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2009 FHA Refinance Loan-to-Value Limits

January 6th, 2009 3:42 PM

2009 FHA Refinance Loan-to-Value Limits

Effective for case numbers assigned on or after January 1, 2009, the maximum loan-to-value for most FHA refinance transactions will be 97.75%. A summary of maximum loan-to-value on refinances is shown in the chart below.

Maximum LTV

Rate-and-Term

97.75%

FHA-to-FHA Streamline w/Appraisal

97.75%

FHA-to-FHA Streamline w/o Appraisal

n/a

Cash-Out Refinances

95% or 85%

FHA Second Appraisal Requirements for Cash-Out Refinances

Effective for all case number assignments on or after January 1, 2009, FHA will require a second appraisal for all cash-out refinances where the loan-to-value, exclusive of UFMIP, exceeds 85% of the appraised value. This second appraisal requirement applies regardless of the loan amount or the location of the property.

***Cash Out Refinance:

If owned less than 12 months: 85% LTV, determined by using the lesser of either the

Appraised Value or the original sales price.

If owned 12 months or more: up to 95% LTV based on current appraised value, subject

to all of the following:

• Property is the borrower’s principal residence for at least 12 mos. prior to loan

application date.

• No payment may be more than 30 days late within the last 12 mos. Payment must be

current for the month due.

• 1-2 unit only. (Max loan amount = $417,000 for 2 units.)

• Existing subordinate financing may remain in place (regardless of CLTV) if the borrower

qualifies with payments on all liens; New secondary financing is limited to 95% CLTV.

• Cash out refinance > 85% LTV will require a 2nd appraisal (regardless of loan amount or location.)

Posted by John Aiossa on January 6th, 2009 3:42 PMPost a Comment (0)

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FHA Streamline Refinance

January 14th, 2009 7:57 PM

FHA Streamline Refinance

• The FHA Streamline Refinance program is designed to lower the monthly principal and interest payments on a current FHA-insured mortgage.

Streamline Refinances are subject to the following requirements:

• Cash-back to the borrower is not allowed with the exception of minor adjustments at closing provided the amount does not exceed $500.

• Allowed with or without an appraisal.

• Must result in an immediate payment reduction to the borrower.

• Generally, do not require documentation for verifying income, assets, credit rating, appraisal, or source of funds. In some cases, however, an appraisal or credit report may be necessary.

• Non-owner-occupied ARM or fixed-period ARM loans are not eligible for the Streamline Refinance program.

• Loans closed prior to July 1, 1991, with or without an appraisal is exempt from annual MIP; however, UFMIP is required. Refer to MIP for MIP Premium Based on Term tables list for the MIP amounts based on the term of the loan.

• Must include documentation attached to the Loan Purchase Voucher (LPV) at the time of delivery to indicate that the mortgage being refinanced was closed on or before July 1, 1991.

Note: This documentation may be in the form of a photocopy of the Note, HUD-1, MIC, copy of the recorded mortgage, or other credible evidence.

Streamline Refinance Payment History

A Residential Mortgage Credit Report, three-file merged credit reports, or current payment history on the loan being refinanced must be provided.

***Streamline Refinance With An Appraisal***

The new base loan amount may not exceed 97.75% of the lesser of the property’s appraised value and any financed upfront mortgage insurance premium (excluding any closing costs) or:

• The sum of the outstanding principal balance of the existing mortgage plus:

- Up to 60 days interest on the old loan

o The existing first lien may include the interest charged by the servicing lender when the payoff is not received on the first day of the month as is typically assessed on FHA mortgages and may also include accrued late charges and escrow shortages but may not include delinquent interest.

- Borrower-paid closing costs

- Discount points paid by borrower

- Prepaids (taxes & insurance) as necessary to establish the escrow account

- Subtract lesser of unearned MIP (refund) or new UFMIP, or

• FHA geographical mortgage limits.

• Plus the new UFMIP, if applicable, determines the final loan amount.

• Subordinate liens and repairs are not eligible for inclusion in the maximum mortgage.

Posted by John Aiossa on January 14th, 2009 7:57 PMPost a Comment (0)

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