Question to other Bankers/Loan Officers - Streamline Refinance (interest rate, rate, ARM)

[ChadMBell]

I'm hearing/reading mixed opinions on whether or not you can do this.

Is a borrower able to streamline an FHA loan to a shorter term with full income verification?

low DTI < 40
Full 1% rate drop
14 years term reduction.

Obviously payment increase?


Thanks for the help. And please site your source or reason for knowledge as I have to argue this back to my operations department.


Thanks again!

[VictorBurek]

No you cannot... your new payment on a streamline without appraisal has to be at least 5% less than new payment or cannot go up by more than 20%. So you can do a ARM to Fixed if payment is going up but going from 30 to 15, you are probably seeing a payment increase of over 20%. ARM to Fixed your interest rate cannot be more than 2% higher as well.

[ChadMBell]

FYI, I actually called FHA connection yesterday and they stopped allowing shortened terms at all. Lady said if the case number wasn't pulled prior to November of last year, that 20% increase is now longer allowed.

Appreciate the response though, figured you would have a good idea about it.

[VictorBurek]

thanks for that update.

[ravenfeathers]

lender can give power of attorney

[SmartMoney]

LOL, in Victor's defense, we have very few inquire about curtailing their term. I've gotten calls about large lump sum principal prepayments, but can't think of one call for a 30 to a 15 year.......I would have had to look that up, cuz nothing is the same as it use to be. Nothing.