refinancing lenders by rickman2



                 Presented by:
US Department of Housing and Urban Development

                 Last Revision: 10/30/07
Assist borrowers currently in a conventional loan
     Result of the ARM reset
     Must meet all eligibility criteria for FHASecure
     Combined loans may exceed CLTV and maximum
     mortgage limits
♦Not Delinquent
     Combined loans may exceed CLTV and maximum
     mortgage limits
     Must meet regular No-Cash-Out (NCO) refinance criteria
               General (cont’d)
♦Program available until December 31, 2008
 (Mortgagee Letter 2007-11)
♦Any FHA lender can originate
♦May be refinanced to an ARM loan (one-year or
♦A second mortgage may be taken at the time of
 closing for the amount not eligible for inclusion in the
 FHA insured first mortgage.
♦FAQs can be accessed at
♦Helps borrowers stay in their homes and preserves
♦Could assist nearly 80,000 additional borrowers
♦Permits an opportunity for borrowers to refinance
 into a prime-rate FHA insured mortgage
♦Help lenders avoid foreclosure expenses
♦No CLTV limit or seasoning requirement for
 purchase money seconds

♦Single-Family (1-4 units)
♦Owner-occupied, principal residence
♦Must meet FHA underwriting criteria for new loan
♦Current FHA geographical maximum mortgage limits
 apply (for FHA-insured first mortgage)
♦Current FHA maximum loan-to-value limits apply
♦May cover existing first lien, purchase money
 second, closing costs, prepaid expenses, discount
 points, late charges, arrearages, foreclosure expenses,
 and other costs
           Eligibility - Delinquent
♦ Conventional ARM that has reset
♦ Must be currently delinquent
♦ Delinquency resulted from reset
♦ The previous consecutive 6 months of payments, prior to the
  reset, was made within the month due
♦ Must have sufficient equity in home
♦ Lender can take a 2nd mortgage for amount not included in
  FHA-insured first mortgage
♦ Current lender agrees to write off the amount not eligible for
  inclusion in FHA-insured mortgage.
           Eligibility – Not Delinquent
♦All conventional to FHA No-Cash-Out
 refinance loans (also called Rate and Term)
  ♦CLTV not a consideration (LTV or maximum
   mortgage limits)
  ♦No seasoning requirements (2nd liens do not have
   to be seasoned for one year, and additional
   mortgage calculation is not required)
  ♦2nd liens may be subordinated without
   consideration of CLTV
  ♦Delinquent/derogatory debts resulting from the
   borrower choosing to pay the mortgage instead of
   other obligations is an underwriting consideration
♦FHASecure does NOT modify or waive FHA underwriting
 guidelines and requirements
    Basic eligibility (owner-occupancy, SSN, CAIVRS, LDP,
    GSA, etc.)
    Willingness: Credit history analysis, including
    explanations and/or documentation
     EXAMPLE: A borrower has insufficient income to pay
       the increased mortgage amount after the reset, along
       with other debts. They chose to pay the mortgage,
       resulting in other debts becoming delinquent. If the
       derogatory items can be documented as resulting
       from the reset, that should not inhibit an approval of a
       regular NCO refinance.
              Underwriting (cont’d)
      • Ability – best indicated by ratios (if exceeded, may
        use valid and sufficient compensating factors)
      • Stability – two years employment history and
        expectation income level will continue for first 3 years
        of the loan
      • Note: If 2nd mortgage payments are required within
        first 36 months, must include in ratios.
    Assets (if required for closing)
♦The lender must specify in the Remarks section of the HUD-
 92900-WS how they determined that the reset resulted in
 the delinquency

            Underwriting (Cont.d)
♦Lenders may use TOTAL Scorecard, but are
 reminded that manual underwriting is required if a
 “Refer” result is received
   ♦Standard FHA refinance loan documentation
   ♦Evidence of the ARM reset (Delinquent and, as
    applicable, Not Delinquent loans)
   ♦Payment history showing that, prior to reset, the
    borrower made the previous 6 months of mortgage
    payments within the month due (Delinquent loans only)

         Lender Responsibilities

♦Encourage borrowers to seek advice on tax
 consequences of debt write-off

♦Ensure accurate property valuations in declining
♦Refrain from soliciting homeowners to cease
 making mortgage payments in order to qualify
 for FHASecure

       Contact Information
                  FHA Resource Center
1-800-CALL FHA (800-225-5342)  
       HUD-Approved Housing Counseling Agencies
               HUD’s Loss Mitigation Center
        Lender Approval and Recertification Division
                Voice Mail: 202-708-3976
                      HUD Web Site
Thank You!


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