The FHA Secure Program was announced in August 2007 by President Bush in answer to the increasing housing and financial crisis arising from the increasing number of foreclosures in the U.S. housing market. With this announcement many homeowners got some hope about saving their homes. True as it be, the FHA Secure Program is limited in who it can help.
How Do I Qualify For The FHA Secure Loan Program?
You must be the homeowner, and you must be living in your home. This loan program is not available to real estate investors or for anyone who is looking to purchase a new home.
Your current mortgage is a non-FHA adjustable rate mortgage that is getting ready to adjust or has already adjusted.
Your mortgage history counts. To look at this we need to break this down into several scenarios so we can see who qualifies.
- In the first scenario, your interest rate has adjusted and you are now behind in your payment but before the interest rate adjusted you were paying your mortgage on-time. If you are in this category then the FHA Secure program will not penalize you for your late payments.
- In the next scenario, you have been paying your mortgage on time before your mortgage interest rate adjusted. Then your mortgage interest rate adjusted and your payments went up and you could not keep up and your mortgage payments got behind. In this situation, you won’t be penalized for your delinquent history. This is an important feature of the FHA Secure Program. If you think about it, the plan is designed to help out homeowners who were doing the right thing with their mortgage payment, but got behind when their adjustable rate mortgage interest changed for the worse. This program isn’t designed to help or bailout those homeowners who were not making their payments on time prior to their interest rates adjusting.
- You will not qualify if you had delinquent mortgage history in the prior 24 months before your mortgage interest rate changed.
The FHA Secure Program is not just for homeowners whose mortgage payments are behind. You also qualify for this loan if your mortgage payments are on time and if your mortgage interest rate hasn’t changed. The program is designed to prevent a problem before one can happen. In this case, you can refinance into the FHA Secure Program before your rate changes to be safe.
Your adjustable interest rate has to adjust between June 2005 and December 2009. This doesn’t mean when you got your loan. It means that during this period of time your interest rate has to have already adjusted or will be adjusting in order to qualify.
Can I get an FHA Secure Loan if my home value is less than my mortgage balance?
This is a difficult question to answer as everyone’s situation is different. However, FHA is strict when it comes to the maximum loan to value that it allows. You will only be able to borrow with FHA up to 97% of your home’s value. If your payoff loan balance is more than that, then you only have a few options. One way is to get the new mortgage company to give you a second mortgage for the amount necessary to pay off the first lender’s mortgage. Or you can negotiate with your current lender to take a short payoff and let you out of the loan so that you can refinance. If you are pretty close, they might take the deal.
The last real qualification requirement to be met is that you must be employed and be able to prove your income. FHA is very strict about their income requirements. The do not allow for state income mortgages.
In summary, the FHA Secure Program is a great program for those who fit its guidelines. The program has its limits and will help a limited amount of folks refinance their homes. Unfortunately, as housing values continue to decline as they are in April of 2008, the impact this program will have on easing the foreclosure problem in the U.S. housing market will decrease.
If you are facing foreclosure or an increase in your monthly mortgage payment due to an adjustable rate mortgage here are two other articles to review: Adjustable Rate Mortgage Getting Ready to Adjust - Call NACA and Steps of Foreclosure - Early Steps Prevent Foreclosure.
Article by Dale Stouffer, Mortgage Broker. Dale has a been a mortgage broker since 1996. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
