The United States Department of Housing and Urban Development reported on August 31, 2007 that President George H. Bush plans to use HUD's Federal Housing Administration (FHA) to help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset − but are now in default − to qualify for refinancing.
In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay; i.e., riskier borrowers pay more. According to HUD, “this common-sense, risk-based pricing structure will begin on January 1, 2008.”
To qualify for FHASecure, eligible homeowners must meet the following five criteria:
- A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
- Interest rates must have or will reset between June 2005 and December 2008;
- Three percent cash or equity in the home;
- A sustained history of employment; and
- Sufficient income to make the mortgage payment.
For more information about FHASecure and other FHA products, please call 1-800-CALL-FHA or visit www.fha.gov or www.hud.gov. For a list of your local homeownership center or a HUD-approved housing counseling center, go to www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.