FHA Connection.
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JUST THE RIGHT CHOICE JUST MORTGAGE, INC.
JMI’s minimum credit score of 620 applies to all loans, including Streamline refinances
PAY-OFF STATEMENT
A current pay-off statement must be included in all files.
CLTV
If existing subordinate financing will remain in place, the maximum CLTV is 125%
To calculate the CLTV for Streamlines without appraisals, use the original appraised value
from the Refinance Authorization screen in FHA Connection.
To calculate the CLTV for Streamlines with appraisals, use the new appraised value.
TOTAL SCORECARD
Loans should not be run through Total Scorecard. If a loan is accidentally run through Total
Scorecard, the loan must be underwritten and close as a rate and term refinance, subject to
Total Scorecard documentation requirements and all applicable credit overlays.
LOAN APPLICATION
Abbreviated version of 1003 Universal Residential Loan application is no longer permitted
Application and HUD form 92900-A – Addendum to Uniform Residential Loan Application
must be signed and dated by the borrowers and interviewer prior-to underwriting.
MAXIMUM LOAN AMOUNT CALCULATIONS
Streamline without appraisal: The maximum insurable mortgage base loan amount cannot
exceed outstanding principal balance on the loan being paid off minus the applicable up-front
mortgage insurance premium refund PLUS the new UFMIP that will be charged on the
refinance. Closing costs, pre-paid expenses and discount points may not be included
(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)
Streamline with appraisal: The maximum loan base loan amount is the lesser of outstanding
principal balance, minus the applicable up-front mortgage insurance premium refund, plus
closing costs, pre-paid items and the new UFMIP that will be charged on the refinance.
Discount points may not be included. (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)
OR
97.75% of the new appraised value plus the new UFMIP that will be charged on the refinance.
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