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The End Of FHASecure

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER

December 19, 2008 MORTGAGEE LETTER 2008-41

TO: ALL APPROVED MORTGAGEES

SUBJECT: 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. Maintaining the program past the original termination date would have a negative financial impact on the MMI Fund that would have to be offset by either substantial across-the-board single family program premium increases or the suspension of FHA's single family insurance programs altogether.

Timing
As of December 31, 2008, FHA will not issue any new case numbers for lenders seeking to refinance borrowers into FHASecure loans. Any loans for which the lender has requested a case number and taken a loan application prior to December 31, 2008 may be processed and will be insured by FHA.

Other Refinance Options
Please note: FHA will retain its standard rate-and-term refinance program, as well as cash-out and streamlined refinance products. The standard rate-and-term refinance product is available to borrowers who are current on their existing mortgages. The policy guidance associated with these other refinance programs (Mortgagee Letter 08-40 and 05-43) remain in effect. Further, the HOPE for Homeowners program is available to help borrowers who may be delinquent on their current mortgages. FHA encourages lenders to consider this product for meeting the needs of distressed homeowners.

If you have any questions regarding this Mortgagee Letter, please contact the FHA Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

Brian D. Montgomery
Assistant Secretary for Housing-Federal Housing Commissioner

NOTE: The FHASecure program was a disaster for two reasons: First it created false hope and the illusion that the federal government was actively helping homeowners. 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. Second, as of December 15th only 4,009 delinquent conventional borrowers nationwide have been able to refinance with FHA loans.