In Mortgagee Letter 2007-11, the Federal Housing Administration announced FHASecure, a temporary initiative to permit lenders to refinance delinquent adjustable rate mortgages (ARMs) and/or to offer new subordinate financing where the combined loan-to-value ratio exceeds the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. 

The Department has decided to expand FHASecure as follows: To include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than two 30-day or one 60-day late payment in the 12 months prior to the rate reset or extenuating circumstance that caused the delinquency; or to include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than one 90-day late payment or no more than three 30-day late payments prior to the=2 0rate reset or extenuating circumstance that caused the delinquency provided the loan-to-value on the FHA insured first mortgages does not exceed 90 percent.

Borrowers delinquent on their interest-only and/or payment option ARMs are not eligible for this expansion. Borrowers with these types of mortgages must demonstrate that a rate reset caused the delinquency and that they were making the monthly mortgage payments within the month due during the 6 months prior to the rate reset. For borrowers refinancing delinquent non-FHA ARMs the Up-front mortgage insurance premium (UFMIP) is set at 2.25 percent of the base loan amount (loan amount excluding UFMIP) regardless of the loan-to-value (LTV) ratio. For LTV ratios greater than 95 percent (excluding UFMIP) the Annual premium (collected monthly) is set at .55 percent. This mortgagee letter replaces the specific guidance regarding FHASecure issued in Mortgagee Letter 2007-11 and is effective for case numbers assigned on or after July 14, 2008.

Many thanks to our guest author, Mr.Greg Brooks Southwest area manager San Diego Mortgage Network for this enlightening post.   A few our prior popular posts on the FHA were:  

Summary of the “Housing and Economic Recovery Act of 2008

FHA Takes $4.6 BILLION Hit … It’s Just Taxpayer Money

Fed Approves New Rules For Mortgage Loans … Too Little Too Late

A NEW LOOK AT FLIPPING PROPERTIES & FHA

Goverment to Use FHA Bail Out Homeowners

Goverment’s FHASecure Refinances 200,000th Mortgage

FHA Home Mortgage Insurance Claims Skyrocket

FHA Boost Loan Limits to $729,750 For California