Streamlined refinancing of FHA mortgages has exploded in the two
months since HUD slashed the fees charged for the simplified
There were 27,753 FHA streamlined mortgage refinances in July, a
42 percent increase from June's level. That follows a nearly 200
percent monthly increase in June after the reduced fees took effect
on the first of the month.
The July total sharply contrasts with the 5,756 FHA streamlined
refinances approved in July 2011, a 347 percent annual increase.
Streamlined refinances made up 89 percent of all FHA mortgages
refinanced during the recent month, compared to 73 percent one year
Total FHA refinances were more than double those of one year
earlier, with 37,282 mortgages refinanced through the FHA this past
July, up from 17,763 in July 2011. Of those, 8,352 were refinances
of non-FHA mortgages a slightly lower figure than the previous
Upfront fee 0.01 percent
Although falling mortgage rates, which reached record lows
during the summer, helped to drive up refinancing, demand for
streamlined refis took off after HUD reduced the fees. Effective
June 1, the one-time upfront charge for mortgage insurance on an
FHA streamlined refinance was cut to 0.01 percent of the loan
amount, a mere pittance, down from a full percent previously.
In addition, the annual fees were reduced to 0.55 percent, down
from 1 percent previously. The reduction was designed to encourage
borrowers to take advantage of lower mortgage rates.
An FHA streamlined refinance is a simplified way of refinancing
for borrowers who already have an FHA mortgage. Approval is
virtually guaranteed, as long as the borrower has kept up on the
payments for the current loan. No credit check or proof of income
is required, nor an appraisal of the property's value, which
enables underwater borrowers who otherwise would have a hard time
refinancing to qualify.
Homeowners who currently have a non-FHA mortgage cannot qualify
for the streamline option but they can still refinance through FHA,
though they would pay higher fees.
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