Last week we discussed the President’s recent Rose Garden address on the topic of financial problems involving mortgage lending and the prospect of looming foreclosures. Part of the President’s proposals were ways to assist homeowners struggling with sudden mortgage payment increases due to resets in their sub-prime, low initial teaser rate, adjustable rate mortgages. One option for these homeowners would be to refinance their existing sub-prime mortgage into a fixed rate FHA loan program called FHASecure. The following information about this program comes from hud.gov.

“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.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
Interest rates must have or will reset between June 2005 and December 2009;
Three percent cash or equity in the home;
A sustained history of employment; and
Sufficient income to make the mortgage payment.

"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 or to make application for an FHASecure refinance, call a local member of the Mortgage Bankers Association of Middle Georgia. You can find one at mbag.org.

There are also two local counseling service organizations which provide guidance for homeowners facing financial difficulties. Their services are free of cost to the homeowner. You may contact either Home First, formerly known as the Macon Middle Georgia Housing Counseling Center, at 682 Cherry Street, Suite 103, Macon, GA 31201, 478-803-2373, or on the web at homefirstga.org. Or you may contact the Middle Georgia Community Action Agency, at 1112 South Davis Drive, Warner Robins, GA 31093, 478-328-0333, or on the web at mgcaa.org. Their services are available to homeowners in the distribution area of this newspaper and greater.

David Griffin has been financing homes in Macon, Warner Robins and all of Middle Georgia since 1983. He is a two-time past president of the Mortgage Bankers Association of Middle Georgia. For an archive of past articles visit www.davidjgriffin.com. (9/13/07)