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FHA Reaching Out To 850,000 At-Risk

Beginning this week, HUD's Federal Housing Administration (FHA) is mailing hundreds of thousands of letters to at-risk homeowners who need a more affordable alternative to the high-cost mortgages they are currently paying. The first round of 280,000 letters was sent this week with another 570,000 letters to be sent through September 2008.

"For hundreds of thousands of families, this letter might be the most important piece of mail they receive all year," said HUD Secretary Alphonso Jackson. "Not only could this information keep a roof over their heads, it could provide them with financial sustainability and security for the long term. Our aggressive outreach will ensure families are educated about the safe mortgage alternative that FHA offers."

These letters are being sent to homeowners who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. Currently, FHA can insure home loans valued between $200,160 and $362,790. Bipartisan legislation has passed both the U.S. Senate and U.S. House of Representatives that would increase the loan limits, allowing FHA to insure bigger mortgages in high-cost states. Once this bill is reconciled and signed by President Bush, approximately 250,000 more families could be helped this year at no cost to the taxpayer.

FHA-insured loans are backed by the full faith and credit of the government, which typically allows lenders to offer mortgage products at a lower, more affordable interest rate. More than 90 percent of FHA-backed mortgages are 30-year, fixed rate products. FHA also provides a one-of-a-kind loss mitigation program that helps protect borrowers against foreclosure. Finally, FHASecure, which allows borrowers who are current and delinquent on their loans to refinance with the FHA, is saving tens of thousands of families on average $400 a month compared to their exotic subprime loans.

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