FHA Streamline Refinances- Making a Comeback!

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

FHA streamline refinances have always been one of my favorite loan types to process because they are very easy to deal with. There is very minimal borrower qualifying to be done so documentation is also minimal. These files can usually be processed and closed very quickly depending on whether or not an appraisal is needed and what time of the month the borrower makes the current month’s mortgage payment.

For processing, I like to utilize the Streamline Refinance Checklist I created, which summarizes the documentation I need to gather and submit with each case. This helps me assure I am submitting a complete file so I’m certain to receive an underwriting approval with minimal or no conditions.

To learn the basics of streamline requirements, I always refer originators and processors to read the following:

· Mortgagee Letter 2005-43 Revised Refinance Transactions
· Refinance Worksheet #3: Streamline Refinance Without an Appraisal (scroll to bottom of worksheet for a summary of guidelines)
· Refinance Worksheet #4: Streamline Refinance With Appraisal Worksheet (scroll to bottom of worksheet for a summary of guidelines)
· You may also refer to HUD’s website on Streamline Refinances at http://www.hud.gov/offices/hsg/sfh/buying/streamli.cfm for additional information.

Essentially all that is being proven by documentation on a streamline refinance is that the interest rate or payment is going down and that there is certain financial benefit to the borrower.

**Important Tips**

Generally the loan application needs only to list the standard borrower and property information but should not include employment, income, assets or any liabilities aside from the mortgage being paid off and any mortgage being subordinated.

Always check the refinance matrixes of the FHA lender to be certain of lender specifics because some actually require employment to be listed and may go so far as to require a verbal VOE to verify the borrower is employed at the time of refinance although such is not required by HUD.

FHA requires only a standard VOM to verify the payment history of the mortgage being paid off but many lenders require a credit report of some sort in order for the Safe Scan and OFAS alerts to be cleared for all borrowers. This seems to give lenders more comfort to assure of less fraud cases. Be sure to also pay attention to minimum fico score requirements for those lenders that require credit pulls on streamlines.

Note that if the borrower’s credit is challenging BUT the mortgage history looks good, you can simply request that your credit bureau remove all tradelines from credit except that of the mortgage since it is the only tradeline that requires verification. This helps present much less concern to underwriting.

Always try to clarify up front when the borrower intends to make his current month’s mortgage payment so you can make a mental note and calendar reminder of when the time is right to order the mortgage payoff. It doesn’t make any sense to submit a file to underwriting until the exact payoff is available because it will most certainly change your max mortgage calculations.

At this time of year it’s always important to verify if last year’s property taxes have been paid out by the current lenders so you know how many months of tax escrow to roll into the new loan. Your borrower may need to pull a printout of account statement to show a recent disbursement by the current lender to pay property taxes.

Take advantage of the current market and let your brokers know that you are ready and able to process their FHA streamline refinances! There is easy money to be earned by processing these files!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.