Learn All the Underwriting Guidelines for the FHA Secure Loan
United States of America (Press Release) September 14, 2007 --
More FHA Secure Loan guidelines to help you determine if you qualify.
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, they will insure mortgages that include missed mortgage payments.
4. Under certain conditions explained below, they 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- 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.
What May be Included in the FHA Secure Mortgage Amount: They 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. They will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHA Secure Loan Initiative: If the new maximum 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 first mortgage and any subordinate lien may exceed the applicable 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.
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, they will insure mortgages that include missed mortgage payments.
4. Under certain conditions explained below, they 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- 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.
What May be Included in the FHA Secure Mortgage Amount: They 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. They will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHA Secure Loan Initiative: If the new maximum 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 first mortgage and any subordinate lien may exceed the applicable 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.
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