FHA is currently doing a significant business in refinancing non-FHA mortgages.  The program is designed to help homeowners, who previously demonstrated the ability to make timely monthly mortgage payments prior  to their reset of an Adjustable Rate Mortgage (ARM) an opportunity to refinance into a prime-rate FHA-insured mortgage. In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limits.

 Eligibility Highlights

 1. The mortgage being refinanced is a non-FHA ARM that has reset.

 2.  6 months of current mortgage payments prior to the ARM reset.

3. It must be determined that the reset of the ARM, has caused the mortgagor's inability to remain current on payments and that going forward the current income enables timely payments for the refinance.

4. The interest rate must have been scheduled to reset between June 2005 and  December 2009.

Underwriting the Mortgage/Qualifying the Borrower

1. Debt Ratio's should be 31 /43

2. Analyze the homeowner's overall credit history, especially payments on the existing mortgage.  Clean mortgage history for at least 6 months prior to reset of ARM.

3. Provide comments in the "remarks" section specifically stating the cause for untimely payments was due to the reset of an ARM.

Note: If borrower's are in trouble and behind on payments, in foreclosure, this may be a suitable option, if their payments are late due to an ARM reset.  Just another way to add value to your clients, and maybe save a home, and a family!