bobbyw24
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- Sep 10, 2007
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Today, as part of the Obama Administration’s commitment to continuously improve housing relief efforts, we announced adjustments to FHA programs to provide additional refinancing options to homeowners who owe more than their home is worth. These adjustments will provide an option for qualifying homeowners to be refinanced into a FHA loan as long as they are current on their mortgage and their lender reduces their total mortgage debt by at least 10% of the loan amount. The new FHA loan will have a balance closer to the current value of the home–giving homeowners a path to regain equity in their homes and an affordable monthly payment.
Total mortgage debt for the borrower after the refinancing cannot be greater than 115% of the current value of the home–including both first and any other mortgages. Moving beyond many previous efforts focused exclusively on affordability, this will secure affordability and focus on bringing the value of underwater borrowers’ loans closer to the current value of their homes through principal writedowns.
Detailed guidelines will be announced by an FHA Mortgagee Letter in the near future. We will move to implement this as quickly as possible and expect it to be available within the next few months. Let me provide an overview for you of the key features of this refinancing option.
FHA Refinance Option for Underwater Homeowners–Encouraging Responsible Refinancings
Voluntary option for lenders and borrowers with mortgages not currently insured by FHA. Encourages lenders and borrowers to work together, when appropriate, to restructure debts.
o Those loans that have a minimum writedown of at least 10% and a total mortgage loan to value of less than 115%. Eligible underwater loans are refinanced into new FHA-insured loans on standard FHA refinance terms for documentation, income ratios and complete underwriting. Terms of FHA refinancing:
o FHA loan will be equal to no more than 97.75% of the value of the home.
o Combined mortgage debt must be written down to a maximum of 115% of the current value of the home.
o Standard mortgage insurance premium structure will apply. Mandatory principal writedown as part of refinance. Minimum writedown by lender of at least 10% of the unpaid balance of the original loan.
Full memo at:
http://portal.hud.gov/portal/page/p...stration/docs/from_the_desk_of_April_2010.pdf
Total mortgage debt for the borrower after the refinancing cannot be greater than 115% of the current value of the home–including both first and any other mortgages. Moving beyond many previous efforts focused exclusively on affordability, this will secure affordability and focus on bringing the value of underwater borrowers’ loans closer to the current value of their homes through principal writedowns.
Detailed guidelines will be announced by an FHA Mortgagee Letter in the near future. We will move to implement this as quickly as possible and expect it to be available within the next few months. Let me provide an overview for you of the key features of this refinancing option.
FHA Refinance Option for Underwater Homeowners–Encouraging Responsible Refinancings
Voluntary option for lenders and borrowers with mortgages not currently insured by FHA. Encourages lenders and borrowers to work together, when appropriate, to restructure debts.
o Those loans that have a minimum writedown of at least 10% and a total mortgage loan to value of less than 115%. Eligible underwater loans are refinanced into new FHA-insured loans on standard FHA refinance terms for documentation, income ratios and complete underwriting. Terms of FHA refinancing:
o FHA loan will be equal to no more than 97.75% of the value of the home.
o Combined mortgage debt must be written down to a maximum of 115% of the current value of the home.
o Standard mortgage insurance premium structure will apply. Mandatory principal writedown as part of refinance. Minimum writedown by lender of at least 10% of the unpaid balance of the original loan.
Full memo at:
http://portal.hud.gov/portal/page/p...stration/docs/from_the_desk_of_April_2010.pdf
