Here It Is... The New FHA Loan Program - FHASecure - Mortgage Lates and 100%+ CLTV Allowed

By
Mortgage and Lending with Branch Manager NMLS 557050

Earlier today, I wrote about the President's new game plan on the mortgage crisis. George W Comes to the Aid of The Mortgage Mess - Are The Tides Finally Turning??

By day's end, FHA announced their new plan to help nearly 250,000 people save their home from adjustable rate mortgages that reset too high.

Here are the highlights of the FHASecure Initiative:

1. The mortgage being refinanced must be a non-FHA ARM that has reset.   Your loan must have adjusted already to be eligible.

2. The mortgagor's payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.  You can be late on your mortgage but you must prove that you were not late prior to the reset and that the reset is the only reason why you have lates now. 

3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.  If you are on a plan with missed mortgage payments that need to be paid, they can be rolled into your new loan, so long as you have enough equity.

4. Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing.  

Let's say you owe $300,000 on your home but its only worth $270,000 today.  You can get a new FHASecure loan for $261,900 and a new loan for $38,100 from your new lender or the current holder of your mortgage if they will go for it.   This new note terms and payments have to be factored into your qualifying ratios but if they are deferred for 36 months, they don't have to be.    These combined loans can exceed 100% and can exceed the FHA loan limit in your area.

5. Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor's inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

The bottom line is this is not a free pass.  If you are late only because your ARM adjusted and you can prove it, this program is the best way to save your home and your credit.

However, this is a terrific new program and once again demonstrates why FHA has been with us for decades. 

UPDATE:  AS A FOOTNOTE TO THIS POST,  I GOT MY FIRST FHASECURE LOAN APPLICATION A FEW DAYS AFTER I WROTE THIS.  

You can follow the progress of this loan as I am keeping an online diary of it.  The first post is here:     FHASecure Diary Part I - I Took My First Loan App For an FHASecure Loan - Let's Be "Guinea Pigs" Together Saving Alfredo's Home

 

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Rainer
46,546
Ilyce N. Powell
Financial Revitalize - Baltimore, MD
CMPS- Certified Mortgage Planning Specialist
Hi Aaron. I just found out about this initiative. Thanks for the details!
Sep 01, 2007 01:38 PM #44
Anonymous
Shannon George, Newlove Realty, Inc. Bowling Green,OH
Thanks Aaron this info will be usefull. Another reason why I am glad I am a AR member!!!
Sep 01, 2007 02:35 PM #45
Rainmaker
209,010
M. Suzi Woods (Gravenstuk)
NOW Sharing the life and spice of the GC one day at a time - Grand Canyon, AZ
Suzi Woods, Prior Independent REBroker in MS
AAron, it sounds like this can save a lot of potential disaster. Is this a good income source for lenders?
Sep 01, 2007 03:15 PM #46
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV

Ilyce---My pleasure!

Shannon- You are welcome.  I love the info on this site and I am happy to help as well.

Suzi--- I think this is amazing opportunity for lenders if marketed correctly.

Sep 01, 2007 03:22 PM #47
Ambassador
1,024,355
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation
This is the only place I have heard about this.  Thank you.  It is great information.
Sep 01, 2007 03:46 PM #48
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV
Margaret--- You are welcome. Glad to share.
Sep 01, 2007 04:38 PM #49
Rainmaker
323,026
Toby Barnett
KW North Sound - Marysville, WA
Toby Barnett
Sep 01, 2007 05:18 PM #50
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV
Toby--- Its good information about all of the layers that they are working on.
Sep 01, 2007 05:29 PM #51
Rainmaker
186,825
Steve Shaw
Keller Williams Realty - Mobile, AL
e-PRO, Gulf Region Properties Team
Thanks Aaron.  I will pass this along to a my customers.
Sep 02, 2007 12:17 AM #52
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV
Steve--- Sounds good.  Its a great idea.
Sep 02, 2007 04:49 AM #53
Anonymous
Kevin

Does anyone know what the credit score requirements are for this new Secure loan?  Does FHA set the credit score guidline or will this be up to the lenders?

 

Thanks for all the good info!!

Sep 02, 2007 02:02 PM #54
Rainer
44,490
John Popp
Charlotte, NC
Kevin There is no score requirment for this program
Sep 02, 2007 02:19 PM #55
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV
Kevin--- John answered it for you.  Its not credit sensitive...especially now that they will let you count mortgage lates on this new program.  Those will cause your score to plummet.
Sep 02, 2007 06:01 PM #56
Rainer
32,037
Ken Stampe
iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX
iBrandPlan

I'm not certain what the retail impact of this will be. I believe this is really geared to mortgage servicers to be able to take loans that are in their default/loss mitigation department and find a way to avoid the foreclosure process. I suspect that those borrowers who are past due AND meet the eligibility of FHASecure will be offered an opportunity from their current mortgage servicer with little transactional fees. Think about it, if you have a loan in default and this can bail it out why would you care about fee income at that point? So the consumer's best option is probably with their current lender. When you apply that approach to the estimated 250,000 impacted households that's not very many loans to specifically market for business.

 Just my .02

Sep 05, 2007 06:21 AM #57
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV

Ken--I agree with you but I actually got one of these yesterday.   See my post at FHASecure Diary Part I - I Took My First Loan App For an FHASecure Loan - Let's Be "Guinea Pigs" Together Saving Alfredo's Home .

If the servicer doesn't contact them, they are going to seek us out.  I also think this will be a home run for the retail guys at the larger banks that do their own servicing, ie Countrywide, Wells, B of A, etc.

Sep 06, 2007 03:03 AM #58
Rainer
42,470
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Great information Aaron.  What is your prediction for the new loan limits for California? I love the program and the speed it was implemented.  I am afraid that the Bay Area and LA, Orange and San Diego counties will be out of luck even with the rate increase.
Sep 06, 2007 08:33 PM #59
Rainer
37,672
Aaron Gordon
Branch Manager - Las Vegas, NV
Home Loan Consultant - Las Vegas, NV
Artur--- I think you are going to see FHA go to $417,000 in CA, which may only provide marginal help.  But I think you may eventually see Fannie and Freddie go higher to meet the demands of high-cost states like CA.  Some are predicting $625,000 like the conforming limits in Hawaii, Alaska, Guam, and US Virgin Islands.
Sep 07, 2007 03:26 AM #60
Rainer
42,470
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Thank you Aaron for your prompt reply.  At least something to work with, but definitely not a solution to problrms here.

Sep 07, 2007 05:20 AM #61
Anonymous
irene arredondo

Hi

there i am in need of some kind of help on what to do i have a hard $ company it was a 2 year fixed rate and now its adjusting and the rate is up there i want to get a whole new company to finance my home if possible if not i need some back bone to help me with this mortgagage company to work with me on a soultion saxon is a debpt colector they are who i talk to but i dont know is the note holder my rate is 10.25% and payment is now $1,731.08 after doing a budjet check what is affortable for me to keep m home is $1,200.00 is the max give or takeif someone can give me some advise or help e-mail me thank you irene

Feb 21, 2009 04:25 AM #62
Anonymous
irene arredondo

Hi

there i am in need of some kind of help on what to do i have a hard $ company it was a 2 year fixed rate and now its adjusting and the rate is up there i want to get a whole new company to finance my home if possible if not i need some back bone to help me with this mortgagage company to work with me on a soultion saxon is a debpt colector they are who i talk to but i dont know is the note holder my rate is 10.25% and payment is now $1,731.08 after doing a budjet check what is affortable for me to keep m home is $1,200.00 is the max give or takeif someone can give me some advise or help e-mail me flowermagic06@yahoo.com thank you irene

Feb 21, 2009 04:27 AM #63
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