The full details on the new requirements can be found at
http://www.hud.gov/offices/adm/hudcl...es/09-32ml.doc
Some of the more important points to consider:
1. Loan must have a net tangible benefit of either:
• reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners’ association fees, ground rents, special assessments and all subordinate liens),
• refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
OR
• reducing the term of the mortgage.
Those are explained in further detail within the link above.
2. Employment is verified & if funds are needed to close, they must be verified as coming from the borrowers own accounts.
3. Credit is checked and a qualifying score must be obtained (most lenders are requiring 640)
4. If you choose the
no appraisal option then the new mortgage amount cannot exceed the current loans principal balance (this can include accrued, but not delinquent, interest), minus the UFMIP refund. The new UFMIP (currently 2.25%) can be added to that figure.
5. If you choose to do the streamline
with an appraisal then like with the old guidelines, you can include closing costs & prepaids to establish the new escrow account, but cannot exceed 97.75% of the new appraised value. Keep in mind if you get an appraisal and it the value comes in less than what is owed, you cannot switch to the no appraisal streamline option and disregard the appraised value. From my records Casa Grande values in general have depreciated over the last 12 months, so this is definitely something to be aware of in your situation.
Majority of lenders are still reviewing income & debts to make sure the situation hasn't worsened, as they don't want to take on a loan where there is a likelihood of an early default. There are still lenders who aren't reviewing income & debts however.