05-09-08

The Bush Administration has implemented changes to FHASecure which will move the product toward risk based pricing starting July 14th 2008. This will ensure that tax payers do not get stuck with the burden of paying for any losses for such a program.

FHASecure will help homeowners by allowing people who had up to 3 mortgage lates in the last 12 months refinance into a low FHA fixed rate. The modifications to the current FHASecure program are scheduled to take effect July 14th. Secretary Roy A. Bernardi said the premium risked based approach will allow more homeowners to refinance and will also lessen any risk to the FHA insurance fund.

The current FHASecure refinance structure included 1.5% and 0.5% to be paid annually no matter what your credit rating is. Meaning someone with the minimum credit required and someone with near flawless credit got the same deal. What will now happen after July 14th is that all the FHASecure loans will now have a sliding scale from 1.25% to 2.25% that will be charged for the loan. Borrowers must still adhere to current FHA guidelines in addition to being put on a sliding scale.

FHA and the Bush administration state that adjusting guidelines for the program to be put on a sliding scale will allow more people to take advantage of the product. This sliding scale for the insurance premiums is expected to reinforce the FHA as a whole and make a more stable FHA that could help as many as 500,000 more homeowners. The Bush administration and the FHA state the measure will also help to encourage homeowners to improve their credit so they would get a better premium on the refinance.

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