"The Bush Administration announced a plan that will help some homeowners that are in dire straits. The new FHA program is being implemented immediately by administrative action and is called FHA Secure. The plan gives the Federal Housing Administration the authority to insure loans for delinquent borrowers facing foreclosure.  The immediate implementation of the plan will be for borrower's who can demonstrate a good credit history but have been unable to keep up with the mortgage payments once their mortgage interest rates reset and their payments went up.  Homeowners who can take advantage of this FHA Secure program immediately, can currently be in default and unable to qualify for a conventional mortgage loan. The default would have to be shown to have occurred after the interest rate increase on their current loan.

There are 5 major points to this plan:

• Homeowner should have a history of on time payments before mortgage rate was reset.
• The interest rate reset needed to have occurred between 6/2005 and up to 12/2009.
• Homeowner must show at least a 3% equity in property , in either cash or equity in value of home.
• Borrower must demonstrate a history of employment
• Borrower must demonstrate sufficient income to pay for the new loan payments.

FHA will also roll out a risk based program which wo.gov uld match the borrower's credit profile with a corresponding level of mortgage insurance premium. This program will be paid for by increased premiums on the FHA Mortgage Insurance Premiums ( MIP) paid by the borrower.  With the current market constrictions on certain types of conventional loans, FHA has seen a substantial increase in the amount of refinance loans being made.  The Bush Administration also announced that it will ask the legislature to work towards increasing the ceiling on the maximum loan amounts that FHA can purchase and insure.   In addition, the president will also seek to have a tax break for homeowner's who were foreclosed and had part of the mortgage debt forgiven.  The tax law now would require that the homeowner pay income tax on the amount of mortgage debt that was the lender forgave.  This plan will not save everyone.   It won't help those speculators who thought they would be flipping the property or the buyer who can't prove income and bought into one of those stated income loans, but for those who do qualify for it,  it means saving their home!"

Press Release by FHA ShareThis