FHA program streamlines refinance procedure

Many homeowners with mortgages backed by the Federal Housing Administration soon will be able to lower their monthly payment.

FHA's streamlined refinancing program officially will launch June 11, and borrowers can start submitting applications now. No appraisal is required as long as the borrower reduces their payment by 5 percent, so if a homeowner is underwater it's not an issue. To be eligible, a borrower has to have taken out an FHA loan before 2009.

A new FHA loan has a 1.75 percent upfront premium on the total loan amount, and a 1.25 percent annual premium. The refinancing program lowers the premium to .01 percent of the loan amount and carries an annual premium of about half a percentage point.

The federal government's revamped refinancing program, known as HARP 2.0, was introduced a few months ago, and already thousands of metro-Phoenix residents have been able to refinance to lower interest rates, no matter how upside down they are on their mortgage. But only borrowers with loans held by Fannie Mae and Freddie Mac are eligible.

"This is a program the government has made the right decision on," said Jay Luber, president of Galaxy Lending in Phoenix.

He said borrowers are not being penalized by having to pay duplicate premiums on loans they have had for years, reducing the fees dramatically.

Still missing is a refinancing program to help underwater borrowers with loans held by investors. The federal government is trying to find a way to encourage or even require investors to agree to lower interest rates for those borrowers. But the government doesn't hold those loans and can't make investors participate, even if it would prevent more foreclosures.

To find out more about HARP 2.0 and the success of other federal housing programs in Arizona, read my front-page story in Sunday's Arizona Republic.

Homebuilding recovery?

New-home permits in metro Phoenix climbed again in April. There were 1,184 single-family permits issued last month, compared with 1,036 in March, the "Phoenix Housing Market Letter" reports.

If these figures don't impress, remember that a year ago, permits were hovering about 600 a month.

The report's publishers, RL Brown and Greg Burger, say that last month's home-building activity "confirms the early stages of a house recovery in metro Phoenix."

by Catherine Reagor - May. 25, 2012 04:29 PM The Republic | azcentral.com



FHA program streamlines refinance procedure