President George W. Bush today announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.
In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay-i.e., riskier borrowers pay more. This common-sense, risk-based pricing structure will begin on January 1, 2008.
"Many hard-working American families who were able to make their mortgage payments under the initial teaser terms of the exotic loan are now struggling to make ends meet because their rates have doubled or tripled," said HUD Secretary Alphonso Jackson. "FHASecure will bring stability to the housing market and give eligible families who were in good financial standing before their loans reset a chance to keep their homes."
The combination of FHASecure and risk-based premium pricing will permit FHA to return to the role it was originally designed to play, bringing stability to the real estate market by helping break today's cycle of foreclosures and price depreciation and creating much needed liquidity in the now-constricted mortgage market.
FHA has recently experienced a substantial increase in the number of conventional borrowers refinancing into FHA products. With FHASecure, it can help even more. The number of these refinancing transactions has tripled since the start of 2006. FHA's transactions are projected to surpass 100,000 loans by the end of the fiscal year. To date, these figures do not include refinances for delinquent borrowers.
The FHASecure initiative will operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer.
The risk-based insurance premium structure will further expand FHA's reach to additional underserved borrowers, particularly minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages, and enhance the FHA's overall risk management. The move to risk-based premiums ensures that FHA remains on solid financial footing as a self-financed agency for the long-term.
FHASecure, like all FHA products, will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.
Under FHASecure, borrowers that are delinquent on their mortgages as a result of interest rate resets will now be able to refinance using an FHA-insured mortgage. In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. Before today, only borrowers who were current on their existing loan were allowed to re-finance into an FHA-insured mortgage.
1. The mortgage being refinanced must be a non-FHA ARM that has reset.
2. The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.
3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.
4. Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing.
5. Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.
What May be Included in the FHASecure Mortgage Amount: FHA will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. FHA will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHASecure Initiative: If the new maximum FHA loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the FHASecure first mortgage and any subordinate lien may exceed the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios.
Educate Borrowers Regarding FHASecure: The FHASecure initiative will take effect almost immediately through administrative action. Counselors should understand this new opportunity and knowledgeably present it as a viable alternative for delinquent borrowers struggling to pay higher interest rates. HUD will soon publish a Mortgagee Letter providing additional and more detailed information regarding the new initiative.
AND
Beginning September 4, 2007, FHA-approved lending institutions may begin submitting upfront mortgage insurance premium (MIP) payments using https://www.pay.gov Payments may be submitted directly to HUD online via the FHA Connection or through CPU to CPU batch file transmissions. Between September 4 and September 28, 2007, lenders may submit upfront MIP payments using either the new Pay.gov process or the current Mellon Bank or PNC Bank process. September 28, 2007 is the last business day that HUD will accept payments made through Mellon Bank or PNC Bank. See Mortgagee Letter 2007-10.
For more information on submitting payments using Pay.gov, see Pay.gov Implementation Information, located on HUD’s Homes & Communities website at: http://www.hud.gov/offices/hsg/comp/premiums/sfpaygov.cfm
HUD is also providing a training demonstration on submitting and tracking payments via the FHA Connection that consists of short targeted topics that can be selectively viewed and revisited as often as needed. The “Training Demonstration of the Upfront Mortgage Insurance Premium (MIP) Payment Process on the FHA Connection” is accessible on HUD’s Homes & Communities website at: http://www.hud.gov/offices/hsg/comp/premiums/sfudemo.cfm
"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. "These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth. All FHA borrowers pay mortgage insurance premiums to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer."
FHASecure will also bring much-needed liquidity to the mortgage market. FHA anticipates more lenders will offer FHA-insured loans, pool them, and securitize them with the Government National Mortgage Association (Ginnie Mae), which has the full faith and credit of the U.S. government. This guarantee makes Ginnie Mae's mortgage-backed securities the safest on the market and helps to channel greater capital into the housing market, benefiting U.S. homeowners.
Since its inception in 1934, FHA has helped almost 35 million people become homeowners, making it the largest insurer of mortgages in the world. The 109th Congress introduced the Expanding American Homeownership Act in June 2006 which would enable FHA to be a safe option for more underserved low- and moderate-income and minority families so they can achieve the American Dream of homeownership. Today, President Bush also urged Congress to quickly pass the Administration's FHA modernization proposal to help more families in need.
For more information about FHASecure and other FHA products, please call 1-800-CALL-FHA or visit www.fha.gov or www.hud.gov. For a list of your local homeownership center or a HUD-approved housing counseling center, go to www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
Source: HUD
There are many different ways that banks, lenders and brokers can trick homeowners into giving up their homes.
There is a legal remedy to recover Truth In Lending Act violation fines, void the lenders security interest in the property and collect money damages.
You may be a victim of Predatory Lending Practices...here are many different ways that banks, lenders and brokers can trick homeowners into giving up their homes.
Find out more about how your Broker or Lender may have violated the Truth in Lending Act and other consumer protection laws...Click on this link: http://mortgage-home-loan-bank-fraud.com/report.html
Along with the exceptionally low interest rates of recent years has come an unfortunate companion: bank fraud. The commercial noise of all the competing lenders in the home mortgage loan market often obscures the very real problem of bank fraud. If you've recently taken on a mortgage or are thinking of refinancing your home, it's critical that you are aware of the inherent dangers of borrowing money.
Though bank practices are most prevalent among those with lower incomes, the tactics are extend to all consumers. It's important to educate yourself in order to avoid being taken in inadvertently. Anyone using the right terminology and offering great rates can appear to be a legitimate banking-related business, but beware the many signs of those who are simply looking to defraud you and your family.
Among some of the most common warning signs of bank fraud are the following: excessive fees, severe prepayment penalties, "Yield Spread Premiums," which are kickbacks to brokers, and loan flipping. This is the common practice of repeated refinancing on one home. These transactions garner the broker/lender repeated profits from closing fees and more, but are of no benefit whatsoever to the borrower.
Many consumers with ARM (adjustable rate mortgage) loans are beginning to have the price reset to a higher monthly payment and inevitably, some of the buyers can't handle these higher payments.
The problem with these loans, is that when home values goes down, it takes all options away from the property owner as far as refinancing goes. The borrower has no equity.
In effect, they're locked into a that loan. Adding to the problem is that the real estate market is currently soft and people who are falling behind on their payments are finding it almost impossible to keep their homes.
Most of these ARM loans were given to consumers at the closing table. Where the borrower thought he was getting a 30 year fixed mortgage he was getting an adjustable rate mortgage. When the interest rate increases it is a total surprise and the borrower and he/she cannot afford the higher payment and falls behind. The lender starts to foreclose and the borrower is in trouble and may lose the home.
See FDIC website: http://www.fdic.gov/regulations/laws/rules/6500-1400.html
The Right to Cancel or the Right of Rescission is a right given to borrowers within Regulation Z of the Truth in Lending Act. Sometimes known as a “cooling off period,” the right of rescission gives borrowers of certain types of loans three business days (in some cases three years) to cancel the loan and to receive a full refund on any money they’ve already paid up front. It’s an extremely important right, and one that every borrower should be aware of in advance of signing loan papers. Homeowners may recoup the Right of Rescission at any time if the loan is fraudulent. There is no statute of limitations on fraud. See complete story at: http://right-of-rescission.com/default.aspx
Website: http://mortgage-home-loan-bank-fraud.com