As lenders take a super-cautious approach to new housing loans, often setting standards higher than those required by government agencies guaranteeing the mortgages, new rules from the Federal Housing Administration (FHA) may make it harder for veterans to refinance their government loans. Changes in FHA standards for “streamlined” refinancings — replacing loans the agency already insures — that become effective November 17 could have this unintended consequence, the American Banker reports. According to the changes, lenders will have to certify that the borrower has a job and income, and appraisals will now be required if the proposed refi would result in a loan more than 125 percent of the home’s original value.

However, the Department of Veterans Affairs (VA) has no appraisal or income requirements for its streamlined refis. Nonetheless, mortgage experts told American Banker, the new FHA requirements are likely to impact veterans’ loans as well. Fred Chamberlin, a mortgage banker at Alpine Mortgage Planning in Lake Oswego, Oregon, told the newspaper that “lenders will always do things more stringently than the program requires.” This means that now “some lenders will not do a streamlined refinance for a VA loan without an appraisal,” even though the government still allows it, he said. As a result, lenders may be encouraging veterans to walk away from their houses if they can’t do a streamlined refi without an appraisal, the newspaper reported. The trend for big national lenders that buy mortgages from correspondents like Chamberlin to set higher standards than the government agencies require has been going on for a year, the paper said. For example, many lenders have required a FICO score of at least 620 for FHA loans, though FHA itself requires no minimum credit score. But this, too, is part of the change in the agency’s streamlined refi requirements — lenders now will have to provide borrowers’ credit scores when they are available.