Financing in 91342>Question Details

Ben Bustillo, Real Estate Pro in Sylmar, CA

Can I streamline my FHA loan and take my wife out?

Asked by Ben Bustillo, Sylmar, CA Thu Mar 12, 2009

I have an FHA loan that I want to streamline refinance it; both my wife and I are on the loan and title, and want to free one of us just in case we buy another property in the near future. Both have the income and the credit. Does HUD allow to streamline on the name of just one borrower?

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"Back in the Day" FHA would allow you to remove a borrower with proof that the person staying on has been paying the payments alone using 12 months cancelled checks.

There are a few old school underwriters that will still do this, but they are hard to come by!

The chances of getting this done now are pretty slim to none.
0 votes Thank Flag Link Fri Mar 13, 2009
You can buy a property and be on title without obligation to the loan but in this case if your wife was put on the loan for qualifying purposes (signed the "NOTE") then the answer is "NO" you can not do a FHA streamline (No appraisal) and remove your wife...all those obligated originally must remain.
0 votes Thank Flag Link Thu Mar 12, 2009
Actually, yes. See below in this space and also check on the link below.

Thanks

Title Issues Regarding Non-Borrowing Spouses or Other Parties in Interest: This section addresses the situation where two or more parties have an ownership interest in the property, but only one of the parties is applying for the loan (and credit qualifies for the loan on his or her own). Currently, Handbook HUD-4155.1 REV-5, paragraphs 2-2 A and D do not permit the non-applicant individuals to have an ownership interest in the property at the time of settlement without executing the mortgage note and mortgage, deed of trust, or security deed. Except as provided in this section, the Mortgagee Letter eliminates that requirement, regardless of whether the transaction is a purchase or a refinance.

The lender is still required to ensure a valid and enforceable first lien on the property under state law, which may require the execution of the mortgage (but not typically the note) by all parties who have an ownership interest in the property. See Federal Reserve Regulation B for more information. If the party in question executes the mortgage, deed of trust, or security deed only for such reasons, he or she is not considered a borrower for FHA purposes, and therefore need not sign the loan application or be considered in credit underwriting.
0 votes Thank Flag Link Thu Mar 12, 2009
Nope...on FHA Streamlines there is no removing...some adding though...but for the most part all needs to stay the same.

Feel free to contact me for any FHA lending questions or any lending questions.
0 votes Thank Flag Link Thu Mar 12, 2009
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