Consumers Lose Again

Last Friday FHA released a plethora of new Mortgagee Letters for FHA mortgage lenders like myself. These Letters spell out rule changes that go into effect in the near future. One of the Letters dealt with what are called Streamline Refinances where a FHA borrower can refinance quickly, easily, and cheaply into another FHA loan. It's been a HUGE benefit for decades for homeowners.

These were some of the benefits of a FHA Streamline Refinance Loan--
* No appraisal is required. If your home had dropped in value, it did NOT matter.
* No income or employment verification is required. Thus, you could be unemployed and
qualify for a new lower monthly payment.
* No credit check, except a mortgage payment review. Thus, you could be one day from
bankruptcy and that was ok.
* Lower closing costs for 2 reasons. First, there is no appraisal required and second, since
the loan required less work by me, I would charge fewer closing costs to my clients. I did
not have to make as much money on these loans because they were less work for me.
You Win!

But, come mid-November the Streamline Refinance program is going away. Here is how a FHA refinance will look like--
* A new appraisal is required if you want your new loan balance to increase to pay your
closing costs and prepaids. Who does NOT want that?
* We must verify that you are employed and receiving stable income.
* We must review your entire credit report.
* You can NOT refinance until you have made at least 6 payments on your new loan.

Beginning November 15th, refinancing your FHA loan will become more expensive and time consuming and less likely to happen. Plus, since I will have to work harder and longer to close your loan now, guess what? I am not so willing to help pay your closing costs now. Thus, YOU LOSE! You can thank our government in D.C. for that! You gotta love "change".