FHA Loan Streamline Refinance and Subordinating NJ smart Start Program

Asked by Maxwell Silva, Franklin Park, Trenton, NJ Sat Jun 16, 2012

We took out a FHA Mortgage for our home in 2008 and used NJ Smart Start Program to aid with closing costs and down payment.   My  Contract with NJ Smart Start states If the Borrower continuously resides in the premises, as his/
her principal residence for five (5) years from the date of the closing of the loan, the principal on the Note will have been deemed satisfied and the Lender will provide the Borrower with a cancellation of mortgage or release of lien. If the Borrower conveys, "cash out" refinance or ceases to occupy the premises as his/ her principal residence, full repayment of principal will be due as follows....

My wife and I want to simply Streamline Refinance to take advantage of current low rates, however, I was told I needed to contact NJ smart start to see wether they would subordinate and they told me they won't. None of this was in my contract with NJ smart! Is this legal?


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Camille Marotta’s answer
Camille Mar…, Agent, Millstone, NJ
Mon Jun 18, 2012
You were given the incorrect information. i have completed a streamline refinance on two other properties. You can streamline for a lower rate as long as you are not cashing out or adding/deleting an individual from the mortgage. I would be happy to help you with the process.

Camille Marotta, Branch Manager NMLS 9838
First Alliance Home Mortgage
7 Pelican Drive, Suite 3
Bayville, NJ 08721

0 votes
Suzanne MacD…, Agent, Morristown, NJ
Sun Jun 17, 2012
If you used an attorney to close your loan, you should ask them for a legal opinion, however, if I understand the terms you are not taking any 'cash out' you are simply refinancing the existing debt so I would think you would be able to do the stream line refinance. The people at NJ Smart Start may have mis-understood your question. Only an attorney will know for sure, but in my lay person's opinion, it looks good. Ask the attorney it will be well worth any cost.
0 votes
Deborah Madey, Agent, Brick, NJ
Sat Jun 16, 2012
Your question is one of contract law. There might be a mortgage rep who has walked through this before and can share their experience. But, your most accurate advice will come from an attorney who reads the contract terms in your file.
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