Written by Brad Dawson
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If you have been in the mortgage business for any amount of time you already understand that FHA streamline deals are virtually dead when the economy is good and FHA deals are the shelter that the mortgage community runs to when times are bad.  This current economic cycle is no exception to this rule.  As the conventional wholesale channels have dried up the mortgage community has gone after FHA streamlines to ensure their deals get funded.  So just what does FHA do and how does going after an FHA deal differ from form the standard conventional underwriting requirements?   The requirements for FHA streamline have changed recently but the basic principles that make FHA loans so attractive to the borrower and the broker are still in place.

Easy credit qualification - Depending on whether your underwriting is done in-house or not, the minimum credit score will generally be around 640 or better.  In some cases where underwriting is done in-house deals can close with scores as low as 580.  Those who can fund with lower credit scores will have a slight advantage as they are able to reach a part of the market that is untouched by their competition.

No income qualifying – This is perhaps the most alluring aspect of an FHA deal.   The FHA’s position when refinancing an FHA insured loan is that they have already passed the income requirement when the loan originally funded, and if they are paying on time there is no need to re-qualify the income again.  This lack of income verification contributes to the ‘stream line’ process and accelerates the closing.

No appraisal – This is another major factor in the ‘stream line’ process.  Refinances that are not ‘cash out’ do not need to have an appraisal.  The guidelines have changed as of November 2009, but the basic tenant is still the same.  This is very attractive given the current state of the housing market where value declines have made conventional deals nearly impossible.  Streamline refi’s without an appraisal make sense for certain loan vintages.

Benefit to the borrower – The main goal of the streamline refi is to reduce the borrower’s payment.  With rates where they are today nearly all FHA's are candidates for a stream line refi.

So how does a ‘soft inquiry’ lead help you fund more deals? The answer is fairly simple once the process of the ‘soft inquiry’ is understood. The process is basically a credit inquiry that does not affect the credit score of the borrower.  This process allows for screening of loan balances, mortgage type, credit score, and all the reporting details that are available on a credit report.  This real time screening produces qualified leads for your streamline deal and result in a qualified response.

Here is an example of a typical inquiry based upon the current streamline guidelines as of January 8th, 2009.

Number of Mortgage Trades =1
Credit 640 or Greater
Current Loan Balance 200k or Greater
Current Loan Payment 1k or Greater
Current Mortgage Reporting Status = Paid As Agreed

Loan balances will vary according to location and current FHA limits. The soft inquiries are flexible and can be altered to meet your needs.

Please give us a call to speak with an experienced consultant. As a mortgage professional you already understand the role the seasoned loan officer plays when closing a mortgage deal. A seasoned loan officer makes deals happen where less experienced ones stumble. The same holds true for your marketing consultant. An experienced consultant understands the market and your needs. Our staff will help you meet the challenges you face in today’s mortgage environment.

If you like what you have read here give me a call or drop me an email

Brad Dawson
888 818 3282 x 236
Brad@blackbookdata.com