Mortgage Daily Logo
mortgage news from industry experts

More Details Emerge on FHA Program

More Details Emerge on FHA ProgramMortgagee Letter issued on FHASecure

September 6, 2007

By SAM GARCIA

More details were released about the new FHASecure program.

The U.S. Department of Housing and Urban Development issued Mortgagee Letter 2007-11 outlining the parameters for the new program announced by President Bush last week. Some details were explained in an announcement from HUD last week.

The program allows for maximum loan-to-values of up to 98.75 percent on properties appraised at $50,000 or less, while the maximum is 97.15 percent on properties valued at more than $125,000, according to the letter signed by Federal Housing Commissioner Brian D. Montgomery. Mortgage insurance premiums are not considered in the LTV calculation.

Purchase money second liens, escrow arrearages, closing costs, prepaid expenses, discount points, prepayment penalties and late charges can be included in the refinance, the agency said. Late payments that arose after a payment reset can also be included.

New second liens may be used in high-cost areas as long as the combined LTV doesn’t exceed the previously mentioned maximums, the letter indicated.

If the borrower does not qualify under the TOTAL Mortgage Scorecard, then underwriters need to insure a maximum debt ratio of 43 percent — or provide compensating factors; verify the mortgage payment was not 30 days late during the six months prior to the rate reset; and provide an explanation that the borrower’s inability to make timely payments was due to the reset.

HUD noted it could reject loans where it appears the borrower was convinced by a mortgage company to stop making payments after the reset and pocket the cash until the FHA refinance closes.

The letter said appraisers must analyze and explain whether the property is in a declining market.

“The mortgagee’s responsibility is to properly review the appraisal and determine that the appraised value used to support the mortgage is accurate and adequately supported,” according to HUD. “Lenders are reminded that if the appraiser they selected provides a poor or even fraudulent appraisal that leads the department to insure a mortgage at an inflated amount, the lender is held equally responsible with the appraiser for the violation if the lender knew or should have known.”

Related:

FHA To The Rescue
The U.S. Department of Housing and Urban Development provided more details on President Bush’s plan to help delinquent borrowers.

President Outlines Mortgage Plan
President Bush has proposed a plan to help delinquent borrowers avoid foreclosure.

next story

back to current headlines
 

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION