What is FHASecure?
The news outlets have been abuzz since Friday’s announcement by the president about a new program called FHASecure. So just what is this product that is supposed to save Americans from the sub-prime fiasco?
FHASecure is a new refinance option that is being offered to borrowers who have a good credit history and were making on-time payments before their adjustable-rate mortgages reset. The program has stringent underwriting guidelines and borrowers will have to pay a mortgage insurance premium, which are both safeguards for the borrower, lender, and taxpayers. More obvious benefits to the program include the FHA’s trusted foreclosure prevention assistance and the absence of prepayment penalties.
According to a statement released by HUD, homeowners must meet the following five criteria to be eligible for FHASecure:
- A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset;
- Interest rates must have or will reset between June 2005 and December 2009;
- Three percent cash or equity in the home;
- A sustained history of employment; and
- Sufficient income to make the mortgage payment.
In addition to the introduction of FHASecure, it was also announced that risk-based premiums will be implemented beginning on January 1, 2008.
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