Here is the word on FHA Streamline
Lets start by telling why FHA Streamline exists.
The Country is in the tank.
The Government knows that we, as a country, are up the creek.
Soooo in true government fashion they(the government) have decided to refinance loans that don’t make any sense with the people’s money for the good of the people.
These government guys are wicked smart!!!
Why you ask?
How dare you ask that question of the all powerful government.
Anyway… Here it is-
Important date… JUNE 1st 2009, If your loan was done prior to this date then you inherit the current UFMIP and MI.
In the law of large numbers there are a certain number of homes that will foreclose when they go underwater(cause people cannot afford the payments).
A certain number that will not (because the people have means to keep making the payments and the desire/obligation).
Then there are the strategic defaults.
That is when the homeowner could probably keep making payments but logically it does not make sense, So as a strategy… they default.
They take 3 years of bad credit and then the start fresh.
Well our great government figured that if they allowed a refinance with a low enough monthly payment, that it is, many times, cheaper to stay put, than go rent.
So, because the government owns most of the loans in America via FHA, Fannie Mae and Freddie Mac the government says …
Heck if we own it then we will refinance it! and guarantee it all over again.
Underwater … Government does not care.
Low credit score… Government does not care.
Low income… Whoaaa buddy!!!
NO income”ee” No Loan”ee”
Cumonnnn you did not think they were that dumb did you?
Sooo the government controls, to a degree, the rate of foreclosures by the rigidity of the underwriting for the FHA Streamline loans.
What the home owner hears is…
Cheaper payment not cost no fees!!!
They say “I’ll take it” and re assert their desire to live in their current home.
The government actually developed software for the underwriting guidelines called “DU” “Desktop Underwriting” for Fannie Mae and
“LP” “Loan Prospector” for Freddie Mac, “DU” is used for FHA.
…and guess who controls the algorithm?
You get 3 guesses…
1 BofA ……WRONG!!!
2 Lady Gaga…..WRONG!!!
3 Uncle Sam…..WINNER!!!!!
So the government controls the amount of defaults by tightening and loosening the lending criteria.
The long and the short of the situation is that many times it is wise to take advantage of lower interest rates from a purely selfish position.
Call us and we will run numbers for you and tell you if it is smart for you.