February 13, 2012

Part of the Obama Administration’s announcement to help underwater homeowners includes the Streamline Refinance offered by the Federal Housing Administration (FHA). The announcement allows FHA borrowers who are current on their mortgage to refinance into a new FHA loan to take advantage of today’s historically low interest rates without requiring additional underwriting. Some lenders have been reluctant to offer the Streamline Refinance product because of the additional risk on loans they may have not underwritten and the potential negative impact this has on their Compare Ratio. On February 3, 2012, Acting FHA Commissioner Carol Galante announced pdfthat the Streamline Refinance will not be included in the lender’s compare ratio.

The Compare ratio is the value that reveals the largest discrepancies between the lender’s default percentage and the default percentage to which it is being compared. The percentages being compared are the percentages of originations that first defaulted during a selected period. A higher ratio may indicate that a lender has an unusually high default percentage in comparison with that region or lender's surrounding area.

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.
Advertisement