FHASecure Program to be Expanded

April 9, 2008 No Comments »

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The Bush Administration announced today that the FHASecure program will be expanded, with plans to refinance 500,000 borrowers into prime-rate FHA-insured mortgages by year-end.

The new criteria will allow borrowers with adjustable-rate mortgages who missed mortgage payments multiple times in the last 12 months gain approval through the loan program.

Borrowers who were late on two consecutive monthly mortgage payments or at two different times within the last year will be eligible to refinance into an FHA loan up to 97 percent loan-to-value.

And those who missed monthly mortgage payments three times during the last 12 months will also be able to utilize the program, although only to a maximum LTV of 90 percent.

But those with outstanding mortgage balances above these limits may also be eligible for the program if their current lenders agree to write down the principal balance.

FHA also encouraged mortgage lenders to make other arrangements, such as subordinate financing (second mortgages) to help move the FHA-insurable portion into the program and off their balance sheets.

The FHA also said it would be simultaneously updating the pricing policy for premiums based on the individual borrower’s credit risk profile.

In related news, White House press secretary Dana Perino told reporters that the Senate’s housing bill will likely be vetoed by President Bush.

Perino noted that the Bush Administration supported modernization of the FHA, reformed oversight of Fannie and Freddie, and expansion of programs like FHASecure and Hope Now.

Since its launch in September of last year, the HUD’s FHASecure product has helped more than 100,000 homeowners refinance their mortgages and avoid foreclosure.

(photo: nicmcphee)

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