FHASecure Not Enough of a Bailout?

If you’ve been reading FinanceBlogOnline.com at all, you know about FHASecure, the mortgage refinancing program that was launched in August and that is run by the FHA, the Federal Housing Administration.

The program has been controversial (and with good reason) as it allows subprime borrowers who have fallen behind on their payments to switch to low, fixed-rate mortgages. I won’t get into the argument here for or against allowing such a move, but there are valid arguments on both sides of allowing these borrowers the opportunity to keep their homes. Approximately 200,000 homeowners in danger of losing their homes have been helped.

One of the main issues popping up is that only about 3,000 of these types of borrowers have been helped, i.e., those in danger of losing their homes, while the rest simply wanted to get out of the bad financing agreement that they had signed up for. Can’t blame them, but is it fair?

While the percentage of subprime loans overall in the U.S. is less than 10% (approximately 7%), they do account for a large percentage of delinquencies. This past year, according to RealthTrac, over 210,000 Americans have lost their homes, and FHASecure, it is argued, will help those following in the footsteps of those that have already lost their homes.

Seems the FHASecure program is learning as it goes. New rules are being put in place to counteract the abuse. Starting in July, the program will be open to all subprime adjustable rate mortgage (ARM) borrowers no more than 60 days late or 30 days late more than once in a 12-month period. They’ll also have to have some skin in the game–home equity or money in the bank equaling 3% of the mortgage principal.

Love the program or hate it, FHASecure is helping people afford the homes they’re already in.