Nov 21 2007
FHASecure
FHASecure is a refinancing option that gives credit-worthy homeowners, who were making timely mortgage payments before their adjustable rate loans reset but are now in default, a second chance with an FHA insured loan.
This program is one of the responses that the government came up with for our huge national foreclosure problem. On the surface it sounds very good but in reality we are having a difficult time getting any done. There are parts of the program that sound great in theory but the reality is very different………..maybe?
What do I mean by maybe? For those of you who don’t know I work as a loan officer and a manager for Universal Lending. Universal Lending is an FHA lender and we are approved for the FHASecure loan product. We also have some of the best make sense underwriters in the industry that do make the effort to get loans approved. Why the commercial? Because we have been working under the assumption that you could not get an FHASecure loan unless you were currently in default. We did not come up with that on our own since that is stupid, we got that from our local FHA support office. It seems counter to what people do, they let everything else go late before they let their mortgage go late.
Imagine our surprise when a client from Green Valley Ranch pointed us to the FHA website that states very clearly in their FAQ section that you do not need to be late at all, that “they encourage you to refinance before there is a problem”…………..Huh??? Be aware that we don’t just make up the rules, FHA sends them to us.
So what now? We are checking with FHA again. Thank you for the heads up Green Valley Rancher. We hope you are right, it seems obvious but you never know when it comes to the government.
Part two of the FHASecure problem is that they say they will allow you to short pay on the current loan and let you re-subordinate the short fall on the new loan. In other words, if your house is worth $90,000 and you owe $100,000 they will let you refinance $90,000 if the initial lender will accept a short pay and/or agree to put a second for $10,000 on the new loan. Sounds great but we can not find any lenders who will re-subordinate or finance the second. You may have a chance if your current servicing company is an FHASecure approved lender.
We were wrong once………maybe, so if you have any input please comment on this email, it can make a difference.
I have just found out another interesting, not so good, twist on this program. The investors that we use, and everyone else uses by the way, are adding a hit to the rate on this program. Anywhere from 0 - 2.5 points. The investor charging 0 is probably short lived when they see that thier competition is getting 1.5 - 2.5 points more than they are. To give you an idea, to cover the points in the rate my rate would go from 6% to 7% if I had to cover 2.5 points.