Refinance of a non-freddie/fannie loan (approved, credit score, rate, FHA)

[srth]

Hi Everyone,


Any suggestions on how this could be accomplished would be so incredible helpful...

Borrower (currently)

130k first @ 7.15%
34k second @ 11.3%
Fico 623
Income DTI 38/53
LTV 97% (maybe 95%)

Chase told me the first was a conventional loan but when checking if Freddie or Fannie owns the loan, nothing comes up, so I think chase just has this as a portfolio loan and they are loving it.

Borrower has no late payments for the 6 year duration of the loan (incredible).

I am trying to go FHA but his income is self-employed and low. If I can't get him approved for FHA, does anyone have any other possible options?

I really want to help this guy, he works his butt off and nobody should be in a loan like that for very long...

Thank you.

Robert

[Pfhtex]

Wow, that's a tough one. FHA would be nice, but MIP would suck. The 623 isn't helping. Please clarify dti: is that 53% where he is sitting now, or if you go fha? Can you jack cards down, do an update, and price better with higher scoring? Co-borrower? I don't suppose the borrower is a Veteran, or the SP is in a USDA eligible area?

Can you do a little credit repair, refi the first only, bottom that rate out, and re-subordinate the second?

[srth]

Pfhtex - Thanks for your reply!!

That credit score is AFTER paying cards off and rapid re-scoring...it was a 597 :|

Wife can't co-borrow, though I will ask about a relative...

The FHA DTI is 48% or maybe a little less. The problem is the appraisal. The neighborhood is very sporadic and I am not sure it will appraise. Value needs to be 175k and zillow says 148k because he never reported the finished basement. The house next door just sold for 145k with no basement. So, the question is, is a basement worth 30k? And, is there any way to more accurately predict the FHA appraisal before he shells out 450 bucks?

VA/USDA - nope

So, 1) wait it out and repair credit? 2) Chance it with the appraisal for FHA? 3) Subordinate the second and refi the first with no appraisal.

I think option 3 may be the best way...but another opinion is always very helpful...

Thanks