Under the new FHASecure plan, homebuyers whose loans are now in default will be eligible for refinancing as long as they had otherwise good credit histories and had been making timely mortgage payments before the interest rates on their adjustable-rate loans increased. Even borrowers with several months of missed payments may qualify for loans, as long as their delinquencies are caused solely by interest rates which have or will increase between June 2005 and December 2009.
To qualify for FHASecure loans, homeowners must also:
- Offer three percent of the loan value in cash or homeowner equity;
- Have a sustained history of employment; and
- Prove sufficient income to make the mortgage payment.
Beginning January 1, 2008, FHA will also implement a new risk-based pricing plan for mandatory FHA insurance. Under the new plan, high-risk borrowers will pay higher premiums. FHA hopes the risk-based pricing plan will allow more new homeowners to qualify.
"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 in a press release. "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."
