If you have been following the FHA market, you will be aware that FHASecure was created to keep people in their homes who had fallen on hard times do to a ARM adjust, resulting in a payment that the borrower could not handle. Therefore this program was ideal to save those borrowers who slipped into the rising sub-prime ARM abyss and truly wanted to keep their home. You needed to be late on your mortgage payments as a result of the adjustment and had on-time payments for the previous 6 months and you can include past due payments, late fees, & prepayment penalties.
SOUNDS GOOD!
WILL IT STAY THAT WAY?
Now with the ever tightening of lending guidelines, there is a disturbing path that this program is taking, the borrower does not have to be current on their mortgage BUT note however, that the minimum credit score requirements of many banks is now 580 to underwrite the loan manualy .
If the credit score is below the 580 mark. Which with mortgage lates, will be highly likely, there will be no chance of getting an automated Accept and the loan will get a denial(refer) and since you are no longer able to send a below 580 to manual underwitting(human) its end of story. Basically leaving the homeowner with no place to go.
Although the borrower may meet FHA requirements(not fico driven) for the loan, always keep in mind that the lending institution has the ability to add(and they do) requirements to their own guidelines.
This is what is happening to FHASecure. A program designed to help people in mortgage stress. It may not be available for those who truly need it.
Changes like these are quite simply, sad.
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