FHASecure
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Transcript of FHASecure
Last Revision: 10/1/07
FHASecure
Presented by:Presented by:
US Department of Housing and Urban Development US Department of Housing and Urban Development (HUD)(HUD)
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General
Assist borrowers currently in a conventional ARM loan♦ Delinquent
Result of the ARM reset Must meet all eligibility criteria for FHASecure Combined loans may exceed CLTV and maximum
mortgage limits♦ Not Delinquent
Combined loans may exceed CLTV and maximum mortgage limits
Must meet regular No-Cash-Out (NCO) refinance criteria
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General (cont’d)
♦ Program available until December 31, 2008 (Mortgagee Letter 2007-11)
♦ Any FHA lender can originate♦ Fixed rate loans are NOT eligible. This includes Interest-
only, as well as mortgages with buydown features incorporated into the interest rate or payment options.
♦ May be refinanced to an ARM loan (one-year or hybrid)♦ A second mortgage may be taken at the time of closing for
the amount not eligible for inclusion in the FHA insured first mortgage.
♦ FAQs can be accessed at www.fha.gov
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BENEFITS
♦ Helps borrowers stay in their homes and preserves communities
♦ Could assist nearly 80,000 additional borrowers♦ Permits an opportunity for borrowers to refinance
into a prime-rate FHA insured mortgage♦ Help lenders avoid foreclosure expenses♦ No CLTV limit or seasoning requirement for
purchase money seconds
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Eligibility♦ Single-Family (1-4 units)
♦ Owner-occupied, principal residence
♦ Must meet FHA underwriting criteria for new loan
♦ Current FHA geographical maximum mortgage limits apply (for FHA-insured first mortgage)
♦ Current FHA maximum loan-to-value limits apply
♦ May cover existing first lien, purchase money second, closing costs, prepaid expenses, discount points, late charges, arrearages, foreclosure expenses, and other costs
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Eligibility - Delinquent♦ Non FHA-ARM that has reset
♦ Must be currently delinquent
♦ Delinquency resulted from reset
♦ The previous consecutive 6 months of payments, prior to the reset, was made within the month due
♦ Must have sufficient equity in home
OR
♦ Lender can take a 2nd mortgage for amount not included in FHA-insured first mortgage
OR
♦ Current lender agrees to write off the amount not eligible for inclusion in FHA-insured mortgage.
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Eligibility – Not Delinquent
♦ Can assist borrowers who are current on their mortgage, but are either facing an ARM reset or have already had an ARM reset
♦ Underwritten the same as a regular No-Cash-Out (NCO) refinance, with the following considerations♦ Combined loans may exceed the CLTV and maximum
mortgage limits♦ 2nd liens do not have to be seasoned for one year, and
additional mortgage calculation is not required♦ 2nd liens may be subordinated without consideration of
CLTV♦ Delinquent/derogatory debts resulting from the borrower
choosing to pay the mortgage instead of other obligations
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Underwriting♦ FHASecure does NOT modify or waive FHA underwriting
guidelines and requirements Basic eligibility (owner-occupancy, SSN, CAIVRS, LDP,
GSA, etc.) Willingness: Credit history analysis, including
explanations and/or documentationEXAMPLE: A borrower has insufficient income to pay
the increased mortgage amount after the reset, along with other debts. They chose to pay the mortgage, resulting in other debts becoming delinquent. If the derogatory items can be documented as resulting from the reset, that should not inhibit an approval of a regular NCO refinance.
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Underwriting (cont’d)
Income/Employment • Ability – best indicated by ratios (if exceeded, may
use valid and sufficient compensating factors)• Stability – two years employment history and
expectation income level will continue for first 3 years of the loan
• Note: If 2nd mortgage payments are required within first 36 months, must include in ratios.
Assets (if required for closing)♦ The lender must specify in the Remarks section of the HUD-
92900-WS how they determined that the reset resulted in the delinquency
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Underwriting (Cont.d)
♦ Lenders may use TOTAL Scorecard, but are reminded that manual underwriting is required if a “Refer” result is received
♦ Documentation♦ Standard FHA refinance loan documentation♦ Evidence of the ARM reset (Delinquent and, as
applicable, Not Delinquent loans)♦ Payment history showing that, prior to reset, the
borrower made the previous 6 months of mortgage payments within the month due (Delinquent loans only)
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Lender Responsibilities
♦ Encourage borrowers to seek advice on tax consequences of debt write-off
♦ Ensure accurate property valuations in declining markets
♦ Refrain from soliciting homeowners to cease making mortgage payments in order to qualify for FHASecure
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Contact InformationContact InformationFHA Resource Center
1-800-CALL FHA (800-225-5342) [email protected] HUD-Approved Housing Counseling Agencies
1-800-569-4287
HUD’s Loss Mitigation Center1-888-297-8685
Lender Approval and Recertification DivisionE-Mail: [email protected]
Voice Mail: 202-708-3976
HUD Web Sitewww.fha.gov
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Thank You!Thank You!