2. Streamline Refinances Without an Appraisal

Introduction

This topic contains information about streamline financing without an appraisal, including

•	streamline refinancing mortgage limits

•	maximum mortgage term

•	maximum insurable mortgage calculation

•	applicability of the mortgage calculation process, and

•	streamline refinances for non-owner occupant properties.

Change Date

May 10, 2009

4155.1 3.C.2.a Streamline Refinancing Mortgage Limits

Most FHA mortgages required the payment of an UFMIP. The statutory loan amounts and LTV limits described in this handbook do not include UFMIP.

The streamline refinance mortgage amount limit may never exceed the statutory limits, except by the amount of any new UFMIP.

4155.1 3.C.2.b Maximum Mortgage Term

The streamline refinance mortgage term is the lesser of

•	30 years, or

•	the remaining term of the mortgage plus 12 years.

4155.1 3.C.2.c Maximum Insurable Mortgage Calculation

The maximum insurable mortgage on a streamline refinance is the lesser of

•	the original loan amount on the Note, which is the original principal balance, including any UFMIP, or

•	the existing debt, which is
	–	the sum of the existing FHA-insured first mortgage, closing costs, reasonable discount points, and the prepaid expenses necessary to establish the escrow account, minus
	–	any refund of UFMIPs.

Note: The existing first mortgage

•	may include the interest charged by the servicing lender when the payoff is not received on the first day of the month, as is typically assessed on FHA mortgages, and

•	may not include delinquent interest.

4155.1 3.C.2.d Applicability of the Mortgage Calculation Process

The mortgage calculation process described in HUD 4155.1 3.C.2.c applies only to owner occupied properties. Non owner occupant properties, even if originally acquired as principal residences by the current borrowers, may only be refinanced for the outstanding principal balance.

4155.1 3.C.2.e Streamline Refinances For Non Owner Occupant Properties

Streamline financing by investors, or for secondary residences may only be made without an appraisal, and must be made solely in the business entity's name, if the residence was previously insured in the business entity's name.

The new security instruments must contain FHA's standard provision permitting acceleration of the mortgage when assumed by an investor, or as a secondary residence. However, FHA does not authorize the lender to exercise the acceleration provision if the investor assumptor is found to be creditworthy.

Although a property purchased as a principal residence, under certain circumstances as described in the security instruments, may be rented or become a secondary residence, a streamline refinance without an appraisal does not “convert” the mortgage to one eligible for assumption by an investor.