Sunday, April 13, 2008

FHA Secure Eligibility Expansion and Insurance Premium Update in the Works.

Timed to coincide with House Financial Services Committee hearings last week, HUD announced a planned expansion of borrowers that can qualify for the FHA Secure refinancing program.

The expansion allows adjustable rate loan borrowers who were late for two consecutive months, or twice late in the last 12 months to qualify for a 97% loan to value FHA refinancing loans. Also ARM borrowers who were late for three consecutive months or three times in the last 12 months may be able to qualify for an FHA refinance loan with a 90% loan to value. In all situations a new FHA appraisal will establish current market values and presumably borrowers will also be required to demonstrate the ability to repay the new monthly housing expense.

A Chicago Tribune story about the expansion is HERE, it says the changes may take two months to put into place. The official HUD/FHA website explanation is HERE, and it provides no timetable that I can see, however the expansion is described as a "plan". The FHA website explanation also says that FHA will also be "..updating the pricing policy for these [FHA mortgage insurance] premiums". This signals FHA continuing intent to move away from uniform to risk based insurance premiums, a move that at least some versions of FHA reform legislation would prohibit or delay.

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