The Housing Rescue Bill And The FHA Streamline Refinance Loan

May 5, 2010 - PRLog -- Only owner-occupants who are not able to pay for their mortgage payments are qualified for the program. No investors or investor properties would get eligible. Homeowners have to confirm, under penalty of law, that they have not deliberately defaulted on their loan to meet the criteria for FHA streamline mortgage refinance program and should have a mortgage debt-to-income ratio more than 31% as of March 1, 2008. Lenders need to go through the document and confirm borrower’s income by the IRS.

Home equity and appreciation sharing

So as to avoid a windfall to the borrower twisted by the new 90% loan-to-value FHA-insured mortgage, the borrower have to share the recently formed equity and future approval equally through FHA. This obligation would carry on till the borrower put up for sale his home or refinances the FHA-insured mortgage. In addition, the homeowner's access to the recently formed equity would be phased-in over a 5 year period. The borrower agrees to pay off the subsequent share of any home equity approval with the FHA refinance requirements as the home is put up for sale or refinanced again:

•   100% of any equity is paid to the government FHA if the borrower refinances or home sells within 1 year.
•   90% of any equity earned is paid to the FHA if the borrower refinances or the home sells within 2 years.
•   80% of any positive equity earned is paid to the FHA if the borrower refinances or the home sells within 3 years.
•   70% of any positive equity earned is paid to the FHA if the borrower refinances or the home sells within 4 years.
•   60% of any positive equity earned is paid to the FHA if the borrower refinances or the home sells within 5 years.
•   50% of any positive equity earned is paid to the FHA if the borrower refinances or the home sells after 5 years.

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Additional requirements:

The requirements are as follows:

•   Present subordinate liens
Prior to participating in this program, all secondary liens (for instance home equity loans, second loans, etc.) should be turn off. This would have to be done with cooperation with the first lien holder.

•   Mortgage insurance and added fees

The upfront FHA mortgage insurance premium which is necessary to refinance with FHA loans would vary as part The Housing and Economic Recovery Act of 2008. The monthly MI rates have also been simplified.

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