15 AAC 151.630. Streamlined refinance

(a) The Corporation will, in its discretion and in accordance with procedures established under this section, refinance eligible mortgage loans owned by the Corporation if the Corporation determines that the requirements established in this section have been satisfied. The Corporation will not refinance under this section mortgage loans that it made or purchased.

(1) pursuant to a rental refinance program, unless the borrower meets the qualifications set out in 15 AAC 151.015(a) ;

(2) pursuant to the REO financing program described in 15 AAC 151.650, except that the Corporation will, in its discretion, refinance a mortgage loan described in this clause if the loan contains a call or balloon payment provision, or

(3) pursuant to a rural, non-owner occupied loan program.

(b) To qualify for the refinance of a mortgage loan owned by the Corporation, the borrower of the mortgage loan must demonstrate to the Corporation that:

(1) the mortgage loan owned by the Corporation is secured by a first or second priority lien on the residence for which it was made; and

(2) the residence for which the mortgage loan was made is a single-family dwelling, duplex, type I mobile home, type II mobile home, tri-plex, or four-plex.

(1) the principal amount of the loan will not exceed the sum of:

(A) the outstanding balance of the mortgage loan owned by the Corporation which is being refinanced;

(B) up to 30 days interest on the existing loan;

(C) for an FHA insured loan, the amount of the upfront mortgage insurance premium; or for a VA guaranteed loan, the VA funding fee; and

(D) up to $5,000 in closing costs.

(2) if the existing loan is subject to mortgage insurance or guaranty, the Corporation may determine that coverage must be continued by all insurers or guarantors of the loan;

(3) the priority of the lien securing the loan must not be changed for the refinance;

(4) the maximum term of the loan will be:

(A) 30 years for first lien loans;

(B) 15 years for second lien loans; or

(5) if the monthly payment on the loan owned by the Corporation is subsidized under the Home Ownership Fund program under 15 AAC 151.300 - 15 AAC 151.340, the amount of the monthly subsidy may continue to be paid by the Corporation to subsidize payments for the refinanced loan; however, the monthly subsidy may not exceed the subsidy amount as established in 15 AAC 151.330 or the amount of subsidy currently being paid by the Corporation whichever is less; and

(6) the loan must be current at closing.

(d) A state veteran rate is not available for a refinancing loan purchased under this section. The Corporation will establish the interest rate on a refinancing loan purchased under this section as follows:

(1) the interest rate shall be two percent less than the cost to the Corporation of the money used to purchase the refinancing mortgage loan, except that if the cost of money;

(A) is 10 percent or less, the interest rate is equal to the cost of money; or

(B) is more than 10 percent, the interest rate may not be less than 10 percent;

(2) the Corporation will, in its discretion, determine the cost of money applicable to a refinancing mortgage loan by taking into consideration one or more actual or proposed taxable or tax-exempt financings, the proceeds of which are expected to be used for purposes of funding the acquisition of refinancing mortgage loans; in considering proposed financings, the Corporation will, in its discretion, estimate the cost of money;

(3) if refinancing mortgage loans are, or are expected to be, purchased other than from the proceeds of taxable or tax-exempt bonds, the Corporation will, in its discretion, determine the cost of money from time to time based upon estimates and references to credit market levels; and

(4) cost of money may include the actual or estimated interest rate on debt, costs of issuing the debt, original issue discounts applicable to the debt, and ongoing program operation costs such as loan servicing fees, debt trustee fees, credit enhancement fees, loan guarantee or insurance fees, and other direct or allocable administrative costs of the Corporation.

(e) The Corporation will establish procedures for application for refinance of a mortgage loan under this section and for other matters pertaining to this section in the sellers' guide.

History: Eff. 5/7/93, Register 130; am 5/5/98, Register 147

Authority: AS 18.56.088

AS 18.56.090

AS 18.56.108

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