Factsheet

LIFELINE REFINANCE MORTGAGE PROGRAM: Fact Sheet and Underwriting Guidelines

The Community Development Administration (CDA) offers a refinance product called the Lifeline Refinance Mortgage Program (Lifeline). For the Lifeline Program, the minimum “representative” credit score is 600 and the mortgage being refinanced may not be delinquent. This program allows CDA to refinance “qualified subprime loans”. A “qualified subprime loan” is defined as an adjustable rate single family mortgage loan made after December 31, 2001 and before January 1, 2008 that CDA determines would be reasonably likely to cause financial hardship to the borrower if not refinanced. One of the following criteria must exist for consideration of a financial hardship for refinancing eligibility:

Borrower’s housing expense to income ratio based on the current payment or next anticipated rate adjustment will be greater than 31% of current income; or
Borrower’s housing expense to income ratio based on the lifetime capped interest rate (fully indexed) will be greater than 35% of current income; or
The lifetime capped interest rate exceeds the rate offered by CDA by more that 2%; or
An involuntary reduction of household income of at least 5% or increase in expenditures related to the death of the borrower or co-borrower, permanent disability or serious illness or injury.

Overall Eligibility:

All judgements/liens against the property must be refinanced.
The property must be the borrower’s primary residence.

Income Limits:

Click here for: Income limits.

Maximum Appraised Value:

Click here for:Appraisal limits. Current appraised value of the home must not exceed the “Maximum Appraised Value” limits

Maximum Loan-to-Value (LTV) and
Combined-Loan-to-Value (CLTV):

100% LTV; 103% (105% for Maryland Housing Fund) LTV if upfront mortgage insurance premium financed
Maximum CLTV cannot exceed 110% with all second mortgages, including forgivable grants.

Minimum “Representative” Credit Score:

600

Debt-to-Income (DTI) Ratio:

Not to exceed 50% for 30- and 40-year amortizing loans.

Co-Signers:

Permitted; if acceptable to the mortgage insurer

Mortgage Products Offered:

30- and 40-year amortizing loans

Points:

May be rolled into the principal amount of the refinancing

Current Interest Rates:
(subject to change)

	2 Points	0 Points
30-Year Amortizing	7.500% (7.821% APR)	7.750% (7.862% APR)
40-Year Amortizing	7.625% (7.908% APR)	7.875% (7.975% APR)

Downpayment/Closing Cost Assistance:

Not available.

Closing Costs:

All closing costs, including pre-payment penalties and CDA’s points, may be rolled into the principal amount of the refinancing.

Mortgage Insurance:

Compliance with CDA’s Mortgage Insurance Policy. Thirty-five percent coverage is required on conventional loans. The Maryland Housing Fund (MHF) does not insure the interest-only products.

Ownership Interests in Certain Property:

Prohibited; refer to Section 6.3 F of the Lender’s Manual for detail

Asset Test:

Must be performed for borrowers whose assets equal or exceed 20% of the current appraised value.

Processing:

Loans are processed through a CDA-approved Lender. Manual underwriting is required.

Counseling:

Not required, but encouraged

Home Inspection:

Not required.

CDA Approved Lenders:

Click here for the current list of lenders approved to originate Lifeline Refinance Mortgages.

revised 10/27/08

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