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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Awc4282, Home Buyer, Hartford, CT
Mon Sep 9, 2013
HI Max. I had the same exact problem. I was told that NJ Housing Agency would have to subordinate the loan. When I called them and advised them that I would like to do a Streamline Refinance to lower my payment they told me that they will not subordinate. I advised them that my contract with them clearly states "If the borrower conveys, CASH-OUT REFINANCES or CEASES TO OCCUPY THE PREMISES AS HIS PRIMARY RESIDENCE, full repayment of principal and accrued interest will be due.
I told them that I am not trying to conduct a CASH-OUT refinance. I explained that I am not taking any cash-out and that I want to conduct a streamline just to lower my payments.
I was told that my contract should have read "ALL REFINANCES" and that the new contracts now state that.
I was furious. Shouldn't they have to be obligated to our contract? Our contract should be binding as these are the terms that were agreed upon.
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