FHA to implement new “FHASecure” refinancing product
BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMES
FHA to implement new “FHASecure” refinancing product
President George W. Bush today (08/31/07) announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing…
To read the entire press release, please visit: http://www.hud.gov/news/release.cfm?content=pr07-123.cfm
LENDERS PLEASE NOTE: FHA WILL PUBLISH A NEW MORTGAGEE LETTER WITH GUIDANCE ON THE NEW FHASecure PROGRAM ON OR ABOUT TUESDAY SEPTEMBER 4th, 2007 at: http://www.hud.gov/offices/hsg/mltrmenu.cfm
FHASecure Initiative information for HUD Housing Counseling Agencies:
The Federal Housing Administration (FHA) is pleased to announce a new initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently “reset.”
Under FHASecure, borrowers that are delinquent on their mortgages as a result of interest rate resets will now be able to refinance using an FHA-insured mortgage. In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. Before today, only borrowers who were current on their existing loan were allowed to re-finance into an FHA-insured mortgage.
Highlights of the FHASecure Initiative:
1. The mortgage being refinanced must be a non-FHA ARM that has reset.
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.
3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.
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.
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.
Additional Information about the FHASecure Initiative:
What May be Included in the FHASecure Mortgage Amount: FHA will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. FHA will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHASecure Initiative: If the new maximum FHA loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the FHASecure first mortgage and any subordinate lien may exceed the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios.
Educate Borrowers Regarding FHASecure: The FHASecure initiative will take effect almost immediately through administrative action. Counselors should understand this new opportunity and knowledgeably present it as a viable alternative for delinquent borrowers struggling to pay higher interest rates. HUD will soon publish a Mortgagee Letter providing additional and more detailed information regarding the new initiative.
Implementation of Pay.gov for Upfront MIP Payments
Beginning September 4, 2007, FHA-approved lending institutions may begin submitting upfront mortgage insurance premium (MIP) payments using https://www.pay.gov Payments may be submitted directly to HUD online via the FHA Connection or through CPU to CPU batch file transmissions. Between September 4 and September 28, 2007, lenders may submit upfront MIP payments using either the new Pay.gov process or the current Mellon Bank or PNC Bank process. September 28, 2007 is the last business day that HUD will accept payments made through Mellon Bank or PNC Bank. See Mortgagee Letter 2007-10.
For more information on submitting payments using Pay.gov, see Pay.gov Implementation Information, located on HUD’s Homes & Communities website at: http://www.hud.gov/offices/hsg/comp/premiums/sfpaygov.cfm
HUD is also providing a training demonstration on submitting and tracking payments via the FHA Connection that consists of short targeted topics that can be selectively viewed and revisited as often as needed. The “Training Demonstration of the Upfront Mortgage Insurance Premium (MIP) Payment Process on the FHA Connection” is accessible on HUD’s Homes & Communities website at: