I’d like to talk a little bit about the FHA Secure Program. FHA accepts short-refinances and next week they are lowering FICO requirements again. Many homeowners, and you agents reading this, will qualify, or know a client that may qualify for not only this program but a “short-refinance too”. Below are some general guidelines about the FHA program. In order to see if you can get your lender(s) to accept a “short-refi”, please contact me through this forum. Many, many homeowners will qualify, but there are a few “key” trigger points that must be executed regarding timing…
SHORT REFINANCE EXPLANATION
SITUATION
If you are reading this, your situation can be described as follows. Your
mortgage now is an ARM( adjustable rate mortgage ) that had a “fixed”
monthly payment for the first two or three years and your monthly mortgage
payments have sharply increased because the payment is now based on a
higher adjustable rate. You are employed, have a reasonable household
income and your credit has always been good but the new mortgage payment is
now too much and you are behind on the mortgage payments. You have tried to
sell your home but discovered that your home’s value has fallen under your
mortgage balance and can’t sell. You are stuck and it looks like the only
option is foreclosure.
SCENARIO OF WHEN WE CAN HELP USING FHA
Let’s say you have a mortgage of ~$400K with a home market value of $335K
and that you would qualify for a better mortgage rate at ~6.625%-7.875% (
rates are subject to change ) if your mortgage balance was once again less
than your home’s value, which is $335K in this example. We may be able to
negotiate a reduction of your mortgage to below your home value of $335K,
making you eligible to refinance and then apply on your behalf. Below is a
comparison of the previous mortgage, rate, payment to what it would be in a
successful transaction.
*Example
Mortgage Rate Pymt Principle Pymt? Fixed?
Present
Scenario $400K ~8+% $2700+(I.T.I) No No
Scenario
if successful
(reduced by ~$325K ~6.75% $2100(P.I.) YES YES
negotiation)
BENEFIT SUMMARY
Avoid foreclosure
Keep your home and Secure an affordable mortgage with a FIXED rate/payment
including principle
Have a substantially reduced mortgage balance
DO I QUALIFY?
Allowable
Mortgage Delinquency and Foreclosure AFTER payment increase
No Reserves or Savings
Single and Multi-Family Homes
Extremely Low FICO Scores
Co-Borrowers that do not live in your residence
Not-Allowable
NOT A NEGATIVE AMORTIZATION (OPTION ARM) LOAN
Bankruptcy within 2 years
Investment Property
Mortgage Lates within 6 months of mortgage payment increase
Program Requirements
Monthly payments MUST HAVE ALREADY INCREASED
THE PROPERTY MUST BE A PRIMARY RESIDENCE
Your current mortgage must be an ARM (adjustable rate mortgage) that has
already increased in payment.
You must have been out of bankruptcy for 2 years with re-established credit
with the exception of the ARM mortgage if it has increased in payment.
Your income must be documented and pass a debt to income ratio of 50%.
(This can be explained to you in detail during an appointment)
For example, if we negotiate your mortgage down to $300,000, the DOCUMENTED
GROSS income between ALL BORROWERS and rental income should be at least
$7,000 per month to have a reasonable chance for approval. Please note,
co-borrowers not occupying your residence are permitted.
BASIC LIST OF REQUIRED DOCUMENTS TO HAVE AT APPOINTMENT
Original 1st and 2nd mortgage note ( what you signed at closing )
Current 1st and 2nd mortgage statement
2006 – 2007 W-2s for all applicants
1 month recent pay-stubs for all applicants
2 months of recent checking account statement
4th quarter statement of retirement assets or other financial assets
Driver’s License for all applicants
Social Security Card if permanent resident alien
Letter describing your current hardship
WHAT IS THE PROCESS AFTER APPLICATION?
After signing your application and disclosures and collecting
documentation, allow us to take over communication with you lenders and
start negotiating your mortgage reduction. If your lender is willing to
reduce your mortgage enough to make you eligible to refinance with the
agreed upon compensation to us, we will then order an appraisal to submit
with your application for the government mortgage program. If your lender
is NOT willing to reduce your mortgage enough to make you eligible to
refinance at the agreed upon compensation to us, we cannot be of further
assistance.
WHAT TO DO DURING THE PROCESS?
Continue keeping all your pay- stubs, bank statements and asset statements
and inform us of any anticipated changes in employment, income, credit or
any other factors which you think may affect your loan.
Again, please contact me anytime and have a GREAT day!
Darin Zabel
Equistar Funding Corporation
204 F Street, Suite B5
Davis, CA 95616
530.753.5657 office
800.515.8797 fax
626.676.3088 cell
www.lucentloans.com
