In order to qualify for this FHASecure refinance you will have to prove that your late payments started after your adjustable rate mortgage increased, FHA will not approve borrowers who just paid late due to financial irresponsibility. You will not be able to receive any cash back for the FHA Secure program. The FHA Secure program will allow home owners with delinquent mortgage payments to refinance to a fixed rate FHA mortgage. The FHA secure program will not however help homeowners who have properties that have dropped in value and are now worth less the n the mortgage balance. The FHA secure program will allow home owners to refinance their home up to 97.75% of the appraised value. All home owners that refi with the FHA secure program will still have to qualify under FHA lending guidelines to ensure they have the income to repay the mortgage and avoid the same problem they are refinancing out of.

Under FHASecure, borrowers that are delinquent on their mortgages as a result of interest rate resets will now be able to refinance using an FHA-insured mortgage. The FHA has never permitted and will not include pre-payment penalties or teaser rates that are common in exotic mortgages and have caused much of the current market troubles.

The FHASecure program will not be available until January 2008. There are certain restrictions to use FHA-Secure. One of the requirement is that the mortgage being refinanced must be a non-FHA Adjustable Rate Mortgage (ARM).

If you are looking to refi-FHASecure may be a good bet if you are in an 80/20 loan currently. Even if your home has gone done in value, you may still be able to able refinance your adjustable rate first mortgage lien. You would just need a subordination agreement from your current second mortgage holder. There is no CLTV(combined loan-to-value) restriction on the refi-FHASecure loan as long as you qualify otherwise.

Refi-FHASecure loans can help delinquent property owners obtain a FHA-insured refi if you have about 3% equity in the home, established income stream and a history of ontime payments for at least 6 months prior to adjustment date.

However, some mortgage professionals have criticized that FHA's qualifying standards are likely to be too difficult for many non-prime borrowers. Approximately 3 million non-prime loans are scheduled to reset in the next 2 years. Subprime borrowers tend to have lower credit scores due to late mortgage payments. It is unlikely that their credit problems have disappeared since they obtained their mortgages.

Also, the FHA maximum allowable loan limits may be too small to be helpful in certain high home price areas such as most cities in California, New York City, and most metropolitans.

Some also suggest that risk-based mortgage insurance premiums (MIP) can be expensive for non-prime borrowers, who are mostly low income families. The cost of MIP premiums was one of the reasons why FHA had fallen out of popularity in the past decade. In the past 10 years, many homebuyers had turned to conventional "combo" loans, which combine a first and second mortgage to avoid the high premium cost of MIP or private mortgage insurance (PMI).

The following 5 criteria have to be met in order to be eligible:
1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;

2. Interest rates must have or will reset between June 2005 and December 2008;

3. Three percent cash or equity in the home;

4. A sustained history of employment; and

5. Sufficient income to make the mortgage payments.