FHA Refinance Update: Changing Guidelines on September 7, 2010

FHA Eliminates Unlimited CLTVs for Refinance Transactions

Call me for additional details and for help with your FHA refinance.

This update from Mortgagee Letter 2010-24 contains changes to the new maximum CLTV limits for refinance transactions, which will be effective for case numbers assigned on or after September 7, 2010.

The combined amount of the FHA-insured first mortgage and any subordinate lien may not exceed the applicable FHA LTV AND the geographical maximum mortgage amount (does not apply to streamline refinance transactions).

Here are the 4 Maximum CLTVs for Refinance Transactions that you need to know about:

1. Rate and Term (or No Cash Out) Refinances = 97.75%
2. Refinances for Borrowers in Negative Equity Positions* = 115%
3. FHA-to-FHA Streamline Refinances With or Without Appraisals = 125%
4. Cash-out Refinances = 85%

* This refinance option is only available through December 31, 2012.

Can rates remain low? 2nd warning in 10 days...

As we continue to enjoy lowest rates in our lifetimes, we have received two warnings this past two weeks, the of which Blog posted on 8/13 in which Kansas City Fed President Hoenig said that ZERO Percent interest rates (at the Fed discount window) is a dangerous gamble, and using monetary policy as a "cure-all will will lead to a recession and unemployment in a few short years.

Today's warning: Raghuram Rajan, the former chief economist for the International Monetary Fund, say the Fed should raise the Fed Funds Rate by 200bp. Rajan's words are not being taken lightly, because back in 2005 he correctly warned central bankers of a potential financial crisis should banks lose confidence in one another.

If you are purchasing or refinancing, call me for your options for mortgage financing.