Preventing Foreclosure

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FHASecure Refinance Options

October 19, 2008Options to Foreclosing, Refinancing

FHASecure is an option for homeowners with non-FHA mortgages to refinance into a FHA-insured mortgage providing a 30-year term with a fixed interest rate, no balloon payment and no prepayment penalty.  FHASecure can assist homeowners who have missed up to three monthly mortgage payments over the previous 12 months or who have experienced temporary economic hardship as well as those who were affected by payment shock.

Homeowners who are current on their mortgage payments can qualify for this Federal Housing Administration program if they have sufficient income to make the payments on the new loan, generally translated to a cap of 41% on their debt-to-income ratio.

If the homeowner is delinquent, to qualify for FHASecure, the default must have been due to the payment shock of an interest rate reset (rate adjustment on an ARM) or the “recasting” of an Option ARM mortgage to fully amortizing.

How to Participate

Homeowners may contact a FHA approved lender directly, whether that be their existing lender or a new lender, to discuss if they qualify for FHASecure.  Homeowners may also have their foreclosure prevention counselor work on their behalf with the lender to determine if this is an appropriate solution for avoiding foreclosure.

Eligibility and Qualifications

  1. Homeowners with current or delinquent non-FHA adjustable rate mortgages
  2. Homeowners in default must show delinquency was caused by increased interest rates and the resulting higher mortgage payments
  3. Any type of conventional loan is eligible for FHASecure refinancing
  4. Must demonstrate dependable income
  5. Have a debt-to-income ratio below 41%
  6. Show a reliable payment history on other debts
  7. Homeowners must have a credit score appropriate for any home loan

Already in foreclosure?

Homeowners already in foreclosure may be eligible and benefit from FHASecure, but the details of each situation must be evaluated on a case-by-case basis by the lender and the FHA. Homeowners facing foreclosure are strongly encouraged to talk with their lenders or consult and obtain assistance from a foreclosure prevention specialist.

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