Extinguisher Holder

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Florida FHA Refinance Program – Refinance Owe More Than Florida Homes Worth

 

Florida FHA Refinance Program – Refinance Owe More Than Florida Homes Worth.

 

SUBJECT: Florida FHA Refinance of Borrowers in Negative Equity Positions

 

FHA's U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ASSISTANT SECRETARY FOR FLORIDA FHA HOUSING-FEDERAL HOUSING COMMISSIONER www.hud.gov espanol.hud.gov

 

 

Florida FHA MORTGAGEE LETTER 2010 -23

 

APPLY NOW AT http://www.fhamortgageprograms.com/

 

 

 

On March 26, 2010, the FHA's Department of Housing and Urban Development (HUD) and the Department of the Treasury (Treasury) announced enhancements to the existing Making Home Affordable Program (MHA) and FHA'S Federal Housing Administration Florida's FHA refinance program that will give a greater number of Florida Homeowners an opportunity to remain in their Florida homes. These enhancements are designed to maintain homeownership by providing Florida homeowners that owe more on their Florida mortgage than the value of their Florida home, opportunities to FHA refinance into an affordable Florida FHA loan. This opportunity allows Florida homeowners who are current on their Florida mortgage to qualify for an Florida FHA refinance loan provided that the Florida mortgage lender or investor writes off the unpaid principal balance of the original first lien Florida mortgage by at least 10 percent.

 

This Florida Mortgagee Letter provides additional guidance for Florida mortgage lenders regarding the requirements and administration of these enhancements to Florida FHA's refinance program. These enhancements are effective for FHA loans with FHA case numbers issued on or after September 7, 2010, which are closed on or before December 31, 2012.

As noted below, these enhancements include Florida loss coverage to be provided from funds under the Emergency Economic Stabilization Act of 2008, as amended (EESA). If the availability of such Florida FHA mortgage coverage is delayed beyond September 7, 2010, implementation of these enhancements will also be delayed.

 

Florida FHA Refinance of Borrowers in Negative Equity Positions Eligibility  

Florida homeowners participation  is voluntary and requires the consent of Florida mortgage lien holders. In order for a FHA loan to be eligible, the following conditions must be met:

 

1. The Florida homeowner must be in a negative equity position;

 

2. The Florida homeowner must be current on the existing Florida mortgage to be FHA refinanced;

3. The Florida homeowner must occupy a Florida home (1-4 units) as their primary Florida home;

 

4. The Florida homeowner must qualify for the new FHA loan under standard FHA underwriting requirements and possess a "FICO based" decision credit score greater than or equal to 500;

 

5. The Florida existing Florida home loan to be FHA refinanced must not be a FHA-insured loan;

 

6. The existing Florida first lien holder must write off at least 10 percent of the unpaid principal of the Florida home loan balance;

 

7. The FHA mortgage refinanced FHA-insured first Florida mortgage must have a loan-to-value ratio of no more than 97.75 percent;

 

8. Non-extinguished existing subordinate Florida mortgages must be re-subordinated and the new FHA home loan may not have a combined loan-to-value ratio greater than 115 percent;

 

9. For loans that receive a "refer" risk classification from TOTAL Mortgage Scorecard (TOTAL) and/or are manually underwritten, the Florida homeowner's total monthly FHA mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income;

 

10. Florida FHA mortgagees are not permitted to use premium pricing to pay off existing debt obligations to qualify the Florida borrower for the new FHA mortgage loan;

 

11. Florida FHA mortgagees are not permitted to make FHA mortgage payments on behalf of the Florida mortgage applicants or otherwise bring the existing FHA loan current to make it eligible for FHA insurance; and

 

12. The existing FHA loan to be refinanced may not have been brought current by the existing first Florida lien holder, except through an acceptable permanent FHA loan modification as described below.

 

APPLY NOW AT http://www.fhamortgageprograms.com/

 

 

 

Principal Write off

The new FHA mortgagee must ensure that the existing first lien holder writes off at least 10 percent of the unpaid Florida mortgage principal balance on the first lien. The short payoff serves as payment in full for any debt extinguished.

 

Calculating FHA Mortgage

The Florida refinanced FHA-insured mortgage must have a loan-to-value ratio of no more than 97.75 percent and all non-extinguished existing subordinate Florida mortgages must be re-subordinated and may not result in a combined loan-to-value ratio greater than 115 percent.

The new FHA mortgage may be used only to FHA refinance the unpaid principal balance on the first lien, plus the interest charged by the Florida FHA servicing lender when the payoff likely will not be received on the first day of the month, any prepayment penalties assessed, late charges, escrow shortages, closing costs, prepaid expenses, and discount points. The existing mortgagee must write off such amounts as described above.

 

Florida FHA Underwriting Requirements

All approved Florida mortgage lenders must use FHA's TOTAL to obtain risk classifications for each mortgage considered. If TOTAL renders an "accept/approve" result, the lender's Florida underwriter does not need to perform a personal review of the borrower's credit history and capacity to repay. Florida Lenders remain solely responsible for the data they supplied to TOTAL and to ensure that a Direct Endorsement Underwriter has reviewed the appraisal. FHA underwriting requirements at the time the case number was assigned must be used. Florida Lenders must still comply with outstanding FHA rate and term refinance eligibility requirements and ensure the integrity and accuracy of the data used to render a decision. 3

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