The Department of Housing and Urban Development released details on enhancements to FHASecure.
Borrowers who became delinquent on their conventional adjustable-rate mortgages as a result of a rate reset or other extenuating circumstances can qualify for FHASecure if they have no more than two 30-day late payments or one 60-day late payment on their mortgage during the prior 12 months, according to Mortgagee Letter 2008-13 issued last week. In addition, they must have made on-time payments for the six payments prior to the reset.
The maximum loan-to-value is 98.75 percent on properties where the appraised value doesn't exceed $50,000. Properties with values above $50,000 are limited to maximum LTVs of between 97.15 percent and 97.75 percent, depending on local closing costs.
Conventional ARM borrowers with a 90-day delinquency can qualify for up to 90 percent LTV. Thirty-day delinquencies are limited to three.
Interest-only borrowers would need to prove a rate reset caused their delinquency and that they had paid the six payments prior to the reset on time.
The up-front mortgage insurance premium for refinances of delinquent ARMs is 2.25 percent. If the LTV exceeds 95 percent, then the annual premium is 0.55 percent.
FHASecure programs, which include all refinances of current and delinquent conventional loans, exclude loans with cashout. If the balance exceeds the maximum FHA loan amount based on the property's value, the existing lender can either write-down the difference or carry a second mortgage for the difference. The difference can also be paid by a nonprofit organization.
Arrearages that arose after the reset or extenuating occurrence, as well as closing costs, can be added to the loan amount.
The maximum payment-to-income ratio 31, and the maximum debt-to-income ratio is 43 percent, though these can be exceeded with compensating factors except on borrowers who exceed 1x60 or 2x30 on the mortgages.
The updated FHASecure terms are effective on loans with case numbers assigned on or after July 14.
HUD also clarified that its 95 percent LTV cashout program, which is quite popular, is unavailable for delinquent borrowers or those who haven't owned the property for at least 12 months.