FHA Mortgage Guidelines:  For the Professional

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FHA Secure

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FHA Secure - Rescue Program

There has been so much legislation in the past few month it is difficult to keep it all straight and understand the guidelines and qualifications for each program.  We have tried to sort it all out for you.

This page will cover the FHA Secure program that is sometimes called the FHA Rescue program.  This program will only be available until December 31, 2008 according to Mortgagee Letter 2007-11.

Please do not confuse this program with the Hope for Homeowners (H4H) program. H4H will be available until September 30, 2011 and we have dedicated a separate page just for that program. H4H

FHA Secure Basics

  • Allowed on both delinquent and current
  • Any FHA approved Lender can originate
  • A second mortgage may be taken out at the time of the closing to cover any amount not eligible for the FHA First.
  • Only Adjustable Rate Mortgages are eligible.
  • You can refinance to another ARM
  • No CLTV limit or seasoning requirements for purchase money seconds.

Eligibility

  • Single-family (1 to 4 Units)
  • Owner -occupied, principal residence
  • FHA Geographical max loan limits apply to the FHA secured first mortgage.
  • The new loan must meet FHA underwriting guidelines
  • Current FHA LTV limits apply
  • The new loan may cover existing first lien, purchase money 2nd, closing costs, pre-paids, discount points, late fees, arrearages, and foreclosure costs.

Delinquent Qualifications

  • Non FHA-ARM that has reset
  • Must be currently delinquent
  • Delinquency must have resulted from the ARM reset.
  • The payments made during the 6 months prior to the reset were all made on time on in the month due. 

There must be sufficient equity in your home or:

  1. The lender can take a 2nd mortgage for the amount not included in the FHA insured first mortgage.
  2. The Current lender agrees to right off the amount not eligible for inclusion in the new FHA first mortgage.

Non Delinquent Qualifications

A homeowner who has managed to keep his mortgage up to date may still qualify for this program provided they are facing an ARM reset or have already experienced one.

The new FHA secured mortgage will be underwritten as a regular no-cash-out- refinance with these considerations:

  • The combined loans may exceed the CLTV and maximum mortgage limits.
  • 2nd liens do not have to be seasoned for one year and additional mortgage calculation is not required.
  • 2nd liens may be subordinated without consideration of CLTV
  • Delinquent/derogatory debts resulting from the borrower choosing to pay the mortgage instead of other obligations may be over looked

Underwriting

The FHA secure program does not modify or waive FHA underwriting guidelines.

Basic Qualifications:

Owner-Occupied, SSN, LDP, CAIVRS, GSA, etc.

Credit History Analysis:

Explanations and documentation to show that any delinquent line items were because homeowner decided to pay the mortgage instead.  IF other debts are delinquent due to reset and it is documented, that should not inhibit approval for a NCO refi.

Income and Employment

  • Ratios:  if exceeded may use valid compensating factors
  • Stability:  Two years history with 3 year future expectations at the same level.
  • If 2nd mortgage payments are required within the first 3 years they must be included in the qualifying ratios.

Documentation

  • Standard Refi loan documentation
  • Evidence of ARM reset and delinquency or not as applicable.
  • Payment history prior to reset showing paid within the current months.

Lenders may use TOTAL Scorecard but manual underwriting is required if a "REFER" result is received.

The Lender must also specify in the remarks section of the HUD-92900-WS how they determined that the reset resulted in the delinquency.

Important Contact Information

FHA Resource center:  800 225 5342

hud@custhelp.com

Loss Mitigation Center: 1 888 297 8685

Lender approval and recert:  FHALender@hud.gov

HUD web site:  www.fha.gov

 

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 Copyright 2008 | Kale Enterprise Corp. | Cartersville, Georgia, 30120

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