Public Employee Press

Part 3 of a series
Housing program can now refinance some mortgages

DC 37’s Municipal Employees Housing Program is now offering refinancing to members experiencing difficulties meeting increased payments on adjustable rate mortgages.

“The FHASecure initiative is a temporary program designed by the federal Housing and Urban Development Department to give borrowers the help they need before they lose their homes to foreclosure,” said Henry Garrido, assistant associate administrator of DC 37, who runs MEHP.

“We aim to work with GMAC loan officers and participating banks to help members who have uninsured, ballooning mortgages and may be suffering financial distress as the result of recent rate adjustments.”

The new initiative gives borrowers who became delinquent after the interest rate hike went into effect the chance to refinance their conventional ARMs to fixed-rate loans backed by the Federal Housing Administration. GMAC Mortgage, LLC is participating with the union’s housing program to offer FHASecure as an alternative for qualifying borrowers seeking a fixed-rate refinance.

To qualify, eligible applicants must demonstrate that prior to the reset or adjustment of their ARM loan, they were paying their mortgage on time, and they must have at least 3 percent equity in the home. In some cases, an eligible borrower may be permitted to include past due mortgage payments in the new FHA loan, subject to FHA underwriting guidelines. These fixed-rate loans do not emphasize the borrower’s FICA score.

“MEHP has seen members whose teaser rates have shot up. The new rates are unaffordable, and borrowers get in trouble when they try to refinance and find these ballooning loans have associated fees and prepay penalties that add to their debt,” Garrido explained.

“This new HUD initiative has the potential to assist many households facing larger mortgage payments resulting from market conditions,” Garrido said. 

The FHASecure has no application fee and the loan can be used to consolidate closing costs, taxes, and homeowner’s insurance into the loan, but it cannot be used to “cash out” or draw funds from the value or equity of the home. An appraisal fee and other associated fees apply.
For more information, call DC 37 MEHP counselors Tracy Lewis or Jorge Ortiz at 212-815-1814. Members should also contact MELS 212-815-1111 for legal advice.