FHA Secure

[mar639]

I was pre approved with chase for a loan at 6.625% this will bring me savings of 900 a month. All depends on appraisle, I only need an extra $15,000 higher value than last time my home was appraised instead of $50,000. Which brings me hope. Closing costs are at a flat fee since I am a chase customer with a checking account and also my husband being a union member gives us many many benefits having a chase loan. I am so happy and at the same time I am continuing to pray that the appraisle comes in ok. I am waiting for someone to contact me on when an appraisre will come by. If all goes well I can close by Nov. 30th. I also recieved via email a good faith estimate with a rate locked in for 60 days. It felt so good to read finally Fixed Rate on the loan papers. Im praying alot.

[evel1999]

That is greast news Lin. I sure hope this works. That is just what you need.
Is that FHA Secure, FHA, or just conventional? Great rate and like you said just to see fixed rate with a lock in on the interest rate fantastic. We will celebrate on line when you close.

[threepugs]

Not a solicitaion, but on a retail basis, we do offer the FHA Secure program at (removed for homeowner safety) Please pardon me if I am speaking out of turn, as I am merely throwing this out there for those who need it.

IamProballyaSharkThatWillEatYouAlive@BaitandSwitch .com

[Moe Bedard]

OK, this is not a solicitation but you direct everyone to your email address. FYI, that is a solicitation and violation of forum rules. Why don't you explain these programs and what it takes to apply and get approved for a loan.

I smell shark and I am a shark hunter. NOT GOOD.

Pardon me if I am speaking out of turn, as I am merely throwing this out there for those who need to watch out for people like you.



I am very leery of brokers and lenders that come here and place these little comments. You may think I am harsh, but you do not see what I see every day at the law firm. Until a lender or loan officer earns their stripes, they will not be allowed to promote their company. PLAIN AND SIMPLE!

[sevendipity]

Hello, so are there any safe lenders that you are recommending? I live in a condo in Massachusetts. I had 100% financing that was fixed for two years. As it was about to reset, I had a lot of work done on it, and attempted to refinance. The value is now lower than what I owe on it, and no one will touch it. I have called the FHA phone number and spoke with people regarding FHA Secure. Some people there have said loan to value is not an issue, others are saying it is an issue. Some are also saying I have to be delinquent, others are saying I don't. I am not delinquent... yet. I have drained my savings to cover these increased costs, and I'm surely on my way to becoming delinquent. I am not playing the victim. I knew it was going to go up, but who would have thought that the value would go down, especially after putting in a whole new kitchen, a whole new bathroom, new carpet, and new paint throughout? I have multiple appraisers out, and multiple acquaintences of appraisers all tell me the value is accurate. It is because places in my complex are going really low because they are all foreclosures. Why don't appraisers take this into consideration? Thanks for reading and any helpful info!

[Moe Bedard]

Thanks for your honesty and candor. As far as the FHA Secure Loan is concerned, you have to be delinquent and it has to be a result of the reset of your loan.

Appraisers have to use recent sales comps of similar homes regardless of what causes the sale. This is causing 'everyones" homes to go down in value right now.

[evel1999]

But one thing I did read good about the FHA Secure, if you owe more on your home than it is worth, they can get the lender to reduce the principal for you if they are willing to do that. In some cases they can do a 2nd on part that is over the appraisal if they want forgive that part. The FHA Secure seems to have a lot of good points for homeowners who can meet the guidelines and refinance.

[ferminet]

One other option to consider is VA loans. We just refinanced a borrower from a subprime into a VA loan. It saved them from a reset that would have put them into foreclosure. A lot of lenders avoid VA loans, but there is flexibility in underwriting there as well. Any veterans out there would do well to check out their VA possibilities.

[blwilliams39]

You're right about the VA loans being an option. I am a mortgage broker and I didn't read the rules and I am not supposed to promote my broker sites because Moe says so.

[Moe Bedard]

So you have been banned. It's nothing personal, just a "blanket" policy like they should do with loan modifications. It's this guy below that is in charge, sorry. Good luck though.

[sevendipity]

This thread, much like the FHA Secure has fallen flat. Hahaha. (If I don't laugh, I'll cry.)

[Moe Bedard]

Tell me about it! haha.....I have studied the FHA Secure up and down. It's there, but hardly any lenders are really offering it to homeowners. Laughter is good and that's what I try to do once in a while.................

[ferminet]

I am told that FHA secure is being securitized in separate GNMA pools, so HUD can track its performance. Only problem is no investor wants to buy a higher risk GNMA pool. That's why the lenders don't want to write them. They can't sell them.

Well now we have another bogus fix to add to FHA secure. The subprime freeze. If you examnined details, it's obvious that almost nobody will qualify for the freeze (its voluntary anyways). But they did manage to hammer the mortgage backed bond market with that announcement, as investors were afraid the government was about to start retroactively modifying mortgages. That led to a a big jump in rates. So we have the FHA secure that no one wants to buy, a subprime freeze that didn't freeze anything and higher rates.
I hope they don't try to help us anymore.....

[Moe Bedard]

It has been 4 months since President Bush announced a new refinancing program called the FHA Secure. This new refinancing product was touted as a foreclosure prevention device and viable alternative to homeowners stuck in adjustable rate mortgages as a way “out” of their toxic loan and into a 30 year fixed FHA insured mortgage.

When it was announced, FHA had estimated that would assist approximately 80,000 borrowers.

An article by Patrick Rucker from Reuters came out today and I was alerted to it by my good friend Peter G. Miller of FHALoanpros.com (thanks Peter), that the FHA Secure has helped only 266 borrowers since its inception back in August.
If you do the very simple math, they are currently helping approximately 60 plus homeowners a month and on track to complete just over 1,000 FHA Secure mortgages within a 12 months period.

The way the FHA Secure is going, it would take 80 years to help 80,000 homeowners!
So, what’s the big hold up and hold out by lenders? Why haven’t there been more of these FHA Secure refinances accomplished?

The biggest issue that I see is that lenders are simply not offering this mortgage to borrowers. What people fail to realize is that the FHA Secure Loan is being securitized in separate GNMA pools, so HUD can track its performance. The major problem is that no investors wants to buy a higher risk GNMA pool. That’s why the lenders don’t want to write these mortgages.

Why? They can’t sell them on the secondary market.

As one reader put it;

Well now we have another bogus fix to add to FHA secure. The subprime freeze. If you examined details, it’s obvious that almost nobody will qualify for the freeze (its voluntary anyways). But they did manage to hammer the mortgage backed bond market with that announcement, as investors were afraid the government was about to start retroactively modifying mortgages. That led to a a big jump in rates.

So we have the FHA secure that no one wants to buy, a subprime freeze that didn’t freeze anything and higher rates.

I hope they don’t try to help us anymore…..

The underlying theme seems to be that the government, in taking a little-to-no public funding approach, is failing to jawbone the private market into funding formerly-high risk mortgages — even though they are publicly-insured and hence “risk free”. We would suggest that general capital flight from US markets, both from the credit crisis and due to the falling dollar, have eliminated a large fraction of the funding that would otherwise be available (perhaps half).

More on the status of the program from Reuters:

WASHINGTON, Dec 17 (Reuters) - A program unveiled by U.S. President George W. Bush in August that is trying to save tens of thousands of homeowners from foreclosure has aided just 266 borrowers so far, according to government data released on Monday.

Officials behind the new initiative, called FHA Secure, said it is on track to move 60,000 delinquent borrowers into stable, fixed-rate home loans.
But between September and mid-December, only 266 such borrowers have cleared all FHA hurdles, according to data compiled by the Department of Housing and Urban Development that was provided to Reuters.

FHA Director Brian Montgomery said the program was off to a slow start but is overcoming bureaucratic challenges and gaining momentum even as the national mortgage crisis worsens.

It is on track to help 60,000 homeowners? You are joking right?!
More from Reuters;

The number of lenders willing to process the new loans has more than tripled to over a thousand in the last month, Montgomery said of FHA Secure.

“We stand by our estimates, at the end of the day. These numbers (of borrowers) are increasing every week. Not quite doubling but close to it.”
Officials at the U.S. Department of Housing and Urban Development note many of the 3,200 delinquent borrowers who have applied for a new loan since September but have not won final approval may yet be accepted.
MORTGAGE PROS HAVE DOUBTS

Still, some of the mortgage brokers and lenders who must sell the new program say it too cumbersome and narrowly focused to help many borrowers.

“I think the concept is great but I’d like to see the people who are even doing these loans,” said Yamila Ayad, a mortgage broker in San Diego, California.

FHA Secure cannot reach most southern California borrowers whose home prices have slipped but are still valued higher than $362,000, the upper limit of loans FHA can insure, she said.

Before FHA Secure can succeed, some mortgage professionals said, it must gain wider acceptance within the industry.

“We do not have a book of subprime business to identify these subprime borrowers,” said Dave Greige, an FHA loan specialist in St. Louis, Missouri. “The subprime mortgage servicers out there need to let their borrowers know about this program.”

[fragsmeller]

So Moe
what is the deal with the FHAsecure, are they supposed to be able to write loans for over the max LTV? That is if you can find someone willing to even give a FHA Secure loan.
My situation is that i'm upside down and thought from reading the mortgagee letter that they could do a second loan to make up the difference and that it could exceed the 97.75% LTV that is customary.
Please let me know what you think.
thank you
Crystal

[Moe Bedard]

Hi Crystal,

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.

Maximum Loan to Value Ratios for the FHA Secure

States With Closing Costs at or Below 2.1% of the Sales Pirce

• 98.75% for properties with appraised values equal or less than $50,000
• 97.65% for properties appraised in excess of $50,000 and not greater than $125,000
• 97.15% for properties appraised in excess of $125,000

State With Closing Costs Above 2.1% of Sales Price

• 98.75% for properties with appraised value equals or less than $50,000
• 97.75% for properties apprased in excess of $50,000

Hope that helps!

[fragsmeller]

Hi Moe,
I have read the letter and know the limits but i have been arguing with my lender that they are allowed to write a second mortgage for over the limit if the first loan is not enough.
She is telling me i am wrong and that they cannot go over 97.75 because no one will underwrite such a loan for over 100%.

I need a simple yes or no, because every one i ask just shows me what you showed me and i interpret it as: FHA lender is allowed to do a second even if it brings the loan over 100%, is this true or not?

thanks again for your help.
Crystal

[evel1999]

One of the things I read they can do as far as a second is:
Write you a 1st mortgage using FHA Secure that meets the loan limits.
Then they can negotiate with the lender who has the loan to take the difference that is short on the payoff and have them do the 2nd. (Your original mortgage) They can delay the payments on the 2nd for 36 months.

That way they can sell your 1st mortgage on the market with no problem as the loan meets the FHA LTV.

The mortgage co(your old mortgage co) holds a 2nd for the difference that was not able to be paid off at closing and that way they avoid being wiped out completely in forclosure.

I don't know if the mortgage co you refinance with can do two loans or not ?
You would have to check with FHA Secure guidelines.

I also read that that can do the FHA Secure and have the old mortgage co take as lesser payoff at closing, forgiving part of the loan (similar to a short sale) as long as it meets the FHA Secure guidelines.
But doubt if many lendes will agree to this.

These rules are part of the FHA Secure, but finding a mortgage co who will work with you on this will be hard. You will need an FHA Loan Office, Mortgage co FHA approved and is well informed on FHA Secure in order to be able to do this.

The trouble with FHA Secure, they do not have buyers for these loans, so very few have been done because of this.

Bush stated that 35,000 have been helped with FHA Secure, but we know that is not true. Very few loans have been done and most of the ones who did get FHA Secure, had enough equity to meet the FHA LTV.

Maybe under the new Bush Plan they will do more to help refinance with FHA Secure. They know themselves that this program has done nothing to help homeowners save their home.

[sevendipity]

I think I got duped now. I called Bank of America in Woburn MA because they were listed on the FHA website. And after calling like 6 different places, I finally got someone who said she knew all about the FHA Secure and thought I could qualify. After taking all my information, she said with my good credit and lack of late payments, I might be able to get something through the Cummunity something-or-other. My appraisal, obviously, came in as less than I owe on it. Now I'm waiting to hear back. But I keep saying to her if they don't approve it, then I want to do the FHA Secure, and she keeps saying "We'll cross that bridge when we get there." I feel like I took the bait and switch and now I wasted so much time. I do have it in writing that if they deny my loan, I get my $250 appraisal fee back. Which I actually don't even think they got, because I got the check back in the mail with a letter stating there was no enough information on the check to process it. Even though I sent it exactly where she said to. I feel like no one knows what they're doing and they're all winging it. But this is our livelihood they're winging. I'm a nurse and when I screw up, it's not tolerated. People could die. I feel I only deserve the same amount of attention, effort, etc. that I give out in my job. I'm sure I've prolly posted these complaints before, but I needed to get that off my chest. Don't you love how all the candidates are talking about what they're gonna to fix this situation now? Do any of them seem like they're able to fix this?

[Moe Bedard]

Sevendipity, Looks like your getting the ole bait and switch. The appraisal will be no good if she now goes FHA because you need an FHA appraisal.

This happen so much. She never could do the FHA Secure and should have said that in the beginning.

fragsmeller,

I am not a lender and I do not underwrite these loans. I just report what I find here. My understanding is that, no they will not go above 100%.

[californiagrape]

Moe is correct FHA Secure will not facilitate a loan great than the county max loan amount and the max % for your state. here in California the max is 97.15% for the FHA Secure today. (hopefully the FHA reform bill will be signed into law soon to drop the down payment to 1.5% (at last guess))

the difference b/w the amount you owe and the max loan FHA will allow for your county and max loan % can be:

1) new 2nd created. (low probability)
2) current 2nd Mtg increased by difference (low probability
3) Short Refi (like a short sale w/o the sale) lender forgives the difference b/w what you owe and what you can refi out of. (thanks to the passing of the exclusion of the"debt forgiveness" tax - some will now be excluded from it)

i know of at least 5 wholesale lenders in California who are actively facilitating the FHA Secure product today.. most started in Nov '07.

the draw back is: the mtg mkt is changing so fast each lender seems to have a different perception on what they will accept. especially when they have to underwrite it manually and increasing their buy back potential.

PS: there is a GNMA II pool that was created specifically for the FHA Secure program.

PSS: what concerns me with the people facilitating these loans; is the extreme possibility of the same group of Loan officers originating these loans and charging a premium for them.. (allowing them to over charge again - they borrower should of had a lower rate.) granted these loans will take a lot more work than a plain FHA - but that does not give someone the right to fleese the public again.)

[Moe Bedard]

Thanks for the insight on the FHA Secure. Are you a loan officer or broker?

[californiagrape]

California licensed Mortgage Broker - 18yrs

[firstsource]

I talked with an investor that buys FHASecure loans and they said that there have been over 10,000 loans approved at this point. Those loans are becoming more popular as more people are learning the ins & outs of the program.

And they are making changes, just yesterday they started allowing cash out under certain circumstances (To improve a borrowers situation by allowing them to pay off credit cards/tradelines.

Charles

[californiagrape]

Which lender is allowing the cash out option?
Flag Star is the most aggressive wholesale lender for FHA Secure, i know but i have not heard that yet.. i did email my AE to see.. thanks for the heads up.