Subject: President Bush, HUD, announce FHA Secure program and risk-based pricing initiative
Date: Fri, 31 Aug 2007 13:25:34 -0400
From: <VVidal@mortgagebankers.org>

To:  Loan Administration Committee and In-house Servicing Counsels
From: Vicki Vidal, Senior Director, MBA
Date: August 31, 2007
Re: President Bush, HUD, announce FHA Secure program and risk-based pricing initiative

Today, President Bush announced a new Federal Housing Administration "FHA Secure" program that will allow borrowers who are in default as a result of a reset in their existing loan to qualify for refinancing. To qualify for the new program, which is effective immediately, eligible homeowners must meet the following five criteria:

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

In addition, to avoid an across the board increase in premiums to remain financially solvent next year and to improve the Agency's overall risk management, FHA plans to implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay.  Although details of the new pricing program are not yet available (we hear it will be published in the Federal Register the second week of Sept), the Agency plans to implement the new risk-based pricing structure on January 1, 2008.

We should have more details about these programs soon. As such, To see HUD's press release regarding this announcement, go to: http://www.hud.gov/news/release.cfm?content=pr07-123.cfm

A copy of MBA's press release regarding this announcement is below.
Have a safe and enjoyable Labor Day weekend!
 
 
Vicki Vidal
Senior Director, Government Affairs
Mortgage Bankers Association
1919 Pennsylvania Avenue, NW
Washington, DC 20006
(202)557-2861 (direct)
(202)721-0251 (fax)
vvidal@mortgagebankers.org 

News Release
 
CONTACT:       John Mechem             
(202) 557-2924
jmechem@mortgagebankers.org

MBA Chairman Robbins' Statement on President Bush's Proposals to Help Homeowners Avoid Foreclosure

WASHINGTON, DC (August 31, 2007) - John M. Robbins, CMB, Chairman of the Mortgage Bankers Association (MBA) today issued the following statement in response to President Bush's proposals to help homeowners facing difficulty making their mortgage payments.

"The President's attention to turmoil in the mortgage markets and to the plight of homeowners facing foreclosure will encourage Congress to take the needed steps to reform FHA and help keep borrowers who face difficulties making their mortgage payments in their homes.  Many of the proposals President Bush rolled out today are ones for which we have long advocated, even before the recent troubles in the subprime mortgage market.
 
It is essential that the Federal Housing Administration have the tools and flexibility to adjust its products and programs to meet the evolving needs of borrowers.  In addition to its vital function helping low and moderate income Americans buy their homes, FHA can play a crucial role in helping stranded borrowers keep their homes.   We support FHA modernization and have been partners with FHA in urging Congress to pass reforms since the Administration transmitted its bill to Congress in the spring of 2006.
 
Making the mortgage process simpler and more transparent is a critical part of helping future homeowners avoid the problems we are seeing today.  And we look forward to working with the Administration to achieve that goal.  Borrowers are smart and when presented with clear, concise information, they will make good decisions.  That is why we need to make the process simpler and easier so every borrower understands exactly what they are signing up for when they sign their mortgage on the dotted line.
 
MBA and mortgage banking industry stands ready roll up its sleeves and get to work with all stakeholders to help stem the tide of rising foreclosures.  Every foreclosure is a tragedy.  For the homeowner, for the lender and for the community." 
 
Subject: FHA to implement new "FHASecure" refinancing product,
Date: Fri, 31 Aug 2007 17:31:30 -0400
From: "Mayer, Jerrold H" <jerrold.h.mayer@HUD.GOV>
To: <HOMEOWNERSHIP-L@hudlist.hud.gov>
Reply-To: "Mayer, Jerrold H" <jerrold.h.mayer@HUD.GOV>

All-

BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMES
FHA to implement new "FHASecure" refinancing product

President George W. Bush today (08/31/07) announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing...

To read the entire press release, please visit: http://www.hud.gov/news/release.cfm?content=pr07-123.cfm

LENDERS PLEASE NOTE: FHA WILL PUBLISH A NEW MORTGAGEE LETTER WITH GUIDANCE ON THE NEW FHASecure PROGRAM ON OR ABOUT TUESDAY SEPTEMBER 4th, 2007 at: http://www.hud.gov/offices/hsg/mltrmenu.cfm

AND

FHASecure Initiative information for HUD Housing Counseling Agencies:

The Federal Housing Administration (FHA) is pleased to announce a new initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently "reset." 

Under FHASecure, borrowers that are delinquent on their mortgages as a result of interest rate resets will now be able to refinance using an FHA-insured mortgage.  In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. Before today, only borrowers who were current on their existing loan were allowed to re-finance into an FHA-insured mortgage. 

Highlights of the FHASecure Initiative:

1. The mortgage being refinanced must be a non-FHA ARM that has reset.

2. The mortgagor's payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.

3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.

4. Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing. 

5. Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor's inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

Additional Information about the FHASecure Initiative:

What May be Included in the FHASecure Mortgage Amount: FHA will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges.  FHA will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.

Subordinate Financing under the FHASecure Initiative: If the new maximum FHA loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the FHASecure first mortgage and any subordinate lien may exceed the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios.

Educate Borrowers Regarding FHASecure: The FHASecure initiative will take effect almost immediately through administrative action.  Counselors should understand this new opportunity and knowledgeably present it as a viable alternative for delinquent borrowers struggling to pay higher interest rates.  HUD will soon publish a Mortgagee Letter providing additional and more detailed information regarding the new initiative.

####

Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, OH  and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 425 employees.  Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.