FHASecure Plan Helps Tens of Thousands of Families Keep Homes
WASHINGTON - In response to the Bush Administration's plan to help families avoid foreclosure, tens of thousands of homeowners are refinancing their exotic subprime loans with HUD's new government-backed mortgage product. HUD Secretary Alphonso Jackson has announced that more than 33,000 borrowers have already refinanced their subprime home loans with FHASecure, a government-insured foreclosure avoidance initiative created in September. An additional 20,000 are in the pipeline for approval this month, bringing the total to more than 53,000 in a four-month period.
"FHASecure is providing tens of thousands of families with a powerful incentive to obtain affordable and safe home loans," Jackson said during his keynote address to the Office of Thrift Supervision's National Housing Forum. "Homeowners finally have an opportunity to save their American Dream without risking their financial future, and they're taking advantage of it everyday."
On August 31, 2007, President Bush announced the creation of FHASecure. Backed by the government, FHASecure is enabling homeowners who have a history of on-time mortgage payments under their original interest rates, but missed payments after their rates reset, to refinance into FHA's mortgage insurance program. Families with high-cost mortgages and mortgages that are due to reset, but are still current on their loan, also continue to refinance through FHASecure. This is a more viable option because FHA-backed loans are less likely to result in foreclosure.
HUD's Federal Housing Administration (FHA) is on target to insure over 240,000 FHASecure home loans in Fiscal Year 2008, nearly two and one-half times the number served in Fiscal Year 2007. Since the creation of FHASecure three months ago, FHA has received more than 113,000 refinance applications from families whose loans are current or past due.
FHA refinancing has increased 125% over the past year, and is expected to increase further next year as more homeowners examine their mortgage options. FHASecure will save the average subprime homeowner about $400 a month, or $30,000 over the expected life of the loan.
As a result of extensive nationwide consumer outreach, more subprime borrowers recognize they have a choice and are turning to FHA for assistance. FHA's toll-free call center has received more than 137,000 calls over the past three months. Nearly 900 FHA-approved lenders around the country are participating in FHASecure by helping families refinance with home loans insured by FHA.
"This is a decisive moment in the economic history of our country ... We must turn the housing market around, and create greater stability and predictability ... In the near future, homeownership should continue to be the bedrock of our economy, this time with affordable loans that won't implode," Jackson added.
Jackson also said FHA could reach more borrowers who need safe and affordable financing alternatives if Congress approves bipartisan legislation to further modernize the 74-year old agency. HUD estimates 200,000 more first-time homebuyers and current homeowners who need access to capital could obtain FHA-insured mortgages next year if Congress expedites passage of FHA reform legislation. Higher FHA loan limits and flexible downpayment requirements would help more subprime borrowers refinance, particularly in high-cost areas such as California and the Northeast United States. Expanded FHA activity will also stabilize local real estate markets by reducing foreclosures.
"Each day of delay by the Congress unnecessarily places thousands of families at risk of foreclosure. These families are in danger of losing their homes. Think of what this means to them," Jackson added.
The House overwhelmingly approved The Expanding American Homeownership Act on September 18, 2007. The Senate Banking Committee approved similar legislation the following day. Yet, the full Senate has delayed passing this critical legislation.
For more information about FHASecure or to find the nearest FHA approved lender, phone 1 (800) CALL-FHA (225-5342) or visit www.FHA.gov.
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