Recognizing the imminent financial duress of many American homeowners, in August
2007 Congress took an extraordinary step and created a special loan program for
homeowners with Adjustable Rate Mortgages (ARMs). The FHA Secure loan program targets
homeowners who have consistently demonstrated the ability to pay their mortgage
loan, but at the time of reset, will not be able to do so.
Why was the FHA Secure Loan Program created?
In recent years, the pricing for an ARM was significantly lower than market pricing
for a fixed rate mortgage, due in part by the popular use of low introductory rates.
This resulted in many home buyers being able to afford the initial mortgage payment.
After a specified period of time, the interest rate for the mortgage becomes variable,
and ‘resets’ to a new rate, which typically is tied to a market index. In many cases,
homeowners have been faced with significant increases in their monthly mortgage
payment. A portion of these homeowners can not afford the new, higher payment.
How can FHA Secure help homeowners?
Homeowners who may be threatened by foreclosure can refinance their mortgage using
the new FHA Secure plan. FHA will allow families who had been making timely mortgage
payments before their loans reset-but are now having trouble making their payment,
or may even be in default, to qualify for refinancing.
To be considered for FHA Secure, eligible homeowners must meet the following five
criteria:
- A history of on-time mortgage payments before the borrower's introductory rates
expired and the loan reset
- Interest rates must have or will reset between June 2005 and December 2008
- A minimum of 3% cash or equity in the home
- A sustained history of employment
- Sufficient income to be able to pay the NEW REDUCED LOAN payment
My FHA.org is provided by Sterling National Mortgage, the mortgage subsidiary of
Sterling National Bank, founded in 1929. If you are having trouble making your mortgage
payment, please contact a mortgage professional at Sterling National Mortgage.