This FHA Secure Loan Program will benefit those homeowners for whatever the refinancing of payments is a major headache. This is done through FHA insured mortgages.
This program was laid down by the President Bush himself. As already mentioned, this program helps the homeowners to avoid the foreclosure of their property. The FHA Secure Program will assist around 250,000 families who are in the risk of foreclosure of their properties, thus allowing them for qualification of FHA's mortgage insurance. But all this is to your avail only when you have a credit that can be considered as reasonably well. This was not possible earlier; as such delinquent borrowers were not able to qualify for the FHA loan program.
All in all, it is a big relief for all the stressed homeowners to refinance their loans with FHA insurance which were in default until now.
How exactly does FHA Secure Work?
Fundamentally speaking, this FHA Secure Loan helps out those borrowers who are in a state of a sub prime crisis and provides them with an offer to refinance the ARM loans to loans insured by the agency. But, the provision that the payments must have been made on time 6 months prior to the ARM loans change date, and that too, at a higher rate, will make it difficult for some of these homeowners to actually qualify. The reason being, that many of these families were duped by these attractive rates, which have since that time rose, thus making them defaulters because of the increased payments. In many such cases, the rated have actually rose to twice or thrice of the original amount!
This step is believed to reduce the ongoing flooding of foreclosures and that stable the real estate market which is in a state of turmoil due to the depreciation in the home value. And as in effect, the real estate market is expected to become more liquid.
This new FHA Secure program is only applicable to those already residing in the property in consideration, as their primary home. Thus, it is more of a life saver for those who have no other place to go; for investors, it is not so very helpful.
Another advantage is that there are no "teaser" rates involved, and there will be no penalties for prepayment. The agency also has an aging mortgage insurance program, and in this case as well, the guidelines remain the same.