HUD Interest Rate Reduction (IRR) Loan Modification Program
HUD’s Interest Rate Reduction program is designed to reduce interest rates on existing FHA-insured properties. The IRR program allows owners to work with their current servicer to reset their existing mortgages at a lower interest rate, leading to significant savings.
Highlights
• Interest rate is lowered to current market conditions.
• Borrower legal fee is the only out-of-pocket cost.
• A good faith rate lock deposit of 0.5% is credited back to the borrower at closing.
• Timing from start to finish is approximately 30-60 days.
• No finance fees or application fees required.
Loan Sizing and Conditions
• The new loan amount equal to the existing mortgage unpaid principal balance (ie. no additional debt added).
• The new loan maturity will remain unchanged from existing mortgage.
• 1.05x DSCR required.
• The mortgage insurance premium remains unchanged from original FHA-insured loan.
Prepayment and Assumptions
• The IRR resets the prepayment penalty structure to 10 years (ie. 10%/9%/8%/7%....)
• Alternative prepayment structures may be available based on current market conditions.
• All other HUD requirements from existing regulatory agreement remain in effect.