Major changes to FHA Streamline Refinancing

Effective 60 days from September 18th, there will be some major changes to FHA streamlines. The major changes affecting FHA homeowners with refinancing are:

• Seasoning - this means all home owners must have owned their home for six months before they can refinance.
• Payment history
  • If home owned less than 12 months, 0x30 on mortgage history for last 12 months.
  • If home owned more than 12 months, 1x30 within the last 12 months is allowed.
• Lender must verify assets if borrower is bringing money to settlement table.
• Lender must verify employment.
• You will no longer be able to roll closing costs into the loan without an appraisal.

In addition to this, many lenders have put credit overlays on top of the FHA guidelines requiring 580, 600 and even 620 scores. Here is the link to the mortgage letter from HUD.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-32ml.doc

While I realize FHA and FHA lender have to tighten up just like everyone else, why is FHA tightening up on their consumer base that they have already insured? Doesn't it help to try and refinance as many of their current portfolio as possible to lower rates and payments?

I absolutely understand tightening up on purchases and "cash out" refinances, but tightening up on streamline refinances, doesn't make too much sense to me. If we are lucky, FHA will retract this new guideline before it actually goes into effect.