Question about FHA Secure

[tiffany]

We were fortunante enough to work out a prepayment plan with Saxon after falling behind and an unfortunante series of circumstnces that caused them to begin foreclosure preceedings. This all occurred in June/July of 2007. We have stayed current on our payment plan since than and it is schedule to be caught up in September of 2008 with a rate reset in June of 2008. That is some very basic history of our mortgage, but we are very grateful to have our home and the opportunity to work this out.

Here is my question. We want to refinance FHA or FHA Secure, we know that in order to go straight FHA we will need 12 months of on time payments, this will happen after our June payment is received. So we are very interested in the FHA Secure which just requires 6 months of current payments which we have.

The concern that we have with the FHA Secure is that our credit is very bad, we are working on paying off bills and keep up with the mortgage and keep the lights on. Will our credit prohibit us from refinancing FHA? I know that they are very forgiving, but we do have some charge offs that we are paying off.

I am also having a difficult time finding anyone to call me back. So far everytime I call a Bank in our area about the FHA Secure I am told that they do them and someone will call us back, they never do. We have even left messages with Saxon our mortgage servicer who also stated that they do these as well. I did read an internet article that stated people are refinancing like crazy and the mortgage servicers are super busy? Has anyone else heard this?

Any, feedback would be greatly appreciated. Thank you so much!

Tiffany

Welcome and thank you for joining the forum...

FHA Secure requires 6 months current payments prior to adjustment, not the last 6 months necessarily, so the 6 months prior to adjustment must be rated 0X30 after adjustment there can be late payments. FHA Secure is the same as FHA they do require a degree of viability and integrity in the credit consumer and other credit. If the credit is severely blemished before and after the adjustment, then neither product is going to work. The fact that you were in a forbearance program may also be reflected on your credit report. This is actually decremental in that it reflects the possibility of recent foreclosure activity. We in the lending industry do not have to have a filing of foreclosure, any payments that are over 120 days, in some underwriters minds 90 days represents foreclosure or NOD activity. FHA requires 36 months from the last date of foreclosure activity.

All in all if the credit quality overall is poor and there is a late payment prior to the adjustment, with forbearance....FHA is going to be a tough product to obtain financing through. The other problem with forbearance is that even while you are in it the payments on the mortgage are often rated as rolling late payments. Prior to applying for any loan you need to have a detailed tri-merge credit report pulled and review the data on that credit report to determine if it is viable for FHA financing in either program. Regardless of what brokers say FHA is serious about credit integrity, expects some blemish, but not serious blemish. Yes we on the FHA level are very, very busy, but we are not approving very many due to the credit issues, this is not a program where the credit can be as blemished as the Brokers seem to think.

What ever you do, please go to a Direct Lender, Credit Union, Bank or Direct Mortgage Banker. The brokers are throwing these things at us like no tomorrow and we can not approve even 30% of them, a good institutional lender can help you get to a point where you can get the financing that you need without just spinning your wheels. From what you have expressed in your post you need credit rehabilitation and the professional institutional lender can assist in that process. We really can not recommend anyone, however the ones that are very aggressive and well trained are Flagstar, GMAC, and Chase....all of them will tell you the truth and if you really are qualified. Brokers will take the application, spin a story and there you sit waiting. Get the facts, good, bad or ugly and work from there until it is a doable situation.

[tiffany]

Thank you Poppy for your response. We completed an online refinance application with (name removed) tonight and hopefully we will hear some positive news in the near future. We have made it this far and we have until September when our workout plan expires, at that point we will than revert back to our original terms. I suppose at the very least if we cannot refinance with a FHA than we will fight for a loan modification and that can hold us until we can refinance at a better rate.

This board has given us hope and again I want to thank Moe for creating it. We have learned so much and that knowledge has given us power to advocate for ourselves without fear and embarassment.

Thank you agian Poppy and Moe!

Tiffany

The other guys or Flagstar....Flagstar is a very direct reputable lender, The other guys never heard of them sound like Broker sort. Please, please be careful...Flagstar is a direct lender there is a (other name) bank, but there is also a broker out there by the same name, trolling the internet in MD.

You are already in a Broker driven monstrosity, please do not let that happen again, especially with the fees and charges, the Credit Unions, Banks and Direct Mortgage Lenders do not overcharge and try to live for 3 months on your single loan....Brokers can and will do that.

[tiffany]

Originally Posted by Poppy

The other guys or Flagstar....Flagstar is a very direct reputable lender, The other guys never heard of them sound like Broker sort. Please, please be careful...Flagstar is a direct lender there is a (other name) bank, but there is also a broker out there by the same name, trolling the internet in MD.

You are already in a Broker driven monstrosity, please do not let that happen again, especially with the fees and charges, the Credit Unions, Banks and Direct Mortgage Lenders do not overcharge and try to live for 3 months on your single loan....Brokers can and will do that.

It was Flagstar Bank, I just typed in the name wrong sorry. I decided that I am also going to follow up with Saxon today and request a loan modification, I figured it will not hurt anything. I did not realize that any workout plan may also negativly effect our credit. Thank you for the heads up on that.

What do you mean by "try to live for 3 months on your single loan"? We will not refinance into 2 mortgages that would just be double our troubles! I believe that we should have enough equity in our home that it should not be a problem. Thank you again.

Tiffany

[Moe Bedard]

Hi Tiffany,
I am glad that was a typo, because the company that you did type in was not an approved FHA lender like Flagstar. A workout plan doesn't have a negative effect on the credit unless you were to default on it. Also what Poppy was referring to is that if you were speaking to a Mortgage Broker versus a Direct Lender like Flagstar, the amount that they would charge you on your file alone would be enough for them to live off of for 3 months.....the fees are so high with those crooks.....
Best of luck with FHA Secure!!!
Please keep us posted on the progress.......o.k.

[tiffany]

Well it has been a roller coaster the last couple of days. We applied for a refinance with Flagstar Bank online and they never called so I called them today and I had to explained to the loan processer what a FHA Secure refinance was and than he told me it would cost $100 to pull our credit report. At that point I wrote him off and found a local bank that is processing FHA Secure loans and that would actually pick up their phone. So they guy that I am working with currently called me back and told me that Meritech (Saxon is our Mortgage lender) is reporting us 4 months delenquent on our loan as of the first of the year and that we would not qualify for a FHA loan. Well 2 things concerned me here, Saxon told us that as long as we stayed current on our work out plan they would not report us as late (and why is Meritech reporting us?!?!?!). Also, I had to tell the mortgage guy that the FHA Secure loan could be processed on people who were showing delinquent, so he is looking into this more. This is so frustrating, we can afford the mortgage payment, but we made stupid mistakes and got ourselves into this mess (NEVER WORK WITH A BROKER!!!).

I spoke with Saxon yesterday and requested a loan modification and was told that our inverter #151 (I am assuming that this is Meritech) does not do loan modifications. Left a message for our work out worker and never heard back. I have tried calling today and the whole customer service department is currently unavailable.

Hopefully, things will work out for us. I believe that they will.

Can anyone fill me in on Meritech mortgage? Thank you again for any information that you can provide.

Tiffany

As long as you are in forbearance the trade line will roll late and report forbearance, there is nothing anyone can do about that. This is a fact of credit reporting and if you did not get that in writing from them, then there is in deal on that side of the world. There is rarely a situation, Lender/Servicer, that does not report the actual history of the loan and their payment record with them. This is very rare, generally worked out ahead of time and in writing with a full blown negotiation for this up front. The lender/servicer that is reporting you late is Saxon, not Meritech, a sub servicing arm of Saxon, and not the end investor on this loan.

This is not something that some one tells you over the phone, that they are not going to report you, you were dealing with collectors and they will tell you anything and I do not care which servicer/lender they are that is what they do.

Please refer to the quote below from one of my first posts to you regarding forbearance and how they rate...this is a fact and not one you can escape, I was trying to tell you then, that if you are in forbearance the credit is seriously flawed and that the delinquency had to occur after the adjustment of your mortgage. These are the rules for FHA Secure and for FHA even more strict. Forbearance in our world means foreclosure that did not go to the court house steps.

"The fact that you were in a forbearance program may also be reflected on your credit report. This is actually decremental in that it reflects the possibility of recent foreclosure activity. We in the lending industry do not have to have a filing of foreclosure, any payments that are over 120 days, in some underwriters minds 90 days represents foreclosure or NOD activity. FHA requires 36 months from the last date of foreclosure activity.

All in all if the credit quality overall is poor and there is a late payment prior to the adjustment, with forbearance....FHA is going to be a tough product to obtain financing through. The other problem with forbearance is that even while you are in it the payments on the mortgage are often rated as rolling late payments. Prior to applying for any loan you need to have a detailed tri-merge credit report pulled and review the data on that credit report to determine if it is viable for FHA financing in either program. Regardless of what brokers say FHA is serious about credit integrity, expects some blemish, but not serious blemish. Yes we on the FHA level are very, very busy, but we are not approving very many due to the credit issues, this is not a program where the credit can be as blemished as the Brokers seem to think."

I was trying to explain that since you were in forbearance the chances of getting an FHA Loan or FHA Secure were very, very slim. You do not need to be lied to, I am an FHA DE underwriter and this is why I cite the rules that I do.

Meritech only exists as they are a lower sub-division of Saxon, and I doubt that they are the investor in this loan...there is another investor, Meritech exists as a servicing sub-ARM to Saxon for certain investors.

[tiffany]

Hi Poppy and thank you for the time that you have taken to answer my questions. I have a couple more for you and I apologize if they are redundant. Like I said we are hoping for an FHA secure, but after your last post we are not putting all of our eggs in one basket. We are working with a local bank who does do FHA Secure and also another loan product backed by the State of Ohio as well as a loan mod from Saxon. It was the Bank that we are working with for the new refinance (hopefully ) who told us that it was Meritech that was reporting us late and not Saxon, although, I found out from Saxon that they merged with Meritech and took over the Saxon name.

So here are my questions:

1. We received court documents yesterday in the mail from our county court stateing that "...since the Plaintiff has failed to prosecute the action (it has been 8 months) that the action will be dismissed for want of prosecution on or about the 17th day of March, unless the Plaintiff can show in writing why it should not be dismissed."

Would this in some way help us with a securing an FHA Secure loan? I know that when I spoke with 1-800-CALL-FHA they stated that if something was rejected from the underwriter it could be responded to. If our credit is showing a "rolling" 30 day late and we can show that our mortgage has not gone into foreclosure and we also get a letter from Saxon stating that we have been timely on our "workout agrrement" (Saxon is refusing to give us a forebarence, whis is when they forgive part of the fees according to them). Would he have a slim chance at qualifying for the FHA Secure? Since the clause for FHASecure states no more than 30 days late?

I know that this is a long shot, but I cannot find anyone to answer these questions and I hope that you can give me some insight.

Thank you again for your time

Tiffany

FHA Secure requires that the mortgage rate 0X30 the 6 months prior to adjustment with a reasonable payment history prior to that on the mortgage history. The rolling lates are indicative of an issue, however if they were prior to adjustment, the FHA underwriter has their hands tied, they can not approve the loan under FHA Secure guidelines...

Plus a rolling 30 and or other rolling event during forbearance is looked at as the borrower being in Foreclosure status, Forbearance is not arrived at unless the borrower is seriously and demonstratively delinquent. If this all occurred prior to adjustment the FHA underwriters hands are just plain tied, they are not able to approve the loan. I am sorry, I would be in the same position to, we have to adhere to the guidelines or the loan is uninsurable by FHA and we are in deep you know what with FHA and with our employers. FHA monitors us as underwriters and audits a percentage of our files....oh joy yet another master....

As you write the courts are getting ready to dismiss the foreclosure action that apparently was filed due to non-action on Saxon's part, so there was a foreclosure filed even if on the most basic of levels. That too will show on the credit report.

It is true that we do reconsider loan requests with additional documentation after an initial decision has been made, however, with the guidelines so doggoned tight on the FHA Secure....I think that sadly enough that the underwriter would be unable to make a positive decision. I am not looking at the file and I am very liberal in my application of the guidelines in these cases, we are looking to get people out of the mess that is place, but the guidelines are so restrictive on this one, my initial read would be that we could not extend the approval due to the rolling lates and the prior Foreclosure activity if it occurred prior to adjustment of the loan. We have not been to successful with any loan that has been or is in foreclosure as FHA rules are 36 months from the last foreclosure event prior to any consideration in a favorable light....

Please try, but be aware that the underwriter is tied to the guidelines in these cases, more than perhaps they would like to be.

The Ohio program is not one that I am familiar with and due to the problems in Ohio, may be more forgiving in the analysis of the credit issues as pertains to the mortgage credit side of the credit analysis.

[tiffany]

Thank you again Poppy for your time and sharing your expertise, I really do appreciate it. Like I said earlier I am persuing any and all options available to us. If I can find a loop hole in the FHA rule than I will use it, but I understand that laws and rules are written to be objective only to the goverrning office (I used to work for a State government office enforcing laws and rules). I feel very good about the Ohio program, after this year our income will be too high to qualify but we are good right now. The requirments were more strict in regards to mortgage history, but that has been relaxed (although, they will not say how much). Hopefully we can get our packet to an underwriter soon and than after 3 years refinance with a conventional FHA Loan or something better. The FHA loans are lower in interest but the Ohio loan is lower than our current interest rate and much lower than what it will adjust to in June.

Wish us luck and again thank you for sharing your time and expertise.

Tiffany

Break a leg and find a loop hole.....I know I am the master at loop holes with government lending...also stretching the envelope too........my share of little letters of "just why the heck did you do this", never in trouble, just adequately answer the letter from the bureaucracy and move on....

[tiffany]

Hi Poppy,

I have another FHA question for you. It looks like we are running out of options in regards to our mortgage and will need to stick with it for awhile longer. My question for you is: When we become current on our current mortgage and make on time payments for 12 months could we than qualify for a conventional FHA mortgage? Or would the initial filing of foreclosure still hold us back even though it was withdrawn?

As always, thank you for your time and knowledge.

Tiffany

The initial filing is a 36 months thing....was that before or after adjustment...??? I have to ask...always method to my madness...however presently even on the Secure FHA they are not taking loans that have gone into foreclosure after the adjustment....they investors are getting tighter in their fear of what they are seeing in the body of the credit reputations that are being submitted right now.

[tiffany]

Hi Poppy,

The initial filing was before the adjustment. I look forward to hearing what you find out.

Tiffany

Before the adjustment is a killer, you will have to wait the 36 months.....FHA is adamant about that in the 4155.1 which ever revision they are playing with today....

You could make a case that it was not fully foreclosed, but the average underwriter is not going to be very adventurous and go against the 4155.1 revised, we are audited and governed by FHA in our practices.

We stand to lose our DE standing with that kind of action and we are very paranoid about that issue as we are hard pressed to get work afterwards. I would recommend keep the credit immaculate for 24 months and try with the fact that you did do a repayment program, kept the agreement and the mortgage current and give it a try, but for the most part you are looking at 36 months with the bulk of the underwriting going on out there, they are looking at tiering the MIP to FICO's, purpose and LTV...when they do that they may take a less conservative position due to the fact that they are tiering the MI pricing for risk...we do not know, this is only supposition and frankly I do not know if they can get the idea fully approved by their masters, Congress. They came out with this idea themselves and want to implement it themselves, but I think that Congress is none to happy about the idea....it presents a great deal of risk to the MIP pool.

[tiffany]

Hi Poppy,

Well apparently we will not be able to get a loan modification or a refinance at this time, but we did get some GREAT news! Apparently the foreclosure is not on our credit report or in public record. So hopefully after we do bring out mortgage current on our workout plan after 12 months of on time payments we should be able to qualify for a FHA right?

Fortunantly, we can afford our workout and our payment increase when it happens, but it will be very tight for a little while.

Thank you again for your time and knowledge Poppy!

Tiffany

First why did they refuse you for the loan modification? I would like to know...inquiring minds you know....

Yes if that credit report and public record are clean....keep it clean for 0X30 the next 12 months....the credit does not say forbearance...please tell me it does not....that is important, how late does it show it, like how many days.....????

[tiffany]

Hi Poppy,

Apparently our "investors" do not do modifications, only workouts and deed in leu. I am not sure about how many days our credit is showing late the Bank did not tell us that. I believe our credit is showing our mortgage as a rolling 30 day late, but I am not sure.

As always thank you for your time and knowledge.

Tiffany

Go up to the site that we recommend here for a free credit report you are legally entitled to one a year from each bureau...Equifax, TransUnion and Experian....get them and see what they say.

Get the rating to 0X30 for 12 months and do not look back.....

[lpinlb]

Hi everyone - I checked with my credit union and they are not offering the new higher limit program and e-loan only said they are doing it with a 90% LTV value as of right now ( their new program only went into effect on Friday so this may change ).

My question is, does anyone know what lenders are lending under the new higher limits program or have a suggestion on how I might research this? We get the flyers in our mail but I don't feel right nor do I trust anything I get in the mail these days with regards to home loans.

[Moe Bedard]

lpinlb,


You can go directly to www.fha.gov and they have a section where you can look up FHA approved lenders in your area. Try to stick with a direct lender versus a broker. Like Countrywide, Wellsfargo, Bank of America, if the Credit Union doesn't have the higher loan limits yet also try your bank too. You can also call FHA at 1-800-225-5342 and they can assist as well.

Hope this helps,