Leading Refinancing Lender Calls for Changes to FHA Program

With FHA temporary rule changes in reaction to the sub prime mortgage market, Refinance.com, the nation's premier source for residential mortgage refinancing, announced the creation of an online resource for borrowers seeking to refinance their homes with an FHA refinance loan. The company indicated that assistance would be available online at FHAHotline.com or by phone at 1-888-FHA-1776. Throughout the years, FHA lenders such as Refinance.com, have already helped over 34 million American families buy or refinance their homes.

"A bad mortgage does not automatically make a bad borrower," stated Nicholas Bratsafolis, Chairman of Refinance.com, a mortgage bank headquartered in New York. "It is unreasonable and unfair to blame the current sub prime mortgage crisis solely on the borrowers. Good people may have been enticed into bad loans and that appears to be the case quite often, regarding the sub prime market," he continued.

"Sub Prime" is a designation placed on loans granted to individuals and families with less than perfect credit. These loans are priced at 3, 5 or 7% premiums above the market price. In most cases, this means that families with the greatest difficulty meeting their payments are being forced to pay significantly more for a mortgage than those with greater assets.

Historically, many of these borrowers would simply refinance their mortgage when the rates increased to a point where meeting monthly payments became difficult. However, the available funds to refinance home mortgages have dried up due to Wall Street market factors beyond the borrowers' control.

Refinance.com proposes that the FHA program, with a few modifications, is ideally positioned to help the majority of American families facing foreclosure. Just four temporary changes in the current FHA guidelines would go a long way towards alleviating the problem and help homeowners avoid foreclosure.

  The guideline changes include:
   1. Institute a Lender paid fee to offset "rescue" loan failures
   2. Raise the maximum amount by 50% across all counties
   3. Forgiveness for borrowers delinquent due to rate increases
   4. Increase the maximum Debt To Income ratio (DTI)

"It seems to be contrary to the 'American Dream' to be saying these people never should have had a home loan in the first place. The fact is that they have a home loan and more importantly, they have a home for their family. We can and must bring the full power of the Federal Government to bear on resolving this issue," Bratsafolis added.

Bratsafolis and Refinance.com have proposed a 90 day test of these FHA guideline changes and stated that there will be no cost to the U.S. taxpayer since the lender paid fees will more than offset any ultimate foreclosures.

"We don't believe it is in anyone's best interest to be making untested changes to the FHA Charter. All that is needed is a 90 day window to determine whether these changes can turn the tide for many homeowners and restore stability in the market place," Bratsafolis concluded.

Consumers can get free information on FHA loans at Refinance.com's 24 hour hotline, 1-888-FHA-1776 or by visiting www.FHAhotline.com, a service of Refinace.com.

For further information about Refinance.com go to www.refinance.com or call 1-800-734-REFI.

Source: Refinance.com