FHA Secure - Good Idea or Bad?

[River_Brat]

Hello,

First of all, thank you to all who put this website together. You are truly an answered prayer. Thank you!!

My husband and I bought our house in Feb. 2007 utilizing an 80/20 loan. The first mortgage is $310,490 on a 30 year, interest only ARM, currently at 6.25%. The second is approx. $77,000 on a 15 year, 11.25% fixed rate with a balloon payment at the end of the 15 years. Both loans are currently with Ocwen.

We have never been late on either loan. Ever.

According to Zillow, our house is currently valued at roughly $220,000 - not sure how accurate that is, but if it's true, that means we're upside down by more than $160,000.

The area we live in is completely saturated with homes in the various stages of foreclosure, so I expect the property values to continue on the downward spiral for quite some time.

When we bought the house, both my husband and I were making decent money. He was forced to take a nearly 50% pay cut last year and was recently laid off with no severance package. I also work in the construction industry and have been told to expect my company to close in Jan. 2009. I'd receive a small severance package, if anything at all. I've since taken on two more jobs, and I'm working 7 days a week until my husband gets another job.

We impound our taxes and our total mortgage payment is approximately $3000 a month and we are struggling to make ends meet. I've been feeding a family of 5 on less than $400 a month, which is very difficult. We have NO disposable income and often juggle one or two bills at the end of the month.

Our loan is set to reset in March of 09 increasing our payments by $700 a month. That will absolutely kill us.

I've found bits and pieces of information on the FHA Secure loan program and it seems like we would qualify. When I called the hotline, the gentleman told me that it would be up to my lender, but that they won't even begin taking calls until October 1st.

I'd like to see if anyone thinks that this would be the best solution for us or not.

Also, I've gotten conflicting information re: the forfeiture of any proceeds from the sale of the house - does that sunset at the end of 5 years at 50% of the profit going back to the government, or is that a forever and ever deal?

I'm afraid to provide Ocwen with a hardship letter because I don't want them to start toying with my loans needlessly, but don't know if it would be better to give them a "head's up" instead of calling on 10/1/08 to ask to be considered for the FHA Secure program.

When I've called them to inquire about possible options, it says that all refi's are handled through Countrywide. I've heard through the grapevine that's because Ocwen is no longer a lender, they're only servicing loans. If that's the case, would I have the option of going through someone else, or do I have to go through Ocwen's prefered partner, in this case, Countrywide?

Does it help or hurt our case if my husband isn't currently working and is receiving unemployment benefits? I'm afraid if he starts working again they'll say we don't qualify for any kind of help because we'd have "extra" income, but at the same time, I don't want to be denied because he isn't working... If he needs to be working, how long does he need to be employed before we should contact the lender?

What documentation should I be gathering? I'm assuming w-2's for at least 2 years, 2 years of tax returns, bank statements, and pay stubs. Am I forgetting anything?

Thank you in advance for your help and advice, I truly appreciate it and I wish everyone the best as we all struggle through this nasty mess together.

[Cat Damiano]

HI River Brat,


Welcome to the forum and thank you for joining.................

Whoever you spoke to at the lender is confusing two different programs.......

This is the FAQ's for the FHA Secure........and it has been available for a while......

FHA Secure Frequently Asked Questions for Homeowners


Here is the FAQ's for the Housing and Economy Recovery Act which begins on October 1st.

Housing and Economic Recovery Act of 2008 FAQ



For either of these program you would need to search for an FHA approved lender in your area on FHA's website www.fha.gov
and see if you qualify.........

[River_Brat]

Thank you Cat.

So, I would have to seek out an FHA Approved lender and start the process of qualifying for the new program through them and not talk to Ocwen?

If we do qualify, am I going to be hit with the pre-payment penalty on both of the loans?

[Cat Damiano]

If you have a prepayment penalty it would still be there.............this is refinancing your current loan through FHA..........so you could use whichever FHA approved lender you wish...............