The Federal Housing Authority is not known for making changes quickly. However, in the case of the FHA Secure product, HUD has acted quickly to bring the FHA Secure product to market. Many times programs and products are announced and then there is a huge lag time before consumers can actually take advantage of the announced programs. The main benefit of the FHA Secure product to the consumer is that borrowers who have fallen behind only since their adjustable rate loan adjusted upward may still be eligible to refinance into an FHA loan. The basic parameters are as follows:
-The mortgage being paid off must be a non-FHA ARM that has reset.
-The mortgage at a minimum has to have been current in the 6 months prior to the loan reset.
-Loans must be in according to typical FHA refinancing loan limits* and LTV's(at least 97.15% in most cases)
-Program will allow for lender to write loan a loan balance or subordinate a 2nd lien or portion of the first mortgage to comply with FHA loan limits and LTV's.
It appears the main concerns expressed in guidelines are that appraisals be of strong quality, particularly in declining markets. Secondly, that Loan Officers do not "coach" consumers to fall behind on payments, then refinance and keep as cash the amount of payments not made.
*FHA Loan Limits by County: https://entp.hud.gov/idapp/html/hicostlook.cfm
Michael Byrne, Mortgage Banker www.mortgageprosforum.com
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