The FHA has expanded guidelines for FHA Secure and opened this product up to more borrowers. These guidelines go into effect on July 14th, 2008. Please remember that the FHA Secure is a temporary program to assist the housing market through its current crisis.
Let’s take a closer look at the four primary changes to the FHA Secure program.
The FHA Secure…
- Includes borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than two 30-day or one 60-day late payment in the 12 months prior to the rate reset or extenuating circumstance that caused the delinquency; or
- Includes borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than one 90-day late payment or no more than three 30-day late payments prior to the rate reset or extenuating circumstance that caused the delinquency provided the loan-to-value on the FHA insured first mortgages does not exceed 90 percent.
- Borrowers delinquent on their interest-only and/or payment option ARMs are not eligible for this expansion: borrowers with these types of mortgages must demonstrate that a rate reset caused the delinquency and that they were making the monthly mortgage payments within the month due during the six months prior to the rate reset.
- For borrowers refinancing delinquent non-FHA ARMs the up-front mortgage insurance premium (UFMIP) is set at 2.25 percent of the base loan amount (loan amount excluding UFMIP) regardless of the loan-to-value (LTV) ratio. For LTV ratios greater than 95 percent (excluding UFMIP) the annual premium (collected monthly) is set at .55 percent.