FHA Streamline Refinance on Rental

[John Bradley]

After speaking with about 5 or 6 mortgage companies, I found one that was more than happy to do an FHA streamline refinance on my rental house. ($51k, 3.375% down from 5.5%). The companies that said no did so for various reasons; they either didn't do them on investments, the loan amount was too small, or they flat out denied that an FHA streamline could be done on a rental. (Whatever).

Anyway, the company I'm working with said that I was going to have to bring 2 months worth of interest, ($460), to closing, and cited this as an FHA stipulation for streamline refi's on investment properties. It didn't make much sense to me, but I told them to go ahead and send me the paperwork. (Figuring this stuff out over the phone can be daunting. I'd rather have the numbers in front of me so I can look them over and do my own research).

The loan docs arrived and this amount, ($460), shows up on a rate-lock agreement. Nowhere is it found on anything that says pre-paid interest. I called a HUD rep and asked if they knew of any FHA rule that stipulates interest up front simply because its an investment property. The HUD rep told me there was no such stipulation exclusive to streamlines on rentals.

So I called the mortgage agent and asked him to go over this with me, because I couldn't make heads or tails out of it. He immediately went into a spiel about how he has a concussion and how his father just passed away, but because he's a "workaholic" and wants me to be satisfied, he's gonna talk to me. Now I'm not going to call the guy a liar, but this is just weird and off-putting at the very least. Our conversation ended with him saying he didn't like how that was worded in the documents, (the $460 as a rate-lock), and that he would look into it. Ugh.

Does anybody have any idea what this guy is talking about? Because either he or the HUD rep is wrong about bringing interest specifically to an investment property streamline refi. I'm 95% sure its the mortgage rep because of the amount being represented as a rate-lock and because of the uncomfortable phone conversation. Thoughts? Advice? Know anyone that will do this refi for me?

Thanks everyone!