2. Credit Qualifying Streamline Refinances

Introduction

This topic contains information on credit qualifying streamline refinancing, including

•	features of a credit qualifying streamline refinance

•	the maximum mortgage amount

•	lender responsibility for credit documentation and borrower qualifying, and

•	required usage of a credit-qualifying streamline refinance.

Change Date

May 10, 2009

4155.1 6.C.2.a Features of a Credit Qualifying Streamline Refinance

Credit qualifying streamline refinances contain all the normal features of a streamline refinance, but provide a level of assurance for continued performance on the mortgage.

The lender must provide evidence that the remaining borrowers have an acceptable credit history and ability to make payments.

4155.1 6.C.2.b Maximum Mortgage Amount

Guidelines for calculating the maximum mortgage amount on credit-qualifying streamline refinances may be found as follows:

If the credit-qualifying streamline refinance is made …	Then the maximum mortgage amount is calculated as described in …
with an appraisal	HUD 4155.1 3.C.3.
without an appraisal	HUD 4155.1 3.C.2.

4155.1 6.C.2.c Lender Responsibility for Credit Documentation and Borrower Qualifying

For credit-qualifying streamline refinancing, the lender must

•	verify the borrower's income and credit report

•	compute the debt-to-income ratios, and

•	determine that the borrower will continue to make mortgage payments.

4155.1 6.C.2.d Required Usage of a Credit Qualifying Streamline Refinance

Credit-qualifying streamline refinances must be considered

•	when a change in the mortgage term will result in an increase in the mortgage payment more than 20 percent

•	when deletion of a borrower or borrowers will trigger the due-on-sale clause

•	following the assumption of a mortgage that
	–	occurred less than six months previously, and
	–	does not contain restrictions (that is, the due-on-sale clause) limiting assumptions only to creditworthy borrowers, and

•	following an assumption of a mortgage that
	–	occurred less than six months previously, and
	–	did not trigger the transferability restriction (that is, the due-on-sale clause), such as in a property transfer resulting from a divorce decree or by devise or descent.

Note: The use of a credit qualifying streamline refinance in situations in which the change in mortgage term will result in an increase in the mortgage payment is only permissible for

•	owner-occupied principal residences

•	secondary residences meeting the requirements of HUD 4155.1 4.B.3, and

•	those investment properties purchased by governmental agencies and eligible nonprofit organizations as described in HUD 4155.1 4.A.6.