A lot of people have been asking me if they are, in fact, eligible for a FHA Secure loan. The loan is designed to help people who have fallen behind on their mortgage payments as a result of a recent adjustment in the rate of their adjustable rate mortgage. Here are a few commonly asked questions about the program and what type of home owners qualify. If you are not currently late on your mortgage you are not eligible for FHA Secure; but you may be eligible for another type of FHA loan. HUD thinks that this program will help up to 250,000 home owners; are you one of them?
How many mortgage payments can I miss before I am ineligible for FHA Secure?
There is no limit to the days or number of payments you are late as long as the late payments and delinquency is a result of a reset in the rate and payment of your current adjustable rate mortgage. So you can have one late payment, or four. You can be 30 days late on your payment or 90. As long as the delinquency is a result of an ARM reset. If you are already in the foreclosure process FHA Secure may still be able to help; however, this is dependent on the lender and stage of the foreclosure process. The foreclosure process is lender-specific and as such each case is unique.
What About Before My Adjustable Rate Mortgage Reset?
You must have been current on your mortgage payments for the previous 6 months prior to your loan reset to be eligible for FHA Secure. You also must qualify under traditional FHA underwriting guidelines which typically don’t allow for more than one 30 day late payment of your current mortgage.
What if I have an Interest Only or Option ARM loan?
As long as the loan is an adjustable rate mortgage you may be eligible for FHA Secure. If the loan is a fixed rate loan you are ineligible for the FHA Secure program.
What if I have a Fixed-Rate Mortgage and am Behind on Payments?
At this time the FHA Secure program is only open to those who are behind on mortgage payments as a result of an adjustable rate mortgage resetting to an unaffordable rate and monthly mortgage payment. This may change in the future to include people trapped in high-fixed-rate subprime loans.
What About the Payments I missed?
The mortgage payments missed, along with any associated servicing fees may be included in the new FHA Secure mortgage; permitted there is enough equity in the property to qualify under FHA guidelines. This minimum equity requirement is 3%.
What if My Loan is Bigger than FHA Limits?
Unfortunately if your loan is above the FHA limit for your region you will not be eligible for this product. In California that maximum FHA loan amount is $362,760. It may be increased in the future by President Bush - but there are no guarantees. If your lender is willing to take a smaller second mortgage behind the FHA Secure first you may be able to refinance a large portion of your loan in to an FHA Secure first mortgage and maintain a smaller second mortgage (up to whatever dollar amount you qualify for and your lender approves) to make up for the difference in loan amounts. Talk to your lender first.
What are some of the features of an FHA Secure Loan?
FHA Secure loans have the following features:
- No prepayment penalties
- No low initial teaser rates
- Full documentation of ability to repay the mortgage
- Require mortgage insurance paid by the borrower
- Require taxes and insurance to be paid via an impound account
To learn more about this new program visit the FHASecure FAQ page set up by the Federal Housing Administration.
What if I am Not Sure if I qualify?
If you are unsure if you qualify talk to a FHA-approved lender about your options under FHASecure. You can email or call me as my company is an approved FHA lender licensed to handle all FHA loans, including the FHA Secure program.