There is news coming out by the minute on the
FHA Secure and I want to lay it all out there for my readers, so they can get a clear picture of what it will do for them. The more I research the more I realize that it will help many homeowners but it will not help the majority of them.
Here are some excerpts from a
CNN article about the FHA Secure.
Quote:
Dodd has said reforming the FHA will be one of his top priorities when Congress returns from its August recess. On May 4, the House Financial Services Committee approved a bill allowing the agency to authorize zero down-payment loans and raise loan limits to serve high-cost housing markets. The bill is awaiting passage by the House.
Still, even with reforms, some borrowers could be left out in the cold, says Alec Crawford, mortgage-backed securities strategist at RBS Greenwich Capital. In a note, he said that the FHA is apparently only considering breaks for borrowers with so-called "5/1" and "7/1" adjustable-rate mortgages, not "2/28" subprime loans.
"Any change of the type we expect would probably have a small impact on the subprime market," Crawford wrote.
FHA reform got a boost from Bernanke on Monday, when he wrote in a letter to Sen. Charles Schumer, D-N.Y., that lawmakers could consider reforms allowing the agency to design new mortgage products aimed at low- and moderate-income borrowers.
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According to this report, the FHA Secure will only allow breaks for homeowners with 5/ and 7/1 adustable rate mortgages. I can't even remeber the last time I spoke with someone who was in one of these mortgages and in trouble. I would estimate that the vast majority are 2/28 and 3/27 ARM's with some 2/38's here and there.
Quote:
Currently, borrowers who are late on their mortgage payments, or in default or foreclosure can't refinance into FHA loans. However, borrowers holding FHA- insured mortgage loans qualify for options available in the agency's loss mitigation program.
On Aug. 10, President Bush said he supports "making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes." But he said he opposes "direct grants" to homeowners.
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Will the
FHA Secure realy help many people? Only time will tell. Hopefully congress will do much more to help
stop foreclosure in the coming weeks like mandating lenders to offer loan modifications for victims of
predatory lending and borrowers who cannot refinance but are qualified for a
loan modification.