In response to the mortgage and credit crisis of 2007, President Bush has proposed a new set of loan programs and guidelines to help at-risk mortgage holders. The FHASecure (Federal Housing Administration, Department of Housing and Urban Development) program is designed to provide borrowers with strong credit histories (and higher FICO scores) with the ability to qualify and secure new mortgages should conditions (in the market, for instance) otherwise prevent it.
At the tail-end of the real estate boom (starting 3-years ago), millions of Americans purchased property on speculation (usually 2nd homes and/or rental properties) figuring to profit on quick resales. While these *better* borrowers have been making timely mortgage payments, the interest rates on their mortgages are due to adjust, meaning they will soon have difficulty making the new, inflated payments.
On August 31st, 2007, the day the President introduced this
rescue plan, there was plenty of heated debate among mortgage and finance professionals regarding what the White House usage of the term "subprime" actually meant (was this a subprime *loan* or a subprime *borrower* program?!?). In either case, this is welcome news for borrowers seeking relief from their adjustable rate woes.
From here, it looks as if the FHA will scale-up their implementation of risk-based premiums, so that each new FHA Secure mortgage accurately reflects the borrower's individual credit history. In other words, riskier borrowers will still pay more.
The FHA pricing structure is slated roll out in January, 2008.
Answer Submitted on Wed, Sep 5 2007
Rate this Answer: