Purpose: To help an estimated 240,000 borrowers who were steered into high-cost adjustable rate mortgage (ARM) loans with teaser rates refinance into a safe, affordable FHA mortgage product that will help build wealth.
Sponsor: Federal Housing Administration (HUD)
How it Works: FHA allows families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing. In addition, FHA implements risk-based premiums that match the borrower’s credit profile with the insurance premium they pay-i.e., riskier borrowers pay more.
FHASecure operates under the same safe guidelines as the FHA’s existing mortgage insurance program without affecting FHA’s financial health. Eligible homeowners are required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA’s insurance fund at no cost to the taxpayer.
Status Report. By the time the program ended last year, it helped to refinance the mortgages of nearly half million families, twice as many as initially forecast. FHASecure was so popular several key members of Congress and trade associations petitioned to keep it operating past its December 31, 2008 sunset date. The argued to sunset was too early, and will continue to be substantial numbers of distressed borrowers with insufficient other options to retain their homes. They urged the extension of FHASecure so it could continue without disruption through at least 2009. However, Congress did not pass legislation extending it.
Lifespan: August, 2007 to December 31, 2008.
For More Information: http://portal.hud.gov/portal/page?_pageid=73,1824154&_dad=portal&_schema=PORTAL