There is a study being circulated at the American Securitization Forum which was obtained by Reuters that says “more than 600,000 troubled homeowners could win new mortgage terms after easing terms of the FHA Secure Mortgage program.
More specifically, the document suggests that FHA loosen its FHA Secure Mortgage program to aid not just adjustable-rate mortgage holders, but borrowers with fixed rates and those who have shown the ability to make steady payments even if they have become severely delinquent in recent months.
According to the study, the current FHA Secure Mortgage program is only poised to help around 44,000 subprime borrowers, or 5 percent of those who are more than two months behind in their payments. The new guidelines would reach 607,000 subprime borrowers, or 68 percent of those who are severely delinquent, it said.
The report does not spend much time talking about other FHA mortgage refinancing options (such as the popular FHA refinance programs like the Streamline or the 95% cash out program), but focuses on the FHA Secure mortgage program.
The report also does not consider how many more could qualify for FHA mortgage refinancing if the loan size limit almost doubles from $367,000 to nearly $730,000 as outlined in a government stimulus package agreed to by the White House and House of Representatives leaders last week. Details of that proposal are still being negotiated, and it must clear the Senate as well.
If/when the loan limits are increased, look for a wave of FHA mortgage refinancing to take place. If they change, suddenly many people who are currently in a subprime loan with a loan balance of between 300,000 and 700,000 will look to FHA mortgage refinance programs as their best option available.
Will the FHA Secure Mortgage Program guidelines change?
Stay tuned.
In today’s world, anything can happen.
