In March, the Obama Administration cut FHA refinancing fees hoping to help 3 million homeowners. Here is how the program will work: effective June 11, 2012 qualifying borrowers (borrowers with existing FHA insured mortgages signed on or before May 21, 2009) can refinance and reduce mortgage insurance cost. Mortgage insurance will be reduced to .01 percent of the loan; down from 1 percent.
The refinancing lender (under this program) is not required to verify the homeowner’s income, employment or credit score. Yes, we are back to “no doc” or “NINJA” (no income, no job or assets) loans. On top of that, no appraisal is required, so the homeowner can be underwater and still get refinanced.
According to the FHA, there are currently 3.4 million households with loans endorsed on or before May 31, 2009 that are paying more than five percent interest. This program would allow many to get refinanced and could save these borrowers an estimated $3,000 a year.
But where is the money to pay for this program coming from? New borrowers getting FHA insured loans and existing loans over $625,500. FHA is increasing its upfront premiums on most new loans by 75… Continue Reading
