FHA BLOG: FHA has announced the "FHA Secure" initiative that is a rate/term refinance program for non-FHA ARM loans.

Written by:
Misty Nixon
NAMP Volunteer Writer

FHA has announced the "FHA Secure" initiative that is a rate/term refinance program for non-FHA ARM loans. The requirements are listed below for easy reading purposes. I'm not sure of any lenders using this program right now but I think they will embrace it in the very near future with all the ARM loans adjusting right now and people not affording their home any longer and loosing them.

- Detailed in ML 2007-11 released 9-5-07
- Allows credit flexibilities for borrowers who became delinquent on their mortgage due solely to an ARM reset
- Non-FHA ARM does not have to have been reset can be in impeding status.
Regular FHA LTV and loan limits apply
- CLTV can exceed the regular LTV limit if the new lender or current lien holder takes back a second lien. Can include closing costs, arrearages, previous secondary financing.
Credit must be pristine for the six months previous to the ARM adjustment.
- No seasoning on second liens.
- Second liens taken out to help pay mortgage payment and not used for property improvement can be refinanced under the FHASecure
- Will allow missed mortgage payments to be rolled into the loan.
Maximum ratios allowed are 31/43.

There will also be some changes to the MCAW aka Mortgage Credit Analysis Worksheet that is FHA's version of the 1008. They will allow six to nine months to phase in its use to give the LOS systems a chance to incorporate it into their programs.

Up until recently, FHA has not been credit score driven. According to Lily Lee, the Deputy Assistant Secretary of FHA, beginning with the new year, FHA will become CREDIT SCORE driven. No mention was made of what the credit score will be but with a few of my lenders I work with they will not consider anything below a 580 even with a DU or LP accept. Very few lenders are still doing the 15-year loan. Webster Bank still does the 15-year and is not credit score driven and SunTrust will do the 15-year but not anything below a 580.

There is some good news for VA loans they will be decreasing the VA Funding Fee which was temporarily increased to 3.35% for non-IRRRL refinance transactions and subsequent-use purchases with less than 5% down (announced in Bulletin 2006-008-GLB), will expire on September 30, 2007. The fee will revert back to 3.3% for those loans that close on or after 10-1-07.

**For FHA Training Classes Visit http://www.FHAtraining.org.

About the Writer. As one of NAMP's volunteer writers, Misty Nixon is currently a NAMP member in good standing. Feel free to email Misty at: misty@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.