I’ve never accepted a guest post – however, I received a letter from a borrower who is frustrated by the FHA Streamline Refinance System. The Borrower (who lives in NC) has a FHA loan, and wants to take advantage of the low FHA Mortgage Rates – however, her loan was endorsed 11 days after the deadline of June 1, 2009. Because of those 11 days, she can’t really justify a refinance, the FHA PMI rates are just too high for it to make sense! (Read More about the FHA Streamline Refinance On Loan Endorsed After June 1 2009)
Here is her letter to Congress. We would encourage others to write to Congress about this very real problem that is keeping people “tied” to a very high interest rate, needlessly. The SEC of HUD announced last week that the FHA PMI “fund” is currently running at a $4 billion SURPLUS! Additionally, Mortgage Delinquencies are going way down!
To whom this letter concerns,
The FHA Streamline Reﬁnance is a special mortgage product, reserved for homeowners with existing FHA mortgages. From my understanding it is designed to help homeowners with underwater mortgages, to beneﬁt from today’s interest rates. This is helpful to many consumers in too many ways to list, but most importantly it helps to keep more families in their homes.
My Personal concern, and the reason I am writing is this. Right now my family would beneﬁt greatly from reﬁnancing, but there are no options for reﬁnancing in which we qualify for, because our home is appraised for less than we owe. It seems from what I have read about the FHA Streamline, that it was speciﬁcally thought out to help people like me, in this situation. I qualify for everything in this FHA Streamline reﬁnance option, except instead of my loan being endorsed by June 1st. Its was endorsed on June 11th.
Can you see where this gets frustrating for me? The main difference it seems, between having your loan endorsed before June 1st 2009, and after June 1st 2009, is the MIP. For a FHA Streamline Reﬁnance that replaces a FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points. (This is the rate that is being applied to my current FHA Mortgage. ) So, For example:
My new FHA Streamline Reﬁnance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid by me at closing.
Since my Mortgage Endorsement is a mere 11 days after the deadline, This is what a FHA Streamline reﬁnance would look like for me. 175 basis points. <—- Huge Difference
So my new FHA Streamline Reﬁnance is for $100,000 mortgage, the FHA will assess a $1,750 upfront mortgage insurance premium (MIP) to be paid by me at closing.
If I were to go ahead and reﬁnance to obtain the better interest rate, My personal MIP would not be Grandfathered in, it would skyrocket and the the beneﬁt lies where? Certainly not the substantial savings that my wonderful lawmakers had intended for me.
My suggestion is this, Please consider rewriting this well intended change so that people who already have 0.55% basis points are included to be able to take part and qualify. With a deadline simply based upon a date for endorsement it turns into being at the mercy of the courier, or the person entering all necessary information. Were they sick that week, on vacation? Perhaps the department was short staffed and for that reason were backed up, and my June 11th endorsement should have been on May 30th? It really seems like Myself and Families like me, who already have the 0.55% and want to participate also,were the ones for whom this change was written.
Thank you for the time and consideration in getting this letter to where it can be most effective!
Update: There could be good news for folks who have a FHA Mortgage Endorsed Prior to June 1, 2009 who want to take advantage of the lower FHA PMI offered with the FHA Streamline Refinance!
We strongly encourage everyone who reads this to contact their Congress member to encourage them to change this arbitrary date set for the FHA Streamline Refinance.
If you are in North Carolina, and you are interested in lowering your payments with a FHA Streamline Refinance or you have questions about FHA PMI Rates, and FHA Streamline Refinance On Loan Endorsed After June 1 2009 – call Steve and Eleanor Thorne 919 649 5058. We would LOVE to give you a FHA Streamline Refinance mortgage rate quote that you can use to compare rates and fees!