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Wednesday, August 11, 2010

NegEQ loan with FHA

The FHA "NegEQ" Refinance
On August 6th, 2010, FHA published Mortgagee Letter 2010-23 which details the refinance program available to homeowners that owe more than the value of their homes. Although HUD estimates an economic benefit up to $35 billion, the success will be determined by the current lien holders who must participate by writing down the mortgages at least 10%. The program is for loans whose case numbers are issued on September 7th, 2010 and closed by December 31st, 2012.
Here are the 8 things you need to know about this program:
  1. The mortgage to be paid off CANNOT be an FHA loan and must be current

  2. The max LTV is 97.75% and the max CLTV is 115%

  3. Second lien holders must subordinate to the new first

  4. Loans that receive an "accept/approve" by TOTAL do not require a review of income or credit history

  5. Loans that receive a "Refer" by TOTAL and/or manually underwritten files, the ratios CANNOT exceed 31/50 (31% includes both 1st and 2nds) and must have acceptable credit history with a minimum credit score of 500

  6. Lenders CANNOT use premium pricing to pay off debt to qualify borrower OR bring mortgage current for the borrower

  7. The performance of loans refinanced under the NegEQ refinance WILL NOT be included in the Lender's compare ratio but will have separate criteria in Neighborhood Watch

  8. The borrower must occupy the subject property
Call me for additional details and to apply for this loan.