FHA Secure
FHA Secure: The “President Bush” Loan
President Bush addressed the Nation on Friday, August 31 over the growing concerns in the housing market. He did not purpose a total bail out of the mortgage industry but he did offer some relief to homeowners. This relief is target to homeowners who have a mortgage adjusting upward from the temporary “teaser rate” that was initial offered from the mortgage lender. The three main components of the relief are foreclosure avoidance through homeowner education, temporary tax relief and expanded guide lines to help homeowner refinance using a special FHA insured mortgage.
I will expand on the refinance possibilities using FhA insured mortgages. The new FhA product will be called FHASecure. FHASecure will allow homeowners that are in default with their current mortgage and have late payments refinance their mortgages. Previously FHA would not allow borrowers with mortgage lates, delinquency or in default to refinance, so this is a significant change to the FHA guidelines.
There are specific criteria to qualify for this special program.
- First, you must be refinancing a non-FHA adjustable rate mortgage that has adjusted upward when the “Teaser rate” expired.
- You must have a history of on-time mortgage payments before your “Teaser rate” expired. Meaning you must have a decent credit history prior to your home mortgage adjustment period. They will be looking most carefully at the 6-12 month history immediately before the adjustment.
- It must be determined that the inability to make your mortgage payment resulted directly from the mortgage payment increase.
- The Teaser rate on you current loan must have reset after June 2005 but before December 2009.
- You have to have a 3% equity position in your home on the FHASecure mortgage. The FHASecure loan will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. FHA will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount provided the arrearages arose after the reset. Your current lender can carry back a second mortgage if there is an additional balance the FHASecure loan will not allow.
- You must have a stable employment history.
- You must be able to document sufficient income to make your mortgage payments.
