Government Mortgage Relief | FHA Rates, FHA Refinancing & FHA Home Loan News

FHA Mortgage Help

08.26.10

The Federal Housing Administration has been steadfast with regards to FHA mortgage assistance and foreclosure prevention programs. For the last few years, the one loan program that struggling homeowners could turn to was the FHA home loan. With the approval of Congress, both the Bush and Obama Administration have extended financial aid in the form of FHA mortgage relief.

HUD, Fannie Mae and Freddie Mac have come together to create targeted loan relief to borrowers who financial hardships, like a loss of home equity, employment issues and even bad credit. FHA loan requirements have tightened somewhat in the last few years, but there are still significant opportunities for homeowners to receive financial assistance with FHA home refinancing. FHA confirmed a new program, the FHA short refinance and it will go live on September 7^th. This refinance program will actually enable homeowners who are underwater to refinance into a lower mortgage balance. To qualify, homeowners must be current on a non-FHA loan to refinance into an FHA mortgage when their lender agrees to write off at least 10% of their principal.

US Government Continues to Fund FHA Mortgage Relief Programs Listed below are the unique conventional and FHA loan programs created to provide mortgage relief:
	FHA Secure Hope for Homeowners Home Affordable Refinance Program Home Affordable Modification Program Second Mortgage Modification Program FHA Short Refinance

US Government Continues to Fund FHA Mortgage Relief Programs

Today FHA mortgage rates have fallen to record levels. Qualified borrowers can lock a 30-year fixed loan with a rate of 4.125% and the 15-year loan features a rate 3.875%. Don’t miss out on these once in a lifetime home financing opportunities.

FHA Loans Improve Performance

06.23.10

The FHA loan defaults have been rising the last few years and the FHA reserves have dipped to dangerous levels. The FHA refinance loans continue to play a major role in helping borrowers with adjustable rate mortgages convert to a fixed interest rate loan that provides a more affordable monthly payment. A lot of work has been done to improve FHA home loan programs and reduce the FHA foreclosures. The Federal Housing Administration have worked with FHA lenders and it appears they have made the necessary changes in the FHA loan programs to reduce the risky FHA mortgage loans and get back on the path for a healthier financial outlook for this government run mortgage program. Last fall industry analysts had forecasted weak performance for FHA loans in 2010, but the portfolio performance has been much better. The Housing and Urban Development Secretary Shaun Donovan made these comments as the Obama administration renewed their commitment to stabilize the housing market.

Notable Changes to FHA Loan Programs

FHA Streamline Refinance – FHA changed the streamline guidelines to not allow borrowers to refinance lender closing costs. If borrowers want the FHA streamline, they will have to pay for closing costs out of their pocket.
FHA Home Loan – FHA increased the down-payment requirements from 3% to 3.5%.
FHA Cash Out Refinance –FHA reduced the LTV from 95% to 85%, so borrowers who want to receive cash in their refinance must have at least 15% home equity left after the refinance loan.
FHA 203K – Home Improvement Financing has been expanded for home rehabilitation and energy efficient initiatives.

Delinquencies on FHA-backed loans did increase to 12.4% in May from 11.7% in April, but were lower than the13.6% from the previous year. Donovan said, “Overall FHA loan performance is somewhat better than was predicted when the actuarial review was completed” in the fall of 2009.” However, the Home Affordable Modification Program (HAMP), offers incentives to FHA lenders to modify loans for distressed homeowners, has been widely criticized because the results have been so poor. The recent HAMP statistics released Monday show that slightly more than 10% of eligible borrowers received a loan modification that became permanent.

FHA Loans to Offer Principal Reductions?

05.17.10

It is no secret that the FHA loan programs have struggled with loan defaults over the last few years. Later this year there will be more government initiatives rolled out to help prevent foreclosures with possible principal reduction incentives offered to distressed homeowners who lost their home equity. The first plan will reward loan servicers to lower loan balances for delinquent borrowers when that is more advantageous to mortgage investors than reducing interest rates. Principal reduction would be available for eligible borrowers who owe more than 115% of their home’s current value. The balance would be forgiven as long as the homeowner makes timely payments for three years.

The second mortgage relief initiative will allow some homeowners who are not behind on their home loans but have seen their home values drop, to refinance into FHA loans worth no more than 97.75% of their home’s price. This new FHA loan program is set to start in the fall. If the borrower has a second lien, the total mortgage debt could not exceed 115% of the property’s value. Homeowners, however, must meet FHA requirements and have a credit score of at least 500. Their new monthly payments would be no more than 31% of their monthly income.

House Approves New FHA Loan Plan

05.07.10

FHA loan reserves have become a growing concern for the government mortgage program. The FHA reserves were finally addressed by the House Financial Services Committee. Government representatives confronted the challenges of balancing the FHA reserves by revising FHA guidelines so that less borrowers default. FHA continues to play a major role in offering FHA home loans to first time homebuyers. Even as FHA rates have recorded record low, the reserves have fallen to approximately .53% of the value of FHA insured home mortgages, well below the legally mandated level of 2%.

FHA reserves are getting dangerously low agian. In an effort to bolster FHA reserves while minimizing the impact on borrowers of FHA home loans, the Committee approved allowing FHA to raise the annual mortgage insurance premium from its current level of .55%. This move is designed to move some of the cost of mortgage insurance from the up-front mortgage insurance premium (UFMIP) paid at closing to the annual portion of the premium, which is pro-rated monthly and added to monthly mortgage payments.

HUD continues to review new proposals to raise the minimum FHA down payment amount from 3.5% to 5% and eliminating seller contributions to buyer closing costs were defeated by the Committee. According to the FHA Loan Pros, “These FHA mortgage proposals may have been well intentioned toward raising FHA reserves, but have endured hardships for the first time and homeowners who depend on FHA loans” for home buying and lowering interest rates with refinance loans. HUD has made it no secret of their plan for FHA to begin increasing the annual mortgage insurance premiums from their current rate of .55% to 1.5%.

New FHA Loan Modification Plan

08.04.09

In the last two years, FHA introduced several loan modification plans and mortgage relief programs, like FHASecure and Hope for Homeowners and today they announced a third attempt with a new FHA loan modification program. These past FHA home loan modification performed well because they never really got off the ground with the participating FHA mortgage lenders. At press time, FHA mortgage rates remained at record low levels.

Most of you will remember how FHASecure was pushed out by the Bush Administration in an effort to salvage homeowners stuck in an ARM that was about to reset to a higher interest rate. This FHA loan program was intended to enable delinquent borrowers a mortgage refinancing option with low fixed FHA rates. FHA Loan Pros discussed it in a recent article; HUD claims that “FHASecure has helped more than 100,000 borrowers remain in their property, but the reality was only 3,800 delinquent homeowners received specific aid from the FHASecure program in 2008.

Then late last year, FHA announced the lending savior, Hope for Homeowners that was designed to do what FHASecure was not able to accomplish. The press ate it up and FHA was the home financing talk on airwaves for months. Unfortunately as of June 30th for the Hope for Homeowners program could account for 949 mortgage applications but only 1 Hope for Homeowner loan could be documented. FHA remains determined to extend a loan modification to distressed homeowners, so hopefully this new FHA initiative will succeed.

The New FHA Loan Modification Program

o FHA announced their new mortgage relief program to help distressed FHA borrowers.

o The FHA home loan is refinanced and 30% of the FHA mortgage is placed into an interest-free second mortgage that must be paid back when the home is sold or refinanced.

o Borrowers can qualify with ratios of 31/55. The first ratio says that up to 31% of the individual’s monthly income can be used for housing costs and that 55% can be used for housing costs plus other monthly debts.

o The homeowners must be able to document a hardship (ie. an income change, loss of employment etc.) and it must be deemed as a long term hardship.