The FHA streamline loan program has been popular with borrowers and lenders because it allows them to refinance a FHA loan without having to completely re-qualify for a new loan. For Lender's this meant a quick, easy and profitable transaction. For borrowers, this was a low documentation, no fuss, easy process. For example, it used to not require income verification, asset verification or credit scores.

Well that is about ready to change!! Recently, FHA announced that they were changing the guidelines for the FHA streamline program. While the official date of change is November 17th, expect Lenders to start modifying their program guidelines much sooner.

Highlights of the changes to the FHA streamline program include:

At the time of mortgage application, the person wanting to refinance with the FHA streamline program must have made at least 6 payments since they got their loan.
For people who have had their loan longer than 6 months but less than 12, they cannot have even one 30 day late payment in the preceding 12 months.
For people who have had their loan longer than 12 months, they can have a maximum of one 30 day late payment in the last 12 months and NONE in the last 3 months.
In order to see if the loan makes sense, a calculation called the Net Tangible Benefit calculation will be done by the Underwriter. The streamline must lower the TOTAL PITI ( Principal, Interest,Taxes,and Insurance) by at least 5% when going from a fixed rate to a fixed rate mortgage. If going from an ARM to a Fixed rate, then the interest rate cannot go up by more than 2%. When going from a Fixed rate to an ARM but the new ARM must be at least 2% less than the current rate. if reducing the Term of the mortgage then it must be fully qualified.
In order to be eligible, the property must be occupied by the borrower: investment properties are not eligible and second homes are not eligible.
All employment, income , and necessary assets now must be certified by the lender — or in other words, expect to provide proof of income and the ability to make the payments.

So once again we see lending getting tighter. Obviously the benefit here is better qualified borrowers but it is not going to help those that need the help the most.