21 Nov 2009.

The main idea of FHASecure (introduced in Aug 2007 and revised in Apr 2008) was that borrowers who were in ARMs and could not afford the reset could refinance into an FHA loan. In most cases the loan limit would have meant the existing loan holder would have to write off part of the loan. Probably only a few thousand refinancings were approved that would not have qualified under normal FHA programs, and FHASecure was discontinued in Dec 2008.

See also

Below are clippings used in constructing this page

FHASecure created to help those with unaffordable ARM resets refinance

31 Aug 2007. HUD news release.


“Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.”

FHASecure is being directed to stronger borrowers

29 Aug 2008.

“FHA(In)Secure. Maurna Desmond”

“In a press release Friday, U.S. Housing and Urban Development Secretary Steve Preston bragged that his agency had helped more than 325,000 American families refinance into affordable mortgages since the housing crisis began. … But according to data from the Federal Housing Administration, which oversees FHASecure … Since late September of last year, just 1.2%, or 3,911, of the loans refinanced by the FHA, which is part of Housing and Urban Development (HUD), were made to borrowers in default, FHA data shows.”

FHASecure discontinued

19 Dec 2008. FHA Mortgagee Letter 2008-41.

“Termination of FHASecure”

“While FHA will retain its standard rate-and-term refinance program for borrowers who are current on their existing mortgages, the FHASecure program under which FHA was able to insure refinance transactions for borrows delinquent on their mortgages, will terminate on December 31, 2008, as per FHA’s initial guidance.”

End of FHA Secure

24 Dec 2008. Housing Wire.

“For FHASecure, a Quiet End Nears. By PAUL JACKSON”

“HW’s source at HUD said [FHASecure] had become “something of an albatross” and duplicative in the face of the recently-legislated Hope for Homeowners program, which casts an allegedly broader net and serves the same purpose. “The thinking is probably that there isn’t a need for two FHA-led programs for troubled borrowers,” said the source, who asked not to be named in this story. “Pick one, and make it work.” When FHASecure was launched in late Aug. of 2007, administration officials suggested at the time that the program could help 240,000 delinquent subprime mortgage holders avoid foreclosure. But by December of last year, four months after its introduction, the program had only endorsed 266 loans for borrowers that were delinquent at the time of refinancing, forcing HUD officials to redefine the program with a wider net for any at-risk borrower, delinquent or not. HUD officials have maintained steadfastly that such a focus was always the intent of FHASecure.”

IMF report on foreclosure mitigation

18 Feb 2009. IMF staff position note.

“Foreclosure Mitigation Efforts in the United States: Approaches and Challenges. Kiff, John & Klyuev, Vladimir”

“FHASecure, introduced on August 31, 2007 but significantly amended on May 7, 2008, offered stressed homeowners an opportunity to refinance into FHA-insured loans. The lender had to agree to write the loan off (via a “short refinancing”) … The payments on the new loan were not to exceed 31 percent of income, and the total of all debt payments (home and non-home) were not to exceed 43 percent. Delinquent borrowers had to pay a 2.25 percent up-front mortgage insurance premium (UFMIP) and 55 basis points annually, while current borrowers paid 1.50 and 0.50 percent. The program, however, has not been successful in overcoming the difficulties identified in the previous section. The number of FHASecure refinancings has been disappointing, and it was phased out at the end of 2008. (While since the start of FHASecure, FHA has refinanced over 400,000 mortgages, reportedly only a few thousand of the new loans have been given to formerly delinquent borrowers, i.e. the group that would not be able to obtain financing under traditional FHA programs.)”