FHASecure Presented by: US Department of Housing and Urban Development (HUD)

Transcription

1 FHASecure Presented by: US Department of Housing and Urban Development (HUD) Last Revision: 10/30/07

2 General Assist borrowers currently in a conventional loan Delinquent Result of the ARM reset Must meet all eligibility criteria for FHASecure Combined loans may exceed CLTV and maximum mortgage limits Not Delinquent Combined loans may exceed CLTV and maximum mortgage limits Must meet regular No-Cash-Out (NCO) refinance criteria 2

3 General (cont d) Program available until December 31, 2008 (Mortgagee Letter ) Any FHA lender can originate May be refinanced to an ARM loan (one-year or hybrid) A second mortgage may be taken at the time of closing for the amount not eligible for inclusion in the FHA insured first mortgage. FAQs can be accessed at 3

4 BENEFITS Helps borrowers stay in their homes and preserves communities Could assist nearly 80,000 additional borrowers Permits an opportunity for borrowers to refinance into a prime-rate FHA insured mortgage Help lenders avoid foreclosure expenses No CLTV limit or seasoning requirement for purchase money seconds 4

5 Single-Family (1-4 units) Eligibility Owner-occupied, principal residence Must meet FHA underwriting criteria for new loan Current FHA geographical maximum mortgage limits apply (for FHA-insured first mortgage) Current FHA maximum loan-to-value limits apply May cover existing first lien, purchase money second, closing costs, prepaid expenses, discount points, late charges, arrearages, foreclosure expenses, and other costs 5

6 Eligibility - Delinquent Conventional ARM that has reset Must be currently delinquent Delinquency resulted from reset The previous consecutive 6 months of payments, prior to the reset, was made within the month due Must have sufficient equity in home OR Lender can take a 2 nd mortgage for amount not included in FHA-insured first mortgage OR Current lender agrees to write off the amount not eligible for inclusion in FHA-insured mortgage. 6

7 Eligibility Not Delinquent All conventional to FHA No-Cash-Out refinance loans (also called Rate and Term) CLTV not a consideration (LTV or maximum mortgage limits) No seasoning requirements (2 nd liens do not have to be seasoned for one year, and additional mortgage calculation is not required) 2 nd liens may be subordinated without consideration of CLTV Delinquent/derogatory debts resulting from the borrower choosing to pay the mortgage instead of other obligations is an underwriting consideration 7

8 Underwriting FHASecure does NOT modify or waive FHA underwriting guidelines and requirements Basic eligibility (owner-occupancy, SSN, CAIVRS, LDP, GSA, etc.) Willingness: Credit history analysis, including explanations and/or documentation EXAMPLE: A borrower has insufficient income to pay the increased mortgage amount after the reset, along with other debts. They chose to pay the mortgage, resulting in other debts becoming delinquent. If the derogatory items can be documented as resulting from the reset, that should not inhibit an approval of a regular NCO refinance. 8

9 Underwriting (cont d) Income/Employment Ability best indicated by ratios (if exceeded, may use valid and sufficient compensating factors) Stability two years employment history and expectation income level will continue for first 3 years of the loan Note: If 2 nd mortgage payments are required within first 36 months, must include in ratios. Assets (if required for closing) The lender must specify in the Remarks section of the HUD WS how they determined that the reset resulted in the delinquency 9

10 Underwriting (Cont.d) Lenders may use TOTAL Scorecard, but are reminded that manual underwriting is required if a Refer result is received Documentation Standard FHA refinance loan documentation Evidence of the ARM reset (Delinquent and, as applicable, Not Delinquent loans) Payment history showing that, prior to reset, the borrower made the previous 6 months of mortgage payments within the month due (Delinquent loans only) 10

11 Lender Responsibilities Encourage borrowers to seek advice on tax consequences of debt write-off Ensure accurate property valuations in declining markets Refrain from soliciting homeowners to cease making mortgage payments in order to qualify for FHASecure 11

12 Contact Information FHA Resource Center CALL FHA ( ) HUD-Approved Housing Counseling Agencies HUD s Loss Mitigation Center Lender Approval and Recertification Division FHALender@hud.gov Voice Mail: HUD Web Site 12

13 Thank You! 13