To facilitate “streamline” refinancings, the Federal Housing Administration will no longer rank lenders based on the performance of those loans in its Neighborhood Watch system.
The FHA is removing streamlined refinanced loans from the lender's "compare ratio," according to a White House fact sheet on the President's plan to increase refinancings and help struggling homeowners.
"This will open the program up to many more families with FHA-insured loans," the White House said.
FHA borrowers that are current on their government insured mortgage are allowed to refinance under the existing streamline program without a new appraisal, credit report or documentation normally required in a refinancing.
"However, some borrowers who have been eligible for low-cost refinancing though this program are being denied by lenders reticent to make loans that may compromise their status as FHA-lenders. To resolve this issue, FHA is removing these loans from the compare ratio," the fact sheet says.
As part of the President's plan, the Rural Housing Service is adopting a new streamline refinancing program too. To be eligible, a borrower with an RHS-guaranteed single-family loan only has to demonstrate "that he or she has been current on their loan."
