What is FHASecure And How Will It Help Borrowers?

In hopes to curtail the the increasing problems that have developed within the sub-prime market, the Federal Housing Administration and the Bush Administration have developed a plan that would help a number of families from foreclosure. However, with all the conflicting news stories reported each an every day about the mortgage industry, I thought I would provide those borrowers with a clearer picture of what the FHASecure program is and who it will provide assistance too.

In truth, FHASecure is not a new plan, but a supplemental plan developed to be added onto the original FHA loan program. FHASecure is for those families who got caught up in an adjustable loan with a teaser rate. We have all seen those advertised, the types of loans that begin with a 1 1/2 or 2 1/2% interest rate and then proceed to reset higher until those borrowers rates have jumped to 7 to 9 %. The sad part is most of those families are hard working honest people with good credit that are now looking to lose their homes because they cannot afford their monthly payments. 

How Do I Know If I'm Eligible For An FHASecure Loan?

With the new FHASecure program, there have been some additions to the underwriting guidelines that are still in effect as if a borrower were applying for a standard FHA loan. The new additions are as follows.

• First, you must have a non-FHA adjustable rate mortgage. Fixed rate and interest-only fixed rate mortgages are not eligible. However, if your loan is an interest-only adjustable rate mortgage, you are eligible for this program.  
• FHASecure is designed for borrowers who are delinquent. If you are current with your mortgage payment, you may apply for a standard FHA refinance.
• A history of on-time mortgage payments before the borrowers's teaser rates expired and the loan reset. If you were late within 6 months prior to the reset, you are not eligible for the program.
• Interest rates must have or will reset between June 2005 and December 2009.
• The borrower has 3% cash or equity in the home.
• A sustained history of employment and sufficient income to make the mortgage payment.
• If you have late payments after the reset you are still eligible. There are no limits to the amount of lates, however the amount you can refinance depends on the value of your property. you may have to acquire a second mortgage to help bridge the gap between what is owed and your homes current value.

What Documentation Will Be Needed To Apply For An FHASecure Loan? 

Since the borrower is in fact applying for an FHA loan, standard documentation will be asked for by your lender.

• One full month's worth of paystubs showing year to date earnings.
• Last 2 years W-2's.
• For self-employed borrowers, last 2 years tax returns with all schedules.
• Copies of social security, pension and or retirement award letters.
• Most recent 2 months bank statements for all accounts. Must include all pages.
• Copy of bankruptcy and discharge papers. Copy of divorce decree.
• Copy of Drivers License and Social Security Cards.
• Copy of Homeowners Insurance.

**Update**

As of March 05,2008 the FHA has temporarily raised the maximum loan limits for Sonoma County from $362,000 to $662,500. This change also includes the FHASecure program. What this means for current borrowers is a short term chance to refinance out of your high interest rate adjustable mortgage. As an added bonus, most of the time the FHA interest rate is lower than the standard conforming Fannie Mae or Freddie Mac rate.

In California,to check on your counties current loan limit for both FHA and FHASecure, please click here.

For further questions, please do not hesitate to contact me. If you are interested in reading further about the FHASecure program, you can find more information at FHASecure FAQ.