CalHFA Follows President Obama’s Lead on Housing

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The California Housing Financing Agency announces their FHA Streamline Guidelines allowing CalHFA borrowers to take advance of the recently reduced Mortgage Insurance.

The Obama administration has taken a bold step toward improving the overall housing situation for homeowners and future homebuyers. It was announced in early January that the annual mortgage insurance premiums charged to homeowners of FHA loans would be reduced significantly.

With the new legislation the insurance premiums assessed by the Federal Housing Administration have been reduced from a factor rate of 1.35 percent down to .85 percent. This means that for every $100,000, homeowners will save approximately $42.00 per month on mortgage insurance premiums.

Now, the California Housing Finance Agency (CalHFA) has decided to follow President Obama’s lead with a bold step of their own. On January 29th CalHFA released a statement announcing they will now be allowing homeowners that currently have CalHFA junior loans like the CHDAP or ZIP to refinance their homes as well.

Under previous guidelines homeowners couldn’t refinance their home without paying off their existing CalHFA junior loans unless the homeowner was experiencing a financial hardship. That would mean no taking advantage of lower interest rates or lower mortgage insurance premiums unless the home had enough equity to pay off the existing CalHFA junior loans.

Through the newly introduced Streamlined Subordination Process, homeowners will now have the opportunity to refinance their first mortgage loans without being forced to pay off existing CalHFA junior loans.

Borrowers need only to meet the following three requirements to qualify for subordination on their junior loans:

• The new first loan must lower the borrower’s monthly mortgage payment or replace an existing loan with a more stable product,
• Borrower must have insufficient funds to pay off existing CalHFA Junior loans(s), and
• Property must continue to be the borrower’s principal residence.

Eligible CalHFA Junior loan programs include:

• California Homebuyer’s Down Payment Assistance Program (CHDAP)
• CalHFA Housing Assistance Program (CHAP)
• High Cost Area Home Purchase Assistance Program (HiCAP)
• Extra Credit Teacher Program (ECTP)
• Homeownership in Revitalization Area Program (HIRAP)
• Zero Interest Program (ZIP) & (ZIP Extra)


Wesley D. Oliver is a Senior Loan Consultant, CMPS® and CalFHA, SCHFA, Preferred Loan Originator with Broadview Mortgage.

Your primary lender just needs to submit your completed subordination packet with all required documentation to CalHFA for review. Once the review is completed by CalHFA, they will provide your lender with a signed subordination agreement and you will have the go ahead to complete the refinance.

The potential household savings for homeowners may be too great to pass on this opportunity to streamline your current FHA loan. To learn more on the CalHFA streamline subordination process you can visit: calhfa.ca.gov  Or for more information on the FHA streamline process you can visit www.letsstreamline.com

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