About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

Kathy M. Kristof, a Los Angeles Times Staff Writer recently wrote the following:

The Federal Housing Administration is coming to the rescue of at least some of the homeowners in peril across the country. The FHA, which has long helped low-income and credit-scarred borrowers get financing, has launched FHA Secure in an effort to stem the tide of foreclosures caused by the sub-prime mortgage crisis.

How will FHA Secure work and who might it help? Here are some answers.

What is FHA Secure?

It’s a new loan program aimed at helping borrowers refinance their adjustable-rate mortgages — even if they are currently in default. The Bush administration believes that some sub-prime borrowers didn’t understand the terms of their loans and have fallen or will fall into repayment trouble when their adjustable interest rates reset at higher levels.

FHA Secure loans will be made by private lenders at market interest rates and simply be insured by the FHA. What will be different is that underwriting standards will be loosened, allowing more borrowers to qualify. The FHA insurance premiums — usually the same for all loans — will be based on risk, declining for those with more equity and better credit.

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