The Federal Housing Administration reported Monday that applications for streamline refinancings of existing FHA borrowers jumped 400% in June from the month prior.
In total, 84,600 new applications came in.
But lenders originated $19.8 billion of FHA-insured loans in June, down 7% from May. The reason for the decline was expected as lenders and borrowers held off filing applications in May in anticipation of the June 11 start date of the streamline program.
FHA approved 18,000 streamline refis in June after receiving 17,000 applications in May.
The newly opened streamline program is designed to give FHA borrowers who haven’t refinanced in three years a chance to take advantage of today’s low mortgage rates. FHA reduced its mortgage insurance premium as an incentive to refinance.
Monday’s report also shows a 15% drop in conventional-to-FHA refinancings from May to June.
But the FHA short refinance program appears to be gaining momentum.
Originations of short refis during the first three quarters of the current fiscal year ending June 30 topped 1,100 -- compared to 245 short refis during the same period in FY 2011.
FHA also received 290 loan applications for short refis in the month of June.
FHA rolled out the short refinance program in August 2010 to facilitate refinancings of underwater conventional loans. In a short refi, the lender must reduce the principal amount of mortgage debt by at least 10% to get the first lien down to a loan-to-value ratio of 97.75% or 115% with a second mortgage.
Earlier this year, the agency refined the short refi program and extended it through yearend 2014.
