The Bush administration will not continue the FHASecure mortgage refinance program for delinquent borrowers beyond 2008, but homeowners who are behind on their mortgage payments may still be eligible to refinance through the recently expanded FHA HOPE for Homeowners program.
In a letter to lenders, Federal Housing Commissioner Brian Montgomery said continuing FHASecure beyond the planned Dec. 31 termination date would have led to losses for the FHA mortgage insurance fund. The losses would have required either substantial across-the-board single family program premium increases, or suspending FHA’s single-family insurance programs altogether, Montgomery said.
Any FHASecure loans for which the lender has requested a case number and taken a loan application before Wednesday may still be processed, the letter said.
Created in August 2007, FHASecure helped about 400,000 homeowners with adjustable-rate mortgages refinance into more affordable government-backed fixed-rate loans. For borrowers who are current on their existing mortgages, FHA will continue to offer its standard rate-and-term refinance program, as well as cash-out and streamlined refinance products.
Delinquent borrowers will now be referred to the HOPE for Homeowners program, which kicked off Oct. 1 and is scheduled to run until Sept. 30, 2011.
The Department of Housing and Urban Development on Nov. 19 announced it was expanding the HOPE for Homeowners program guidelines so that more borrowers would be eligible. The program can now guarantee refinance loans of up to 96.5 percent loan-to-value ratios when mortgage payments represent no more than 31 percent of borrower’s monthly gross income and 43 percent of household debt.
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