Administration’s Proposed Refinancing Plan for Non-GSE Loans Is Illusory
The Administration’s newly announced plan to provide low cost refinancings to underwater, current borrowers whose residential mortgage loans are not owned or securitized by the GSEs is high on hope and low on likelihood of success. The plan creates a form of a “streamlined” refinancing on a stated income basis and without an appraisal. Eligibility criteria include that the loan to be refinanced has been current for the past six months, the borrower must meet a minimum credit score of 580 and be an owner-occupant and the new loan must fall within FHA loan limits and a to-be-determined high loan to value ratio. Holders may need to write down principal of the existing loan if the LTV exceeds a certain percentage in excess of 100%, much like the wildly unsuccessful 2010 FHA Short Refinance program. Read More