What are the requirements and documents needed for a recast?
- Borrowers need to wait until the loan is sold to determine if the Investor (new owner of the loan) allows recasts. Not all types of mortgages qualify for recasting.
Ineligible loan types include:
- Held for Sale and Government-backed loans such as, FHA, VA, USDA, and Ginnie Mae loans.
- Custom Construction, and Manufactured Construction loans.
- You must meet minimum principal reduction standards. The Investor on your loan requires for you to pay a minimum amount towards the principal balance. This payment must be made at one time and cannot be made in multiple payments or over a period of time.
- Fannie Mae, Freddie Mac, and Portfolio Loans must pay the principal balance down by a minimum of $10,000.
- FHLB Loans must pay the principal balance down by the greater of $5,000 or 10% of the current Unpaid Principal Balance (UPB).
- Pay a non-refundable $250 recast fee.
All borrowers must complete and submit a specific letter in writing:
- All borrowers names on the loan
- Indicate the request is for a mortgage recast
- The amount of the principal payment, including breakdown of the amounts must be indicated if your check payment includes the recast fee, ie: $10,000 for principal paydown and $250 recast fee on a $10,250 check
- If you are requesting removal of Private Mortgage Insurance (PMI), the principal paydown recast will not occur until after the PMI removal request is completed.
- You are in good standing and current on your mortgage loan payments.
- You have not requested a recast of your mortgage loan once in the last 12 months.