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The FHA department has decided to expand FHASecure as follows:

To include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than two 30-day or one 60-day late payment in the 12 months prior to the rate reset or extenuating circumstance that caused the delinquency; or

To include borrowers delinquent on their non-FHA ARMs due to a rate reset or the occurrence of an extenuating circumstance but experienced no more than one 90-day late payment or no more than three 30-day late payments prior to the rate reset or extenuating circumstance that caused the delinquency provided the loan-to-value on the FHA insured first mortgages does not exceed 90 percent.

Borrowers delinquent on their interest-only and/or payment option ARMs are not eligible for this expansion: borrowers with these types of mortgages must demonstrate that a rate reset caused the delinquency and that they were making the monthly mortgage payments within the month due during the 6 months prior to the rate reset. 

Please see the current mortgage insurance premiums as listed as these have changed.

FHASecure Eligibility Criteria

All conventional-to-FHA rate and term refinances are considered FHASecure, regardless of whether the borrower is delinquent or current.  Cash-out refinance transactions are not acceptable under this initiative as borrowers must fit the normal Cash Out guidelines.  The following items are the eligibility criteria for originating mortgages under FHASecure.

Borrowers Current on Their Mortgages

• The mortgage being refinanced must be a non-FHA fixed rate or adjustable rate mortgage.
• Lender must verify the borrower’s mortgage payment history through the current mortgage servicer or through cancelled checks (front and back) to determine if it is acceptable under FHA’s standard underwriting guidelines.
• If there is insufficient equity in the home, FHA will insure first mortgages where there is a:

1)      Write Down.  The existing note holder(s) writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage (a short pay-off); or

2)      New Subordinate Financing.  The FHA-approved lender making the new mortgage, the existing note holder or other interested party may take back a second lien by the amount which the payoff is short, including closing costs, arrearages, other reasonable and customary costs that are standard servicing practices and are included in all payoff statements or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits; and/or

3)     Re-subordination/Modification.  The note holder(s) of existing subordinate financing must re-subordinate or modify the existing subordinate lien(s) and re-execute at closing if the lien is to remain in effect after closing; and/or

4)      Other options.  State/local programs or “Rescue Funds” administered by nonprofit organizations.

• Mortgagees must determine that the borrower has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage as well as pay other recurring obligations.  

Borrowers Delinquent on Their Mortgages

• The mortgage being refinanced must be a non-FHA adjustable rate mortgage.
• When refinancing a delinquent mortgage where the delinquency was caused by a rate reset (In the case of payment option ARMs, the ultimate 'reset' or 'recasting' of the loan to fully amortizing is an acceptable cause of default to qualify a borrower for FHASecure) or the occurrence of an extenuating circumstances the borrower’s payment history must show that:

1.      The borrower was making the monthly mortgage payments within the month due during the 6 months prior to the rate reset or extenuating circumstance; OR

2.      In the 12 months prior to the rate reset or extenuating circumstance the borrower’s payment history shows no more than one 60-day late payment or two 30-day late payments.  Borrowers with less than a full 12 months payment history (i.e., 7-11 months payment history) must show that they have made their monthly mortgage payments within the month due during the 6 months prior to the rate reset or occurrence of the extenuating circumstance; OR

3.      If the borrower is unable to meet the payment history requirements specified above, the lender may still proceed with the refinance transaction provided that the loan-to-value ratio on the new FHA-insured mortgage does not exceed 90 percent and the borrower has no more than one 90-day late or no more than three 30-day late payments over the 12 month period prior to the rate reset or extenuating circumstances .

• Mortgagees must determine that the rate reset or extenuating circumstances that caused the delinquency does not affect the borrower’s overall capacity to repay the new FHA-insured mortgage.
• Borrowers delinquent on their interest only and/or payment option ARMs must demonstrate that the delinquency was caused by a rate reset and that they were making their monthly mortgage payments within the month due during the 6 months prior to the rate reset.
• If there is insufficient equity in the home, FHA will insure first mortgages where there is a:

1)      Write Down.  The existing note holder(s) writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage (a short pay-off); or

2)      New Subordinate Financing.  The FHA-approved lender making the new mortgage, the existing note holder or other interested party may take back a second lien by the amount which the payoff is short, including closing costs, arrearages, other reasonable and customary costs that are standard servicing practices and are included in all payoff statements or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits; and/or

3)      Re-subordination/Modification.  The note holder(s) of existing subordinate financing must re-subordinate or modify the existing subordinate lien(s) and re-execute at closing if the lien is to remain in effect after closing; and/or

4)      Other options.  State/local programs or “Rescue Funds” administered by nonprofit organizations.

• Mortgagees must determine that the borrower has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage as well as pay other recurring obligations.
• In most of the FHA insurance programs, there is an Up-Front Mortgage Insurance Premium (UFMIP) and an Annual premium. For borrowers refinancing delinquent non-FHA loans the and Non- Delinquent loans please see the current MIP Premium Schedules.