subject: The Benefits of Having a FHA Mortgage Rate [print this page] The Benefits of Having a FHA Mortgage Rate
The Federal Housing Administration has recently released a new initiative that would permit troubled homeowners with adjustable mortgage rates that are approaching reset to refinance once the loan has rest or even after the loan has become delinquent in special circumstances. Called The FHASecure Initiative, it would apply to non-FHA ARMs where the homeowner has not had a history of late payments in the six month period prior to actual reset. If the home has sufficient equity, the homeowner would still be able to refinance even if he has become behind in his payments, with some special conditions. The borrower would have to prove that if he receives an FHASecure refinance, he can afford to make the new payments based on his income at the time he makes application.
The new FHA initiative is a temporary measure and applications must be filed prior to December 31, 2008. The FHA Mortgage Rates will make nationwide loans based upon 97.75% of an appraisal estimate. The maximum mortgage that will be provided for a single-family home would vary with the home's geographic location. They are not setting an income limit and individuals with a credit score under 650 will be eligible for the loans. The FHA would then allow the individual to roll over the first lien and second mortgage with which the home was originally financed, along with prepaid expended, closing costs, discounted points late charge and prepayment penalties. It seems likely that FHASecure could save hundreds or even thousands of troubled homeowners from losing their homes.
This initiative, coupled with some concurrent plans from the Congress and multiple state plans could work together to help protect homeowners from living a worst case foreclosure scenario during 2008.
This FHA initiative comes at a time when attendees at the annual Standard & Poors bank conference heard dire predictions that not only the mortgage sector but the entire US economy seems headed for recession. Chase, Goldman Sachs, Merrill Lynch and others are clearly having a bad financial time during this crisis.
The one positive thing that seems to be taking place is the feds and many of the worst-hit states are finally getting around to taking some legislative steps to provide help and prevent many new foreclosures from happening. New York state, for example, is moving to stop greedy mortgage brokers in their tracks by preventing them from tricking buyers into accepting bad loans that they can't afford and forcing them to provide full disclosures about loan terms and conditions. They are also proposing that borrowers have a reciprocal right to attorney's fees and residential leases.
The one thing nobody has even proposed is any way to help the homeowners who have already lost out through foreclosure. The only group that could do that is the federal government but, unfortunately, politics always gets in the way. But at least the feds and the states are finally starting to do more than talk and at least get ready to throw a life preserver to future homeowners about to lose their homes.
