President Bush announced Friday a new FHA refinance program named FHASecure.
The program is an Federal effort to help ARM adjusting consumers avoid payment-shock related foreclosure.
Under the terms of the program borrowers seeking to refinance into a fixed rate mortgage under the program must:
-Obtain a new appraisal, and demonstrate 3% equity in the home
-Demonstrate they have the ability to repay the loan
-Interest rate must have or will reset between June 2005 and December 2009.
It offers bruised borrowers the benefits of:
-No minimum credit score required.
-Existing late payments can be rolled into the new loan, as long as there exists 3% equity in the home.
In related efforts, Bush announced :
-He has asked Congress to remove the tax penalty for borrowers who are able to negotiate forgiveness (often part of a short sale) as part of their mortgage debt.
-He has asked congress to pass an FHA overhaul bill which would allow the administration to expand risk-based pricing, reduce down-payment requirements on loans it guarantees, and raise loan limits in high-cost states like California and New York from $363,000 to $417,000.