Update January 9, 2009: This program is no longer available effective December 31, 2008.
[photopress:piggydrown.jpg,thumb,alignright]This afternoon I received our Mortgagee Letter from HUD with the nitty gritty on FHASecure. Since our company is a HUD Approved Mortgagee lender (we’ve been providing FHA financing since our inception back in 1976); we are also approved to help distressed home owners who have adjusting ARMs via a FHASecure refi.
FHASecure is “a temporary program designed to provide refinancing opportunities to homeowners
Hey Rhonda,
Great follow up post to mine. Thank you for posting the info on that HUD mortgagee letter I was looking for in regards to loan originators using FHASecure to solicit for new business. I think it was you that commented on how last Friday, right after Bush made his speech, there was a spike in the number of domain names purchased that included the phrase “fhasecure.com”
Because Seattle is still showing signs of some appreciation (for now), homeowners here might have a better shot at FHASecure as compared to homeowners in other parts of the U.S. where property values have dropped dramatically.
Please keep us posted as to how easy/difficult it is to get these loans approved.
Thanks, Jillayne. Homeowners should not wait until they are “FHASecure” candidates…this means they are facing trouble with their mortgage after it adjusts. The Mortgagee Letter reads different than what’s on FHAs gov site. The first “highlighted” item is:
“The mortgage being refinanced must be a non-FHA ARM that has reset”.
Page 1 of the Mortgagee Letter states: “This mortgagee letter extends eligibility to borrowers who became delinquent under their current mortgage following the reset of the interest rate”.
I’m hoping that people DO NOT NEED FHA SECURE. In order to avoid this program, MEET WITH A MORTGAGE PROFESSIONAL ASAP IF YOU HAVE AN ADJUSTING MORTGAGE.
Jillayne, I’m not shouting at you…I’m shouting at “them arm people”. 😉
Why wait to be FHASecure bait?
Is it also required that there be a certain amount of equity in the home in order to qualify for FHASecure? If so, I guess this wouldn’t help people in locations where prices are already declining.
The irony is that about the time that most people’s loans reset is about the time their local markets might be depreciating.
Sniglet, the loan to value is slightly higher than the tradtional FHA refinance.
IMHO this is not the answer. Consumers need to take action before they need to be rescued.
Rhonda,
But what action can a person take if they are under-water and can’t qualify for any refinance products? Even if a reset is a year or two away, a person in this kind of situation is just one of the living dead.
Unfortunately, I get the impression that most of the borrowers with big resets coming up don’t really have any options left unless they happen to live in one of the few regions left (like Seattle) which haven’t experienced depreciation.
I guess there is always the insurance pay-out after the big kitchen fire to bank on if all else fails…
If someone is “under water” now and their reset is two years away…and they can make their mortgage payment…it’s a waiting game.
Any consumer with a reset coming within the next few years should contact a Mortgage Professional now to review their goals, credit and to create a strategy (this may not require a refi).
Rhonda: This is a wondeful post. You are an oasis of sanity in the mortgage lending community.
Diane, that is the biggest compliment coming from you. You’ve made my weekend! 🙂
Rhonda,
Do you know if this FHASecure program is going to be available to anyone else, other than those whose ARM is about to reset, such as a first time homebuyer with good credit? I think it should be. Otherwise, it seems like the financially responsible person who didn’t buy a home that they couldn’t afford is being punished, while those that dove in too deep and are now drowning are being rewarded for that bad decision.
Dave,
A first time home buyer with good credit can do FHA (FHASecure is just for refi’s) and conventional financing depending on how much money is available for down payment and closing costs.
A borrower should avoid FHASecure and refinance BEFORE their ARM has adjusted. According to the Mortgagee Letter that we received from HUD, this is only for borrowers who’s non-FHA ARM has adjusted and they are becoming delinquent on their mortgage.
Mortgage lates will screw your credit for quite a while. Refi before this happens (or sale).
Sorry but I just have to compliment you on your choice of visual illustrations. That drowning piggy bank is, though somewhat morbid an excellent analogy of the situation.
Thanks, tj. No need to apologize.
Do you provife refi in Las Vegas, NV area?
My interest only ARM is going to reset next September 2008.
Hi John, I’m licensed for mortgages for Washington State only.
Is this a nation wide program,and if so do the other realtors know about it ,and can it be of help to some one that was in forcolser.
Ton, this is a national program. It’s a refinance of a non-FHA ARM when the mortgage rate has adjusted. Loan Originators who can provide FHA mortgages should be able to offer FHASecure.
It’s vital that home owners contact a lender before they’re in a foreclosure situation.
woops…looks like my drowning piggy bank photo is gone! I just linked this post to one I wrote about increasing mortgage insurance w/FHA effective 10/1/2008…I’m only mentioning the piggy bank because of comment 12.
Hello Rhonda. I’m a CA mortgage broker wanting to help my brother who lives in WA. He has an NOD filed with Saxon and we’re trying to see if FHA secure will work for him. He is trying to do a mod with them but they are less than interested in moving quickly. He has a ton of equity but just can’t make the pmts. He was doing OK at the first reset but now the second has killed him. Does your company consider these deals when the NOD has been filed? Thanks for your response.
Sandy, I have yet to do a FHA Secure mortgage…so I’m not sure. I want to say that it will probably be difficult if he’s received a NOD (I’ll verifiy this).
I do know the rates for FHA Secure are significantly higher than standard FHA (2.5 hit to fee) and that the debt-to-income ratios for FHA Secure are 31/43. Even if he didn’t have a NOD, the underwriter must determine that he has the capacity to make future mortgage payments and meet his other obligations.
Here are some additional requirements for FHA Secure w/a delinquency:
~evidence that the payment history the 6 mos prior to reset had no payments outside the month due OR
~evidence that the payment history has no more than 1×60 late payment or 2×30 late payments in the last 12 months OR
~evidence that the payment history has no more than 1×90 or 3×30 late payments in the last 12 months.
~Include evidence of partial forbearance, if applicable.
I strongly recommend that your brother seek the help of a qualified attorney.
FHA Secure is no longer available effective for case numbers issued after December 31, 2008: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-41ml.doc