The focus of this article will be the FHA SECURE PROGRAM. To simply put it, FHA Secure is a refinance option for home owners that currently have a subprime loan or any other non FHA loan. One of the benefits of this program is whether you are current or delinquent on your current mortgage, you could still qualify for this FHA Secure Loan. That means if you are currently late or have had late payments in the past, then you could still qualify for a low fixed rate mortgage. Now before we go any further lets clarify what is considered a late payment in the mortgage industry when qualifying for a new loan.
Here it is - the mortgage industry does not consider you ‘late’ until your payment is 30 days past due. So that means that if you make a payment on the 25th of the month when it's due on the 1st, you are not “late" as far as a mortgage approval is concerned!
Of course, your current mortgage lender will consider you late (typically after a 15 day ‘grace period") and assess applicable fees. But the lender will not report you to the credit agencies until you are 30 days late. So it won't affect your credit!
Now in April of 2008, the FHA Secure loan program was expanded to provide assistance to the following:
- Borrowers with an adjustable rate mortgage who were late on 3 consecutive months or 3 different times within the last 12 months. FHA will allow up to a 90% Loan-to-Value for these homeowners to refinance.
- Borrowers that have an adjustable rate mortgage who were late on 2 consecutive months or 2 different times over the course of the last 12 months can qualify for a refinance loan of up to 97% Loan to Value.
- Now borrowers have to be able to document sufficient income to qualify for the new FHA Loan.
It is not uncommon in today's market for the lenders to voluntarily reduce the amount owed on sub prime mortgages to allow the refinance at 97 or 90% Loan to Value, but of course on a case by case basis.
The FHA Secure Loan Program has also encouraged lenders to be more flexible and allow subordinate financing (second Mortgage) to make up for the difference between the current loan balance and the new FHA loan.
Now homeowners in Fort Lauderdale and Miami that have adjustable rate mortgages that have recently adjusted and have caused financial burden or even foreclosure are finding relief in this FHA Secure Loan Program.
This FHA Secure Loan Program will ignore the foreclosure under the following circumstances:
- If all the homeowner's payments were on time before the rate adjusted and they are now in foreclosure because they cannot afford the new payment, then the foreclosure will be ignored.
This program is not for everyone, but if your situation sounds like the one above you can get into a low fixed rate FHA loan. If not there are still options such as a short refinance or loan modification if you want to keep your home even if you are upside down. If you want to sell then a short sale may be the answer. Either way if you work with a qualified loss mitigation expert, that can help you navigate the process and determine which option will be the one for your particular needs.
Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in mortgage loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Commercial Mortgages. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://www.specializedfinancialsolutions.com/foreclosure.htm or Call 954-678-5796