Title goes hereFHA Streamline Refinance

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Agenda

• Highlights• Non-Credit Qualifying and Credit Qualifying Streamlines• Borrower Eligibility, DTI, & Housing History• Maximum Loan Amount and Amortization Terms• Maximum Cash Back• Upfront and Monthly Mortgage Insurance & MIP Refunds• Net Tangible Benefit & Seasoning Requirements• Funds to Close• Required Documents• FHA Case Number Request

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FHA Streamline Highlights

• Fixed rate and ARMs available

• 600 Minimum FICO (680 for ARMs)

• All Borrowers must have at least one credit score

• No appraisal required

• No LTV Max for Streamlines

• DTI not applicable (on non-credit qualifying)

• No minimum loan amount

• No new secondary financing

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FHA Streamline –Non-Credit Qualifying

Non-Credit Qualifying

A Borrower is eligible for a Streamline Refinance without credit qualification if all Borrowers on the existing Mortgage remain as Borrowers on the new Mortgage. Mortgages that have been assumed are eligible provided the previous Borrower was released from liability.

ExceptionA 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 Property and 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.

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Credit Qualifying (CQ): Review of credit and capacity analysis for the borrower is required.

• At least one Borrower from the existing Mortgage must remain as a Borrower on the new Mortgage.

Credit-Qualifying is required when:• Removing a borrower;• Following the assumption of a mortgage that:

o occurred less than six months previously, ando does not contain restrictions (that is, the due-on-sale clause) limiting assumptions

only to creditworthy borrowers; and• Following an assumption of a mortgage that:

o occurred less than six months previously; ando did not trigger the transferability restriction (that is, the due-on-sale clause), such as

in a property transfer resulting from a divorce decree or by devise or descent.

FHA Streamline –Credit Qualifying

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FHA Streamline DTI

Non-Credit Qualifying: DTI Ratios are not calculated.

Credit Qualifying:DTI must be calculated. FHA DTI ratio requirements for manually underwritten loans must be met. See next slide.

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FHA Streamline DTIFHA Manual Underwriting Approvable Ratio Requirements

Lowest Minimum Decision Credit Score

Maximum Qualifying Ratios (%) Acceptable Compensating Factors3

500 - 5792 or No Credit Score 31/43

• Not applicable. Borrower(s) with MDCS below 580 or with no credit score may not exceed 31/43 ratios.

• Exception: Energy Efficient Homes (see below) may have max ratios of 33/45

5802 and above 31/43

• No compensating factors required.• Energy Efficient Homes (see below) may

have ratios of 33/45 with no compensating factors.

5802 and above 37/47

One of the following compensating factors must be documented:

• verified and documented cash reserves• minimum increase in housing payment, or• residual income1

5802 and above 40/40The following compensating factor must be documented:

• No discretionary debt

5802 and above 40/50

Two of the following compensating factors must be documented:

• verified and documented case reserves• minimal increase in housing payment• significant additional income not reflected

in Borrower(s) Effective Income, and/or• residual income1

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FHA Streamline Housing HistoryNon-Credit Qualifying

Required Documentation:If the Mortgage on the subject Property is not reported in the Borrower’s credit report, a verification of Mortgage must be obtained to evidence payment history for the previous 12 months.

Non-Credit Qualifying:For all mortgages secured by the subject property:

• All payments must have been made within the month due for the 6 months prior to case assignment;

• Must have no more than one 30-day late for the previous 6 months; and• Payment(s) due for the month prior to mortgage Disbursement, must be made

within the month due.

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FHA Streamline Housing HistoryCredit Qualifying

Credit Qualifying:

For all mortgages on all properties:• Properties with ≤ 6 months of mortgage history must reflect 6 months payments made,

all within the month due.• Properties with > 6 months of mortgage history must reflect all payments paid within

the month due for the 6 months prior to case assignment.• Must have no more than one 30-day late for the previous 6 months.• For the subject property, payment(s) due for the month prior to mortgage

Disbursement, must be made within the month due.

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FHA Streamline Maximum Loan Amount

Owner Occupied Primary Residence and HUD-approved Second HomeThe maximum Base Loan Amount is the lesser of:

• the outstanding principal balance of the existing Mortgage as of the month prior to mortgage disbursement; plus:

o interest due on the existing Mortgage; ando MIP due on existing Mortgage; or

• the original principal balance of the existing Mortgage (including financed UFMIP);• less any refund of UFMIP

Investment PropertyThe maximum Base Loan Amount

• is the lesser of: o the outstanding principal balance of the existing Mortgage as of the month prior to

mortgage disbursement; oro the original principal balance of the existing Mortgage (including financed UFMIP);

• less any refund of UFMIP

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FHA Streamline Maximum LTV/CLTV

Topic Fixed Rate ARM

LTV • Use the original value of the Property (from previous mortgage) to calculate the LTV.

• Note: Since the new loan amount cannot exceed the original principal balance, maximum LTVs are not provided.

CLTV No Maximum

• 125% maximum• High Balance loan amounts the CLTV

is capped at maximum LTV.• Partial Claim Notes must be

included in the CLTV calculation and the CLTV is limited to 100%.

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Maximum Amortization Terms

Maximum Amortization Terms

The maximum amortization period of a Streamline Refinance is limited to the lesser of:

• the remaining amortization period of the existing mortgage plus 12 years; or

• 30 years.

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FHA Streamline Maximum Cash Back

Notes:

Cash back at disbursement for NCQ and CQ Streamline refinances may not exceed $500.

Note: No cash back is permitted for Streamline Refinances in Texas.

Cash back resulting from the refund of Borrowers unused escrow balance from the previous Mortgage must not be considered in the $500 cash back limit whether received at or subsequent to mortgage Disbursement.

A payoff letter for the existing mortgage must be obtained.

Refer to: Streamline Refinance Max Base Loan Amount Worksheet.

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FHA Streamline Upfront and Annual MIP

Original FHA Loans Endorsed AFTER 05/31/2009

UFMIP 1.75%

Annual MIP

Loan Amount Term LTV MIP

≤ $625,500

> 15 Years≤ 95% .80

> 95% .85

≤ 15 Years≤ 90% .45

> 90% .70

> $625,500

> 15 Years≤ 95% 1.00

> 95% 1.05

≤ 15 Years

≤ 78% .45

> 78% but≤ 90%

.70

> 90% .95

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FHA Streamline FHA Streamline Upfront and Annual MIP

Original FHA Loans Endorsed ON or PRIOR TO 05/31/2009

UFMIP .01%Annual MIP .55

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FHA Streamline MIP Refunds

The MIP credit from the existing FHA-insured mortgage being paid off with the new refinance cannot exceed the up-front MIP on the new loan. The full amount of MIP credit can only be applied to the new refinance in the amount that is equal to or less than the new up-front MIP.

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FHA Streamline Net Tangible Benefit

A Net Tangible Benefit is a

• Reduced Combined Rate, o Combined Rate refers to the interest rate on the Mortgage plus the

Mortgage Insurance Premium (MIP) rate.• Reduced term, and/or

o To be considered an NTB, all of the following must be met the remaining amortization period of the existing Mortgage is

reduced; the new interest rate does not exceed the current interest rate; and the combined principal, interest and MIP payment of the new

Mortgage does not exceed the combined principal, interest and MIP of the refinanced Mortgage by more than $50

• Change from an ARM to a fixed rate Mortgage that results in a financial benefit to the Borrower.

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FHA Streamline Net Tangible Benefit

If the Existing FHA Loan is...

Then the new FHA Loan Must Meet the Following...

New Fixed Combined Rate

New Hybrid ARM Combined Rate

Fixed Rate At least 0.5% below prior Combined Rate

At least 2% below the prior Combined Rate

Any ARM w/< 15 Months to Next Payment Change Date

No more than 2% above the prior Combined Rate

At least 1% below the prior Combined Rate

Any ARM w/ >= 15 mos. to Next Payment Change Date

No more than 2% above the prior Combined Rate

At least 1% below the prior Combined Rate

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FHA Streamline Seasoning Requirements

FHA Connection will not permit a case number to be assigned for a Streamline Refinance transaction until the seasoning requirements have elapsed / been met. On the date of the FHA case number assignment:

• the Borrower must have made at least six payments on the FHA-insured Mortgage that is being refinanced;

• at least six full months must have passed since the first payment due date of the Mortgage that is being refinanced;

• at least 210 Days must have passed from the Closing Date of the Mortgage that is being refinanced; and

• if the Borrower assumed the Mortgage that is being refinanced, they must have made six payments since the time of assumption.

Additionally, GNMA requires the following loan seasoning requirements be met on all new FHA Streamline Refinance transactions:

• A minimum of 6 months full and consecutive payments (pre-payment of monthly mortgage payments not permitted) have been made on the loan being refinanced since the first payment date evidenced on the Note; and

• 210 days has passed since the first payment due date of the loan being refinanced to the first payment date of the new Fairway Streamline Refinance loan.

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FHA Streamline Funds to Close

NCQ:The Mortgagee must verify Borrower’s funds to close, in excess of the total Mortgage Payment of the new Mortgage, in accordance with standard FHA source of funds requirements.

CQ: The Mortgagee must verify Borrower's funds to close, in excess of the total Mortgage Payment of the new Mortgage following standard underwriting guidelines.

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FHA Streamline Required Documents

FHA Documents Required:

• Non-qualifying Streamline Checklist• Credit Qualifying Streamline Checklist• FHA Case Number Request• CAIVRs• Review of the LDP and SAM exclusion lists• HUD-92900a URLA Addendum• HUD 92900-B Important Notice to Homebuyers• FHA Informed Consumer Choice Disclosure• FHA Streamline Max Mortgage Calculation Worksheet• Written or verbal VOE

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Completing the HUD Addendum

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HUD Addendum for Brokered Loans

Be sure to complete this section.

HUD Addendum for Correspondent Loans

FHA Streamline Case Number

When requesting a case number:

• FHA case number assignment cannot pre-date loan application unless the case is transferred in from an outside lender.

• Be sure the projected closing date is accurate (for calculation of MIP Credit).

• You will obtain the Refinance Authorization using the existing case number (for the new refinance). Fairway will obtain this for you.

o The refund amount displays at the bottom of the Case Number Assignment Results page in the Refinance Authorization section only when case number is requested.

• The Refinance Authorization Result must be included in the submission package.

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How to Order FHA Case Number

To order the FHA Case Number, complete the form on the website and email to your team.

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FHA Resources

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FHA Handbook (4000.1)https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1

FWL FHA Reference Guide

Questions

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