Guidelines for Credit Qualifying Streamlines
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.
Maximum Mortgage Amount on Credit Qualifying Streamline Refinance
The maximum insurable mortgage for any streamline refinance without an appraisal cannot exceed the outstanding principal balance
- minus the applicable refund of the UFMIP,
- plus the new UFMIP that will be charged on the refinance.
Note: The outstanding principal balance
- ma include interest charged by the servicing lender when the payoff is not received on the first day of the month, but
- may not include delinquent interest, late charges or escrow shortages.
The maximum insurable mortgage amount for a credit qualifying streamline refinance with an appraisal is the lesser of
- the existing principal balance
- minus the applicable refund of upfront mortgage insurance premium (UFMIP)
- plus closing costs, prepaid items to establish the escrow amount, and the new UFMIP that will be charged on the refinance transaction, or
- 97.75% of the appraised value of the property plus the new UFMIP that will be charged on the refinance
Required Documentation on Credit Qualifying Streamline Refinances
For credit qualifying streamline refinances, 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.
Required Usage of a Credit Qualifying Streamline Refinance
A credit qualifying streamline refinance must be considered
- when a change in the mortgage term will result in an increase in the mortgage payment of more than 20%
- 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 (i.e. due-on-sale clause) limiting assumption only to a creditworthy borrower, or
- following the 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.
