FHASecure

FHA has just introduced a special program that gives you the opportunity to rid yourself of a loan you cannot afford and save your home from future foreclosure.
Starting on July 14, 2008, FHASecure will begin to provide additional assistance to sub prime borrowers with adjustable rate mortgages, and help to restore liquidity and stability to the markets.  It will assist families who have missed up to three monthly mortgage payments over the previous 12 months or have experienced temporary economic hardship, such as loss of overtime or medical needs, as well as those who were affected by payment shock. 


First, you should understand what FHA does:
It does not make mortgage loans; it approves lenders and insures the loans they make. For over 70 years, FHA-insured mortgage loans have helped first-time home buyers and those with little cash for down payments become homeowners. They were pushed to the background in recent years during the flurry of exotic ARMs with very low “teaser” rates. FHA is not only back on the playing field, but they have developed this special program, the FHA Secure Refinance , for homeowners who now may be at risk of losing their homes. Housing and Urban Development (HUD) Cabinet Secretary, Alphonso Jackson, recently proclaimed, “FHA Secure will bring stability to the housing market and give eligible families, who were in good financial standing before their loans reset, a chance to keep their homes.”

Am I eligible for an FHA Secure Refinance?

If you are current on your mortgage.
So long as you are current on your mortgage and have sufficient income to make the mortgage payment, you are eligible for an FHA Secure refinance. 

If you are delinquent on your mortgage.
If you are delinquent on your mortgage, the default must have been due to the payment shock of an ARM interest rate reset or, in the case of an Option ARM, the "recasting" of the mortgage to fully amortizing. 

Some ARM interest rates have doubled or tripled at their re-pricing date in recent years. If you have become the less-than-proud owner of one of these ARMs, you might be concerned about your ability to make these new, higher monthly payments. An FHA Secure Refinance may be perfect for you! There are only four basic FHA loan requirements to qualify for this special, possibly financial life-saving program:

1. You should have a history of making your mortgage payments on time BEFORE your original “teaser” interest rate expired.
2. Your ARM interest rates must have reset.
3. You have a verifiable and consistent history of employment or other regular income.
4. You have sufficient income to make your new FHASecure mortgage payment without putting stress on your family budget.

Homeowners who believe they meet these eligibility criteria may then determine their particular equity requirements using one of the following categories:

--For Borrowers with adjustable rate mortgages who were late on two consecutive monthly mortgage payments or at two different times over the previous twelve months, FHA will require 3 percent cash or equity in your home, the same as FHA's current standard.

--For Borrowers with adjustable rate mortgages who were late on three consecutive monthly mortgage payments or at three different times over the past 12 months, FHA will require 10 percent cash or equity in the home for these borrowers to refinance.

With these new criteria, the expanded FHA Secure Refinance can help additional borrowers access a more viable refinancing option and will offer lenders an alternative to foreclosing on these individuals. LENDERS MAY VOLUNTARILY WRITE DOWN THE OUTSTANDING SUBPRIME MORTGAGE PRINCIPAL BALANCES TO A 97 PERCENT OR 90 PERCENT LTV RATIO depending on the borrowers' circumstances. FHA will also encourage lenders to make other arrangements, such as subordinate financing, to "fill the gap" between the existing loan balances and the FHA-insurable loan amount. The refinanced loan amount backed by the FHA would be based upon a new appraisal, performed by an FHA-approved appraiser.

FHA does NOT offer low “teaser” rates, nor do they have “creative” or confusing rate increase terms in their loan specifications. What you see is what you get. Totally honest and up front. Here is another wonderful feature of an FHA Secure Refinance mortgage. If you have less than perfect credit, you’re still eligible for an FHA Secure mortgage loan.

How to Successfully Apply for an FHASecure Mortgage Loan Refinance

The major factor in getting approved for an FHA Secure refinance is meeting the criteria noted above. This is not a government giveaway program. It is designed to help the almost half million homeowners who have suffered, or are about to suffer financial hardship because of ARM loan re-pricing.

Remember, if you are a delinquent on your loan now, you must show that you made your payments on time when you still had your low “teaser” interest rate. You also need to have 3% cash or equity in your home. While you may at first disregard this as an important issue, you should be aware that we are in a period of declining real estate values. A home that was worth $X in 2005 may only be valued at $X-minus some dollar amount in 2007, as the fair market value (FMV) of many houses in the U.S. has declined. FHA Secure refinance loans include another helpful provision that could fix this problem, should it exist for you. FHA will allow you to get a second mortgage from your current lender or the FHA-approved lender making this loan for the amount of your delinquent payments, closing costs and/or prior secondary financing you got to close your current non-FHA mortgage loan.

Also remember that you need to show a consistent history of gainful employment and display sufficient income to meet your new FHA Secure loan payments going forward. Sporadic employment and inconsistent income levels, as always, could jeopardize your ability to be approved for this new mortgage loan.

As you can see, the FHA Secure refinance program may prove to be a financial life-saver for you if you have fallen victim to the large interest rate increases of some exotic ARM loans offered in recent years. Because this program is so new and has a few additional conditions that must be satisfied, you should consider getting expert advice and application assistance from a proven mortgage expert with a strong record of success helping borrowers get the mortgage loans they want.

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