FHA an option to bail out those facing foreclosure?
Question:
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Answer:
Yes that has been discussed. It's an option, so is a combination of things, like 1st lower the rates to spark people to buy again, 2nd freeze adjustable rate mortgages for 2 years, 3rd increase Fannie/Freddie limits. All good idea's.
Your question in not clear. You need to work with your mortgage company for a WORKOUT, FOREBARANCE or SHORT SALE. You can only do this when you are behind in payments and to avoid foreclosure.
As long as the applicant's loan balance is within the loan limits that FHA states for each county within the US, I don't see a problem with people whose ARMs are set to recalculate or even those who are facing foreclosure refinancing to a Fixed rate FHA loan. It make sense, plus there is MIP involved which will protect the lender and the borrower.
Rumor has it that FHA is planning on raising the loan limits and may be soon offering a 40 year fixed rate loan.
Not really. FHA guidelines are very clear. A borrower must be current on their mortgage before they can close. Any mortgage lates limits the LTV to 85% - If there is a 120-day late it is considered a foreclosure and the borrower must wait 1-year before they can refinance. When the year is past they must provide a documentable reason for the 120-day late, and they are again limited to 85% LTV. If the borrower is in foreberance they must wait a year from the final payment.
One exception to the 85% rule is if there is strong reason for the lates and the loan is only a Rate & Term you may get up to 95% - FHA is a great loan, but it's not the savior we wish it was. Not yet anyway. Changes are on the horizon.
FHA through Freddie Mac and Fannie Mae did already and still allow some subprime mortgage conversions that have not defaulted. Your mortgage carrier is not the best person to talk to about this. You'll need to discuss this matter by going directly through FHA consumer lines to find out your options and what' required to refinance under better terms.
Right now they are discussing what to do with defaulted mortgages to allow remortgaging.
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