July 17, 2013
When borrowers with existing FHA mortgages want to apply for streamline refinancing, one question that sometimes comes up is whether or not a borrower is permitted to add or delete someone from the title of the loan at the time of refinancing.
FHA loan rules do address this issue. Those rules are found in HUD 4155.1, Chapter Six, Section C under a section titled Borrower Additions or Deletions to the Title on a Streamline Refinance.
The concern for some borrowers is whether or not adding or deleting someone might trigger the due-on-sale clause making the entire loan amount payable according to the terms of the clause. The FHA does permit additions and deletions to the title as described in Chapter Six:
“Individuals may be added to the title on a streamline refinance without
• a creditworthiness review, and
• triggering the due-on-sale clause.”
That’s good news for borrowers who need to add someone to the title–common reasons for that might include a change in marital status or living arrangements, family changes, etc. But what about deleting someone from the title? FHA loan rules for streamline refinance loans are a bit more strict in this area. Chapter six says:
“Individuals may be deleted from the title on a streamline refinance only
• under the circumstances described in HUD 4155.1 6.C.2.d
• when
— an assumption of a mortgage not containing a due-on-sale clause occurred more than six months previously, and
— the assumptor can document that he/she has made the mortgage payments during this interim period, or
• following an assumption of a mortgage in which the− transferability restriction (due-on-sale clause) was not triggered, such as in
— a property transfer resulting from a divorce decree or by devise or descent
-− assumption or quit-claim of interest occurred more than six months previously, and
-− remaining owner-occupant can demonstrate that he/she has made the mortgage payments during this time.”
Consult with your loan officer for more information on the required procedures for adding or deleting someone from the title of your existing FHA mortgage when applying for an FHA streamline refinance loan.
Do you have questions about FHA home loans or refinance loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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