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FHA To Bail Out Some Sub-Prime Mortgage Holders

August 31, 2007

Stacks of MoneyNews in today’s USA Today stated that the Federal Housing Administration (FHA) has decided to step in and offer refinancing opportunities to many sub-prime mortgage holders ideally helping them avoid foreclosure.  I’ve been a huge critic of any government “bail out” in the sub-prime market but this plan makes some sense to me.

To qualify, the borrower must have been making their mortgage payments on time until their interest rate increased, in addition they must also have at least 3% equity in the home they own.  Therefore, FHA is looking for those homeowners who at least showed some effort to keep their mortgages current when they either purchased using one of the variable interest rate mortgages or had refinanced into such a mortgage.

Here are a few more articles on this plan:

USA Today

Mortage Brokers Fall on Tough Times

As Mortgage Rates Rise so Does Fraud

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