Real Estate – An Innovative Way of Not Filing Bankruptcy
The Federal Housing Administration announced FHASecure, a temporary initiative to permit lenders to refinance delinquent adjustable rate mortgages (ARMs) and/or to offer new subordinate financing where the combined loan-to-value ratio exceeds the applicable FHA loan-to-value ratio and geographical maximum mortgage amount.
The FHASecure Eligibility Criteria
Borrowers Current on Their Mortgages
The mortgage being refinanced must be a non-FHA fixed rate or adjustable rate mortgage. Cash out refinances are not acceptable.
If there is insufficient equity in the home, FHA will insure first mortgages where there is a:
1) Write Down. The existing note holder(s) writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage (a short pay-off); or
2) New Subordinate Financing. The FHA-approved lender making the new mortgage, the existing note holder or other interested party may take back a second lien by the amount which the payoff is short, including closing costs, arrearages, other reasonable and customary costs that are standard servicing practices and are included in all payoff statements or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits; and/or
3) Re-subordination/Modification. The note holder(s) of existing subordinate financing must re-subordinate or modify the existing subordinate lien(s) and re-execute at closing if the lien is to remain in effect after closing.
Borrowers Delinquent on Their Mortgages
How FHASecure Can Help:
The borrower's payment history shows no more than one 60-day late payment or two 30-day late payments.
If the borrower is unable to meet the payment history requirements specified above, the lender may still proceed with the refinance transaction provided that the loan-to-value ratio on the new FHA-insured mortgage does not exceed 90 percent and the borrower has no more than one 90-day late or no more than three 30-day late payments over the 12 month period prior to the rate reset or extenuating circumstance.
An Innovative Way of Not Filing Bankruptcy
****Resources of FHASecure can be located at www.hud.gov
Must One be an Attorney to Understand the FHASecure Program?
In Mortgagee Letter 2007-11, the Federal Housing Administration announced FHASecure, a temporary initiative to permit lenders to refinance delinquent adjustable rate mortgages (ARMs) and/or to offer new subordinate financing where the combined loan-to-value ratio exceeds the applicable FHA loan-to-value ratio and geographical maximum mortgage amount.
The Department has decided to expand FHASecure as follows: To include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than two 30-day or one 60-day late payment in the 12 months prior to the rate reset or extenuating circumstance that caused the delinquency; or to include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than one 90-day late payment or no more than three 30-day late payments prior to the=2 0rate reset or extenuating circumstance that caused the delinquency provided the loan-to-value on the FHA insured first mortgages does not exceed 90 percent.
Borrowers delinquent on their interest-only and/or payment option ARMs are not eligible for this expansion. Borrowers with these types of mortgages must demonstrate that a rate reset caused the delinquency and that they were making the monthly mortgage payments within the month due during the 6 months prior to the rate reset. For borrowers refinancing delinquent non-FHA ARMs the Up-front mortgage insurance premium (UFMIP) is set at 2.25 percent of the base loan amount (loan amount excluding UFMIP) regardless of the loan-to-value (LTV) ratio. For LTV ratios greater than 95 percent (excluding UFMIP) the Annual premium (collected monthly) is set at .55 percent. This mortgagee letter replaces the specific guidance regarding FHASecure issued in Mortgagee Letter 2007-11 and is effective for case numbers assigned on or after July 14, 2008.
Many thanks to our guest author, Mr.Greg Brooks Southwest area manager San Diego Mortgage Network for this enlightening post. A few our prior popular posts on the FHA were:
Summary of the “Housing and Economic Recovery Act of 2008
FHA Takes $4.6 BILLION Hit … It’s Just Taxpayer Money
Fed Approves New Rules For Mortgage Loans … Too Little Too Late
A NEW LOOK AT FLIPPING PROPERTIES & FHA
Goverment to Use FHA Bail Out Homeowners
Goverment’s FHASecure Refinances 200,000th Mortgage
FHA Home Mortgage Insurance Claims Skyrocket
FHA Boost Loan Limits to $729,750 For California
FHA Takes $4.6 BILLION Hit … It’s Just Taxpayer Money
Due to 'unforeseen' high default rates on home loans, the FHA expects to lose $4.6 billion. The causes of these losses are cited as the FHA’s seller-financed down payment mortgage program, which in particular has seen high delinquency and rates of foreclosure. In order to avoid the losses, the FHA will have to renew efforts to the end the seller-financed down payment program to which 35% of losses in 2007 can be attributed. *Editor's translation: Leave it to the government to come up with a home loan program where, if the buyer does not have the low 3% down payment normally required, the seller can pay that for them. So, from day one, the buyers have zero equity and zero incentive to continue monthly mortgage payments. Duh…wonder why the FHA is losing BILLIONS.
A NEW LOOK AT FLIPPING PROPERTIES & FHA
The Federal Housing Administration (FHA) has temporarily suspended its 90-day rule against flipping properties. The suspension is an effort to facilitate the sale of bank-owned properties.
Under the anti-flipping rule, the FHA will not insure a mortgage loan if the sales contract is executed within 90 days of the seller’s acquisition of the property. Effective June 9, 2008, the anti-flipping rule has been waived for one year for properties acquired by lenders, their subsidiaries, and their outside vendors.
The purpose of FHA’s new policy is to facilitate the sale of bank-owned properties, given that foreclosed and abandoned homes harm neighborhoods and delay a community’s recovery. However, FHA still requires homes to be “safe, secure, and sound,” which may not be the condition of certain foreclosed-upon properties. San Diego County real estate blog
Goverment to Use FHA Bail Out Homeowners
According to reliable sources, House and Senate banking committee leaders are close to an agreement on a landmark housing bill on which the Senate might vote on this week. This legislative package would, in part, authorize the Federal Housing Administration (FHA) to refinance 400,000 to 500,000 at-risk loans to prevent additional foreclosures. The bill would raise the FHA loan limits, and allow use of taxpayer funds, to pay for the FHA foreclosure rescue package. The cost to the taxpayer could be $960 million over three years. We can hope that the final revision, after passing both the House and Senate, will eliminate the taxpayer funding provision. San Diego MLS listings