White House Pulls the Plug on 'FHA Secure'

The White House is pulling the plug on the Federal Housing Administration's "FHA Secure" refinancing program at yearend, according to industry sources. FHA Secure has helped at least 460,000 subprime borrowers refinance into Federal Housing Administration-backed loans. The Bush Administration launched the program in August 2007 as part of President Bush's first response to the subprime crisis which later morphed into a global financial meltdown. FHA Secure was meant to be a temporary program that expired at the end of 2008. However, lender and consumer groups have urged the Department of the Housing and Urban Development and the White House to extend it through 2009. "The expanded loan options offered by FHA Secure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers," according to a November letter signed by several trade groups. Under the program, FHA loosened its underwriting standards to allow borrowers with adjustable-rate mortgages to refinance into fixed-rate FHA mortgages. The program was expected to help refinance borrowers who were behind on their payments, but only 4,000 delinquent borrowers were refinanced.