MSI Ramps Up FHA Short Refinancing Program
Lenders have originated just 2,015 FHA-insured short refinancings since the Federal Housing Administration launched the special program in August 2010 to provide a refinancing outlet for underwater borrowers with private label alt-A and subprime loans.
While the number of short refinancings has been disappointing, the performance has not, according to Mark Stamm, a consultant to MSI Mortgage Services III LLC.
FHA has paid just three short refi claims and only 41 loans are 90 days or more past due, according to HUD.
Stamm admits that making FHA short refis is “difficult.” They must be manually underwritten and the homeowners are skeptical at first that a refinancing can cut their monthly payments by a third or more. But that can happen when a 140% LTV loan is written down to a 97.5% LTV to meet FHA requirements.
The Bloomington, Ill.-based mortgage lender recently received approval to be a Ginnie Mae issuer, which gives the company a new securitization option to sell short refis into the secondary market.
The consultant told NMN that MSI is ramping up to originate over 1,000 FHA short refis in 2013 at its Frederick, Md., office, which specializes in short refinancings.
Stamm works with MSI vice president Bob Bodell who is in charge of the Frederick office.
“We are hiring and staffing up,” Stamm told NMN.