Major FHA streamline changes

It has been announced recently of MAJOR changes in the FHA streamline program. And not for the better. After November 16th any case numbers that are pulled are subject to the new restrictions. They will be far more restrictive, less benefical to the borrowers and more expensive for the borrowers. Thanks federal gov't for taking another weapon of common sense out of our hands to easily save people money and get them on 30 year fixed rate mortgages.
The major changes are as follows.

You must have made at least 6 payments so no more turning around and refinancing into a lower rate.
Loans less than 12 months must have a clean payment history.
The net tangible benefit to the borrower is much more stringent now. It's unclear exactly what this means at this point. I guess they will decide how much is important enough for you to save.
Loans will be capped at 125% of the current LTV
Appraisals will be required if you wish to roll in the closing costs on the loan. It will be the outstanding balance minus the UFMIP plus the new UFMIP only.

This means that borrowers will have to come to the table with thousands of dollars to the table if they wish to take advantage of the new lower rates. Considering that many first time home buyers use FHA many people will be unable to refinance.

Here's why the streamline program makes so much sense now. A lender sees you are paying at say 6.0% and have been for years. Common sense tells you that if they pay 6% why couldn't they pay 5% and save hundreds of dollars per month? Appraisals are not required because the lenders don't need to see what a home is worth because the borrower is saving so much money. Now if you want to roll in the majority of closing costs an appraisal is required. With the drop in DC area home prices this again means many people will be unable to refinance. They finally made a common sense decision on the conventional side to look past the LTV of a home but are now bringing FHA into the past where good loans and good people are denied the chance to save money. In this economy people need ever dollar they can get and now it's harder or soon will be to do just that. In January HVCC like restrictions are also to be placed on FHA loans. Another disaster waiting to happen. We are hoping that the HVCC goes away and dies and instead the gov't thinks it should EXPAND a program that doesn't work. HVCC hires appraisers from far away to work markets they don't always understand and breaks the link of accountability to the borrower and the lender. Call your Congressman and ask that they vote to put a hold on HVCC. There is a bill in to end the collusion between banks and appraisal management companies but passage looks dim with the current Congress. Please ask me how you can help fight Andrew Cuomo and his allies so the US housing market can be the linchpin of economic recovery.

Thanks,
Brent Mendelson
Mortgage Broker