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:
- The lender can take a 2nd mortgage for the amount not included in
the FHA insured first mortgage.
- 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
