FHA Streamline Refinance

IN the middle of February, 2011, FHA published yet another mortgage letter.  This time they're announcing that the FHA Streamline Refinance Program is going back to being streamlined.  Again, no more employment verification, no more credit verification, no more income verification.

To refinance with the FHA Streamline Refinance Program you still need to have been on time with the last 12 mortgage payments, there still has to be a 'net benefit' and you still can do it without a new appraisal.

By 'net benefit' FHA means you either are refinancing from an variable rate mortgage into a fixed mortgage or else your monthly payments are going to be 5% lower, at least.

So, you could have a credit score lower than my IQ (and that's low), have no job, no savings, and you qualify.

In case you're wondering, FHA benefits.  Reducing people's mortgage payments increases the chances that they won't default.

I say the FHA Streamline Refinance Program is a smart thing to do from their point of view.  They found a win-win program.

Foreclosures and Home Insurance

When you buy a home using a mortgage loan, you're required to carry homeowners insurance. (If you're in the Chicago area, this is a good place to get home insurance from.)  But what happens if you're in foreclosure? 

Obviously, even if you're in foreclosure, you should still pay the premiums (if for no other reason, because the process takes a long time and the home is still yours and you signed that you will).  But what if you can't afford it anymore?  Do lenders take over?

Of course they do.  They have the option to buy home insurance that names them the beneficiary or just paying the insurance that you have.  It seems they do the latter.  Of course, I only have anecdotal information.

But it struck me as an interesting question.

Mortgage Brokers

At the beginning of this month, the way mortgage brokers  can get paid has change: no more yield spread premium.  In other words, mortgage brokers can no longer get paid more if the interest rate on your loan is higher. 

I have the feeling that overall, this change will be an improvement and that some mortgage brokers will find a way to get paid more some other way.


The honest way would be to say upfront, my fee is $x and have to sell themselves based on their services, number of happy customers. 

I spoke to one mortgage broker who's happy about this change.  He's just outside Chicago, in Glenview, thinks he's good so anything that makes it harder on others is better for him.  And he thinks some people will end up leaving the business.  Not he.

Me, as I said, I think the change will be good overall.  But I'll expect some to find some other way to make more money.

What do you think?