FHA Secure Lending Guidelines. Will You Qualify to Refinance?

[Moe Bedard]

Highlights of the FHA Secure 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 FHA Secure Initiative:

What May be Included in the FHA Secure 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 FHA Secure 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 FHA Secure 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.

[Moe Bedard]

I thought I would post some more information for real estate professionals so they can get educated on the new FHA Secure Loan, so they can help their clients. Also homeowners that would like to hear it straight form the horses mouth

All this information is posted on the HUD website along with all of these helpful links.

This is the FHA Single Family Housing listserv for real estate industry professionals that are interested in updates to Mortgagee letters, Notices, Guidebooks, Housing Counseling, FHA Reference Guide, Mortgage Limits, Career Opportunities, Grants, Contracting Opportunities & Housing Industry Training. Please visit us at: http://www.hud.gov/offices/hsg/sfh/hsgsingle.cfm or visit our new homepage at: http://www.fha.gov

You can find a directory of states that are serviced by the four FHA Homeownership Centers (HOC) on the web at: http://www.hud.gov/offices/hsg/sfh/hoc/hsghocs.cfm

Servicing lenders can visit FHA's National Servicing Center on-line at: http://www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm

For FHA technical support, please contact the FHA Resource Center: http://answers.hud.gov/ Search our online knowledge base and find answers to our most commonly asked questions. Use "live help" to get on-line technical support. You can also get email technical support at: hud@custhelp.com or phone FHA toll-free between 8:00 a.m. and 8:00 p.m. ET (5:00 a.m. to 5:00 p.m. PT) at: (800) CALLFHA or (800) 225-5342. Call FHA TDD at: (877) TDD-2HUD (877) 833-2483).

To find the FHA S/F Reference Guide on-line please visit: http://www.hud.gov/offices/hsg/sfh/ref/hsgrcont.cfm

Find out about FHA training by visiting our Events and Training calendar at: http://www.hud.gov/offices/hsg/sfh/events/events.cfm

Do you want to find out about current HUD Contracting Opportunities? To obtain a listing of the current opportunities please visit: http://www.hud.gov/offices/cpo/contract.cfm For more information please see the HUD contracting homepage at: http://www.hud.gov/offices/cpo/index.cfm

Do you want to find out about career opportunities at HUD? Visit: http://www.usajobs.opm.gov/ Please see the HUD section at: http://jobsearch.usajobs.opm.gov/a9hud.asp Application forms can be found at: http://www.usajobs.opm.gov/forms.asp

Find out about grant opportunities by visiting HUD's Funds Available website at: http://www.hud.gov/offices/adm/grants/fundsavail.cfm

For all FHA publications visit HudClips at: http://www.hudclips.org/cgi/index_cliphome.cgi You can order hardcopies at: http://www.hud.gov/offices/adm/dds/index.cfm

Do you need to find a FHA form? You can also find all FHA forms on the HUDClips website at:: http://www.hudclips.org/sub_nonhud/html/forms.htm

For information on Presidentially Declared Disaster areas and to learn how HUD can help, please see: http://www.hud.gov/offices/hsg/sfh/nsc/disaster.cfm or contact the National Servicing Center in Oklahoma City, 1-888-297-8685. Also see: http://www.hud.gov/katrina/index.cfm

This list does not provide HudHome property listings. To see the latest list of all HudHomes nationwide please visit: http://www.hud.gov/homes/homesforsale.cfm