Last week, President George W. Bush announced his FHASecure Plan which is designed to help some 80,000 homeowners avoid foreclosure as their ARMs adjust to higher rates and payments. The announcement not only caused quite a stir on Wall Street, it created a lot of questions on Main Street as well.
FHASecure Plan FAQs
What is it?
It is called the FHASecure plan. It allows borrowers with strong credit histories to qualify for a refinance when they would otherwise be unable to qualify. For example, homeowners who had been making timely mortgage payments prior to their loans adjusting, but are having difficulty making the current, inflated payments.
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 risk-based pricing structure will begin on January 1, 2008.
What does it mean to LOs, their clients, and their real estate agent partners?
For their clients, who are in ARMs, it means an opportunity to get out of their "time-bomb" loans and into a stable mortgage. Keep in mind, FHA can now go up to a 95% LTV on a cash-out refinance and up to 97.75% in most cases on a rate & term refinance. The FHA originators out there are: capitalizing on this segment of the market, making a lot of money, and making their clients happy by delivering a good loan.
How do I answer questions about it?
Stay tuned for the next release on FHASecure Plan for the answer to this question! FHA will publish the actual underwriting guidelines for the Plan shortly.
Currently, what we know is this: to qualify for FHASecure, eligible homeowners must meet the following five criteria:
- A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset.
- Interest rates must have reset, or be scheduled to reset, between June 2005 and December 2009.
- Three percent cash or equity in the home.
- A sustained history of employment, and
Sufficient income to make the mortgage payment.
If you are interested in the FHASecure program, make sure you call our offices at (909)307-0977
Carlos Samaniego, CMPS
Certified Morgage Planner specializing in Debt and Credit restructuring.
