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FHA Secure... Help with Late Payments

By
Mortgage and Lending with TampaBayLoanOfficer NMLS#241583

 

President George W. Bush has anounced that HUD's Federal Housing Administration (FHA) will help  families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay-i.e., riskier borrowers pay more. This common-sense, risk-based pricing structure will begin on January 1, 2008. Many hard-working American families who were able to make their mortgage payments under the initial teaser terms of the exotic loan are now struggling to make ends meet because their rates have doubled or tripled, FHASecure 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.

The FHASecure initiative will operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer. The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers, particularly minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages, and enhance the FHA's overall risk management. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.

FHASecure, like all FHA products, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

•1.       A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;

•2.       Interest rates must have or will reset between June 2005 and December 2009;

•3.       Three percent cash or equity in the home;

•4.       A sustained history of employment; and

•5.       Sufficient income to make the mortgage payment.

FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates, These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer. FHASecure will also bring much-needed liquidity to the mortgage market. FHA anticipates more lenders will offer FHA-insured loans, pool them, and securitize them with the Government National Mortgage Association (Ginnie Mae), which has the full faith and credit of the U.S. government. This guarantee makes Ginnie Mae's mortgage-backed securities the safest on the market and helps to channel greater capital into the housing market, benefiting U.S. homeowners.

Let's all keep an ear out for our community. This will help to bring a sense of calm that is needed so much in our industry. Remember this is not a cure-all for everyone. Keep going your part to make sure that our community gets the help it needs. I have refused to put individuals and families in those exotic high-cost loans that has put our industry in this credit crunch. When we look out for our clients not only in the short term but more important the long term we will continue to improve our industry. This will come back ten fold with happy clients that know we all had the best outlook for them not just our check book. These happy clients will be more than happy and willing to recommend us to their friends and families as the Trusted Advisor.

Will Merritt

Vice-President of Operations

Florida Mortgage Services LLC

727.530.7208

will@flmortgages.com  www.tampabayloanofficer.com

BLR Guy
BLRGUY(Beach & Luxury Realty Inc) - Saint Pete Beach, FL
This sounds like a nice program Will.It should help some people out of their mess!
Sep 24, 2007 10:31 PM
blreast therealty4u
Beach and Luxury Realty, Inc. - New Smyrna Beach, FL

Thanks for the information Will

Its nice you're working to keep us informed with your Blog.

 

Hopefully this will  take some stress off some recent buyers.. and give a little more stability to the number of new potential foreclosure dangers in the next few years..

Keep us informed about new information.      And whether loan requirement tightening is occuring in our local markets..  Should agents be sharing with those large number of buyers waiting-  if their current credit situation may not be improving as much as they think?

Are border line prospective buyers needing to not only improve those ratings, but look at more quickly locking in a mortgage? within the next year or so?   Or is that being overblown in the media lately?

What's a slightly lower price, if they cann't qualify for a decent rate loan?

Sep 24, 2007 11:10 PM
Will Merritt
TampaBayLoanOfficer - Pinellas Park, FL
Tampa Bay's Most Trusted Lender

Remember that clients that have bad credit scores will have higher rates. They should be open to improve theri score. This will save them on monthly payment and keep them in a loan that will not adjust in a couple of years. Yes the media is blowing a most of the concerns out of the water. Rates will continue to be around 6.25%. Could them go higher sure but they also could go lower. You need to start watching the mortgage bonds daily. watch the 30 year and the treasure bonds first the 30 year and 10 year bonds. I will be doing a blog about the indexes that us great mortgage pro's watch.

Sep 27, 2007 06:59 AM