FHA Secure Plan FAQs

FHASecure Plan FAQs

What is it?

It is called the FHASecure plan. It allows borrowers with strong credithistories to qualify for a refinance when they would otherwise be unable toqualify. For example, homeowners who had been making timely mortgagepayments prior to their loans adjusting, but are having difficulty makingthe current, inflated payments.

In addition, FHA will implement risk-based premiums that match theborrower's credit profile with the insurance premium they pay, i.e., riskierborrowers pay more. This risk-based pricing structure will begin on January1, 2008.

What does it mean to LOs, their clients, and their real estate agentpartners?

What it means for LOs is that they now have an opportunity to increase their income dramatically, by filling their pipelines with refinance loans ofborrowers with ARMs.
For their clients, who are in ARMs, it means an opportunity to get out oftheir "time-bomb" loans and into a stable mortgage. Keep in mind, FHA cannow go up to a 95% LTV on a cash-out refinance and up to 97.75% in mostcases on a rate & term refinance. The FHA originators out there are:capitalizing on this segment of the market, making a lot of money, andmaking their clients happy by delivering a good loan.

For real estate agents, it represents a chance to team up with LOs andmarket FHA to their databases, in order to save their clients with ARMs frompotential foreclosure.

How do I answer questions about it?

Stay tuned for the next release on FHASecure Plan for the answer to thisquestion! FHA will publish the actual underwriting guidelines for the plan shortly. Currently, what we know is this: to qualify for FHASecure, eligiblehomeowners must meet the following five criteria:

1. A history of on-time mortgage payments before the borrower's teaserrates expired and loans reset.

2. Interest rates must have reset, or be scheduled to reset, betweenJune 2005 and December 2009.

3. Three percent cash or equity in the home.

4. A sustained history of employment, and

5. Sufficient income to make the mortgage payment.


Information Courtesy of Scott Criss, CMP
Certified Mortgage Planner, Mortgage 1 Lending
<http://www.scottcriss.com/> http://www.scottcriss.com/